CORPORATE TAXES AND INTERNAL BORROWING WITHIN MULTINATIONAL FIRMS (A CASE STUDY OF AGIP OIL COMPANY PORTHARCOUT)

ABSTRACT
This project develops the Main reasons for the emergences of such a market are tax avoidance through debt shifting and the existence of institutional weaknesses and financial frictions across host countries. The serves to derive hypotheses regarding the role of local versus foreign characteristics such as profit tax rates, lack of institutional quality, financial underdevelopment, and productivity for internal debt at the level of a given foreign affiliate. The paper assesses hypotheses in a panel data-set covering the universe of Agip oil company multinational firms and their internal borrowing. Numerous novel insights are gained. For instance, the tax-sensitivity found in this paper is many times higher than previous research suggests. This accrues mainly to three things: the consideration of the boundedness of the internal debt ratio as a dependent variable in comparison to its treatment as an unbounded variable in most of the previous work; the coverage of all (small and large) multinationals here rather than a focus on large units in previous work; and the inclusion of endogenous characteristics in other countries multinationals are invested in (due to endogenous weights) while previous work did not consider such effects at all or assumed them to be exogenous. Moreover, local and foreign (at other locations of a given affiliate) market conditionsmatter more or less symmetrically and in the opposite direction.

BACKGROUND OF THE STUDY
Tax and internal borrowing is a financial issue and its payment is a civil duty. It is the imposition of a financial burden for the government on individual firm and companies and a process of borrowing in which a word is copied from a non-standard variety into the standard language (cf. Görlach 2001: 158). For lack of prestige, dialect words are often not considered dictionary-worthy, but eventually some items may become fully integrated in the standard variety, typically without the speakers being aware of their origin respectively.
In general based, the word tax means any contribution imposed by the government upon individual and companies for the use of government to provide facilities or services as rendered by the state. It is not a voluntary payment or donation but an enforced contribution made on the pronouncement or directive of legislative authorities.
Osita (2004:1) stated, taxation may be define as the compulsory leave by the government through it’s various agencies in the income, capital or consumption of it’s subject such as salaries, business profits, interest, dividends, commission regularities, rent etc.

It could be said that there are three main methods of financial economic expedition open to meet developing countries there are:-
(a) LOANS
(b) GRANT
(c) TAX AND OTHER CURRENT RECEIPT
Of these sources, tax is perhaps the most important since the level of government expenditure is to a great extent dependent on the ability of the tax system to generate the required revenue at the disposal of the government.
In spite of this benefit from tax most people still indulge in corporate tax and internal borrowing. Attempt to avoid some portion of liability or not to pay tax will affect the revenue of the government that is the reason why the government frown at the issue of corporate tax and internal borrowing, and uses it’s authorities to enforce compliance.

ARONOMOLE and OLUWALAYODE (2006:39). Define tax avoidance as legal ways by which a tax payer reduces in tax liabilities.
Tax evasion is a deliberate on the part of the tax payers to reduce their tax liabilities through illegal means or an attempt not to pay tax due.
The distinction between this tax avoidance and tax evasion is that tax avoidance is not considered a criminal offence where as tax evasion is a criminal offence.
According to ANYAELE (1990:225) a tax may be defined as a compulsory contribution imposed by a government authority on goods, individual and co-operate bodies irrespective of the exact amount of services rendered to the tax payer in return and not imposed as a penalty for our legal offence. Both direct and indirect taxes that are collected for the government inform of income tax, exercise duty, import and export duties. Purchase and sales taxes and so on help the government to generate a lot of revenue for the smooth administration in the nation.
There are two elements in every form of taxation and that is the BASE AND RATE. The tax base is the object which is taxed or a measure of the private sector income or wealth that can be taxed, while the tax rate is the percentage of the measured amount taken off from the tax base. In this case the money realized from it is used to provide social goods and services, so that everybody both the rich and poor will have equal chances of making use of them, that is the goods and services. They include pipe borne water, electricity, good roads, hospital, schools etc. most people in Agip oil company has the habit of evading or avoiding tax payment i.e. they always avoiding paying their taxes. With this state of affairs the various tier of government in the Agip oil company don’t usually generate enough revenue which will enable them to effectively execute all the development projects which are highlighted in their budgets.

It has to be pointed out that the successive Agip oil company governments have not made adequate and sincere efforts toward informing the tax dodger or evader on the need for them to pay the taxes. All attentions have been directed on the revenue from oil sector while taxes and agriculture, which supposed to be generating a lot of revenue to the Agip oil company, are deliberately over looked.
Also the researcher wants to look into the problems of paying tax by the public, such problem are as follows
a) corporate tax and internal borrowing by the public
b) Poor system of tax collection
c) Inability of the government to prosecute tax avoidance.