The Advantages and Disadvantages of Having a Wholly-owned Subsidiary
Because of this, the creation of a sales subsidiary is not to be made without careful evaluation of all the costs involved (Hennessey 299).

A subsidiary is defined as a corporation controlled by a second corporation through partial or complete stock ownership of the voting class of security, interlocking directorate, lease, or community of interest. Many major corporations in the United States are either the "pure" or exclusive type of holding company or the "mixed" type of holding company, the latter owning a number of subsidiaries which may in turn be intermediate holding companies and/or operating companies. There are advantages to carrying such interests in separately incorporated and controlled companies, offering decentralization of management in separate boards of directors and officers, bypassing any undue taxation on "foreign" corporations, or those domestic to other states, by carrying local properties in subsidiaries domestic to the state of location. The United States generally defers taxation of the foreign-sourced earnings of a foreign subsidiary until the income is recognized by the parent company. For foreign operations that are established in low-taxed foreign countries, the use of a foreign subsidiary structure may serve to defer U.S. taxes, desirable because the deferred U.S. tax could then be used for expansion of the business or other investments (Valentine 103).

 
 
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    South America | Support EC | Portugal Spain | Latin America | United Japanese | | Economic Community | Instead French | Japan Asian | Germany Canada | sales subsidiary | independent distributor | wholly-owned subsidiary | type holding company | american companies | antitrust law | latin america | contradictions integration | ec countries | holding company | economic goals |  
   
 
 
 
   
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