As the Managing Director of the CPA firm, I would choose the option of outsourcing the basic tax revenues from India, just like the other firms in the community. The basic tax return will improve the firm, in that it would be easier to access the services at a reduced rate. For the company’s sales and profitability to be on track with projections and goals of the competitors, the company has considered downsizing six members. This will raise the cost owing to the implementation of the tax return methods.
Monetary policy of inducing the tax rate will reduce the income of the company due to the 40% tax imposed on foreign corporations by the Indian government. Reduction of income results in the increase of interest rate of the services, thus intensifying the investment opportunities in India. The price of services increases, amplifying the level of production in the company and solving the problem caused by downsizing the workers. As the managing Director, I considered cutting down the workers whose return is lesser than the cost, so that the effectiveness and efficiency of the company would not be affected drastically.
Outsourcing basic tax rate from India will have monetary and non-monetary effects. For customers, the increases of prices of the services will cause the client to pay more for the services. However, the quality and quantity of the services will increase due to intensive investments because of the high rate of interest on services. The non-monetary effects are evidenced in customers missing services of the cut down workers, and may as well opt to leave the company.
Downsizing the workers will affect the members monetary, in that their income will increase because of the increased investments in the company. The monetary disadvantage to the workers is that lower income earnings due to the tax will cause workers to retire from work earlier than usual. A non-monetary disadvantage is that the workers will have to put extra effort to do the additional work resulting from the shortage of the workers because of the downsizing. This may lessen their effectiveness and efficiency, resulting in lower production levels in the company. The downsizing of the workers would affect the image of the company in the society, pushing away investors due to the perception of instability of the company.
Outsourcing the basic tax return monetary affects the partnership of the company, since the government often leaves out such contributions from the company’s taxable income, while allowing managers to obtain tax deductions for aids to make funds arrangement. Investment earnings in pension funds will universally exclude the income tax imposed on the services while accumulating earlier to the payment. Payments to retirees and their beneficiaries would also receive constructive tax management. The move will improve the open trade between members, since the interest rate will remain constant due to the constant tax levied on their services. The monetary disadvantage of this move is that the costs of the services increase, resulting in the high prices discouraging the partners.
In conclusion, outsourcing the company using basic tax returns affects the effectiveness and efficiency of the company, since the prices of services raise and increase income and investments. The cost of production increases due to the downsizing of workers, but this can be avoided through careful selection of those to be downsized. Monetary advantages of the criteria should be considered since the company depends on the profit it receives from the policy.