What is a Multinational Corporation?
A multinational corporation/ company (MNC) is a large organization that has operations in a number of countries. They are large companies that are managed by professionals who do not own the company.
MNCs are very important as they have a lot of influence & can provide many advantages. The advantages that they provide includes:
- The increasing numbers in a nation’s employment, and their education.
- MNC’s incorporation also increases the investment in the country which in return increases the development of industries in the country and investment capital for the host country.
Why MNCs come to Singapore?
With its ever-growing economy, and being the financial hub for the Asia Pacific region, Singapore has positioned itself in a pivotal role as a business epicenter within the heart of Asia. That is one of the major reasons why MNCs continue to favor Singapore as a preferred business destination for incorporating a Singapore company. Most MNCs stand to benefit from Singapore’s open business and business-friendly policies.
MNC companies from all over the world continue to uphold Singapore as an ideal location to establish and expand their businesses, and this overview continues to grow concurrently with Singapore’s internal and external advancement and progression. To encourage MNCs to come to Singapore and set up a base of operations, Singapore’s Economic Development Board offers these companies International Headquarters Incentives (IHQ) and Regional Headquarters Incentives (RHQ).
Companies who successfully get conferred with the RHQ status will reap the benefits of a concessionary tax rate of 15% for up to 5-years for all qualifying income which is derived from activities and business operations conducted in Singapore. Whereas companies who obtain the IHQ status, on the other hand, enjoy tax rates of 0 to 10%.
On top of that, Singapore has a progressive tax system. Designed with entrepreneurship growth in mind, its attractive and low corporate and personal tax rates are a big reason why MNCs continue to choose Singapore over any other country. Singapore also has an extensive network of free trade agreements and double taxation agreements, both of which help to facilitate and safeguard the interests of Singapore’s investors.
As Singapore continues to cement itself as one of the best places in Asia to incorporate a company, thanks to its strategic location, stable economy, tax relief, and equally stable political environment, and its top-notch infrastructures, Paul Hype Page & Co can predict there will only be more coming in the near future.
Multinational impact on economy
MNCs have a big impact on economic, political, environmental, and cultural force that can’t be avoided in present globalization. To put it in perspective, MNCs have an impact on the lives of billions of people every day, often in complex and indiscernible ways.
These companies can provide developing countries with many benefits. However, these institutions may also bring with them the codes of ethical conduct that serve to exploit the needs of these nations, rather than providing them with the critical support for economic growth and social development.
When an MNC invests in any country, their scale of the investment is likely to be in a significant figure. In this case, governments will often offer incentives to firms in the form of grants, subsidies and tax breaks to attract investment to come in big. This foreign direct investment (FDI) will have advantages and disadvantages for the host country that will be explained below.
MNCs employ huge number of people around the world and so are crucial to the global economy. These companies play a larger than life figure that their political influence goes as far reach as deciding where they locate.
Advantage of Multinational Companies