wk11_Repatriation of foreign-source income

wk11_Repatriation of foreign-source income - 26 36 40...

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In 2009, a US company has three foreign susidiaries in Canada, Israel, and Italy a. We assume that in 2009 the earnings from the three foreign subsidiaries are equal to $1000 b. We assume that earnings from the three foreign subsidiaries will completely be repatriated to the US parent firm by the end of each year c. The foreign dividend withholding tax rate is 5% d. US tax rate is 35%, Canada tax rate is 26%, Israel tax rate is 36%, and Italy tax rate is 40% What are the overal tax payment/credits of this US multinational compay in 2009?
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Unformatted text preview: 26% 36% 40% Canada Israel Italy Foreign income before tax $1,000 $1,000 $1,000 Foreign income tax $260 $360 $400 After-tax foreign income $740 $640 $600 Declared as dividends $740 $640 $600 Foreign dividend withholding tax $37 $32 $30 Total foreign tax $297 $392 $430 Potential tax payment to US government $350 $350 $350 Actual tax payment to US government $53 $0 $0 Dividend to US parent firm $650 $608 $570...
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This note was uploaded on 03/25/2012 for the course FINS 3616 taught by Professor Curry during the Three '10 term at University of New South Wales.

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