Exposure to Country Regulations Why might this action affect the regulations imposed on the subsidiary’s business by the Singapore government?

Exposure to Country Regulations Why might this action affect the regulations imposed on the subsidiary’s business by the Singapore government?

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December 31, 2021
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Exposure to Country Regulations

Why might this action affect the regulations imposed on the subsidiary’s business by the Singapore government?

Answer and ExplanationSolution by a verified expert

Explanation
Governments of a host country allow the parent companies to operate from their country itself because it can reduce unemployment in the host countries.

Company M is eliminating the workforce and increasing unemployment in Country S, which violates the regulation imposed by Country S government on the business of the subsidiary. The government may impose a high rate of taxes and duties, and can restrict further expansion because of the violations.

Verified Answer
The downsizing by MNC leads to an increase in unemployment in Country S. As a result, Government S may levy high taxes on the business of the subsidiary.

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