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Sir, the question states, “a bilateral treaty on tax exists between the US and Gamala, which permits offset of overseas tax against any US tax liability on overseas earnings. Tax in Gamala is charged at 20% and in US at 30%”
This means that in the US, Tramont will have to pay only the excess 10% on the overseas profits, right? What if such a statement is not included as a part of the question. Will we charge 30% in US on the profits from Gamala?Also, why has the US tax calculation not been included as a part of the APV computation? The additional US tax computation has been included as a part of adjustments to the APV. I know that this makes no difference to the final answer, but is there any rationale behind the presentation? I will be given full credit for including it as a part of the APV computation, right?
Thanks so much once again! 😀
It is true that if there is a double tax agreement then it is only the excess that will be charged.
You will always be told that in a question 🙂 (But if you were not then you would assume it and you would state your assumption)
With regard to the second part of your question – no problem, you would still be given full credit.
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