What is the taxation of multinationals operating in two or more countries?
Multinational companies operating in two or more countries are subject to the taxation laws of each country they are in. This means that a company operating in both the United States and Canada, for example, would have to pay taxes according to the laws of both countries. In the state of Minnesota, multinational companies must pay corporate income tax on all income earned in the state regardless of the business’s domicile. Furthermore, if a multinational company has operations in multiple countries, the Minnesota Department of Revenue will look to determine the source and the closest connections to the state. If the company has substantial contacts in the state, then income generated from foreign countries is also subject to Minnesota taxation. In addition, these companies are subject to the U.S. federal tax code and the tax codes of the other countries of operation. The profits must be divided according to the laws of the countries in which they are earned. In the U.S. the foreign tax credit provisions in the U.S. Internal Revenue Code can be used to offset taxes owed to other countries. Overall, multinational companies must abide by the taxation laws of each country they do business in. For companies operating in Minnesota, those laws include Minnesota’s corporate income tax as well as the applicable federal and international tax laws.
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