Taking account of political risk

Article Abstract:

Formal assessment of political risk is an important part of strategic decision-making for multinational companies. Three key steps are typically involved in formal assessment of political risk: measurement, management, and development of post-expropriation tactics. Measurement can be done on a country-specific or company-specific basis, and both forecasting scales and rating methods are available for characterizing degree of risk. Four risk management approaches in the pre-investment period are: avoidance, insurance, environmental negotiation, and environmental restructuring. Post-expropriation policies should be aimed at negotiating with host governments, and mutual concessions may be suggested. Failure in negotiations may lead to efforts at legal redress and attempts to salvage investment through insurance or other payments.

Usage, Risk assessment, Political aspects

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Devising an overseas tax strategy

Article Abstract:

Four classes of foreign exchange gain or loss for international tax purposes are: import-export transactions; foreign currency loans; forward foreign exchange transactions; and balance sheet translations. Foreign exchange gains or losses on import-export transactions denominated in a foreign currency are usually treated as ordinary income. Gains and losses on loan repayments in foreign currencies are sometimes seen either as taxable or as deductions against tax. In forward foreign exchange contracts, gains or losses result when the forward rate differs from the spot rate when the contract matures. This transaction is treated as ordinary income in most countries, with gains being taxable but losses deductible.

United Kingdom, Taxation, Accounting, Tax administration and procedure, Tax administration, Tax policy, International law

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The basic equations of FX

Article Abstract:

Methods of currency quotation, the concepts of interest rate parity and purchasing power parity, the Fisher Effect, and expectations theory are discussed from the perspective of foreign exchange markets. Foreign exchange markets are not localized and generally consist of commercial and central banks willing to convert currencies for corporations. The forward market instruments available to companies buying and selling currencies on foreign markets are also discussed. Most of the models and equations examined assume a certain amount of equilibrium which the real markets almost never experience.

Analysis, Economic aspects, Financial futures, Foreign exchange, Currency options, Capital movements, Foreign exchange futures, Convertible money

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