Designing Global Tax Strategies: Offshore Jurisdictions, Double Tax Treaty Use, and Corporate Value
Abstract
As businesses increasingly expand across borders, navigating international tax systems has become both a challenge and an opportunity. Many companies overlook or underutilise legally available tax planning mechanisms - such as Double Taxation Avoidance Agreements (DTAAs) and offshore jurisdictions - that could help reduce tax burdens and generate long-term value. This study explores whether and how multinational enterprises (MNEs), particularly those operating from Georgia, can lawfully use such tools to enhance their financial performance without breaching regulatory boundaries.
The research employs a qualitative methodology based on five comparative scenarios drawn from actual business cases. These cases examine different cross-border structures involving permanent establishments, treaty and non-treaty jurisdictions, and low-tax regimes. The methodology uses secondary sources, including national legislation, international tax conventions, and OECD guidelines. Financial outcomes are evaluated based on tax savings allowed by using different legal options. Cash flows from savings are discounted to calculate the Net Present Value (NPV) of the impact of various tax strategies.
The findings demonstrate that a strategic and legally compliant approach to tax planning can create substantial value. The research validates that offshore jurisdictions offer a legitimate avenue for significant tax savings, provided they are structured with proper economic substance and adhere to the arm's length principle. Furthermore, the study confirms the critical role of DTAAs in mitigating the risk of double taxation, thereby reducing financial burdens and fostering international business expansion. The analysis of the permanent establishment concept reinforces this, highlighting how DTAAs can be leveraged to optimise tax outcomes. The research provides practical guidance for businesses and policymakers aiming to create a more efficient and stable fiscal environment.
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