Globalisation has several dimensions arising out of what may be called the consequential enhanced connectivity among people across borders. While such enhanced connectivity is determined by three fundamental factors, viz., technology, taste and public policy, cross-border integration can have several aspects: cultural, social, political and economic. For purposes of this presentation, however, the focus is on economic integration.
Improper tax categories affect the amount of profits before anything else, thus causing problems. The second is tax base. Right now, reform of tax base is underway in China. The value-added tax (VAT) will be shifted from production-based to consumption-based. One of the issues involved is how to apportion equipment investment and whether such input should be taken as costs.