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RR Exporters USA has $100,000 of before tax foreign income. The host country has a corporate income tax rate of 25% and the U.S. has a corporate income tax rate of 35%:

a) If the U.S. has no bilateral trade agreement with the host country, what is the total amount of income taxes RR Exporters will pay?
b) If the U.S. has a bilateral trade agreement with the host country that calls for the total tax paid to be equal to the maximum amount that could be paid in the highest taxing country, what is the total amount of income taxes RR Exporters will pay to the host country, and how much will they pay in U.S income taxes on the foreign earned income?
c) If the U.S. treated the taxes paid on income earned in the host country as a tax-deductible expense, then how much would RR's Exporters total U.S. corporate tax on the foreign earnings be?
d) If the U.S. treated the taxes paid on income earned in the host country as a tax-credit, then how much would RR Exporter's total U.S. corporate tax on the foreign earnings be?

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M9859433

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