A multinational enterprise is a company that owns or controls production or service facilities outside its home country for operating in foreign markets.
Key Characteristics:
- Has investments and subsidiaries established across multiple nations.
- Centralized strategic management and coordination of worldwide operations.
- Faces complex transfer pricing regulations between international related entities.
Example:
Toyota is a Japanese MNE with manufacturing plants and sales networks spanning over 20 countries worldwide.
Key Takeaways:
As large-scale businesses with integrated global supply chains, MNEs contribute significantly to international trade but also require sophisticated tax planning to comply with transfer pricing norms between jurisdictions.