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Sir, supposing if a US company wants to acquire a subsidiary in UK, tax rate in US is 25 percent and in UK is 20 percent, royalties are paid by UK company to US.
1) Will the royalties be taxed twice in US and in UK?
2) If the cash flows net of royalties paid is taxed at 20 percent in UK, which is remitted to US, assuming double tax treaty exists, will the cash flows in US be taxed at 5 percent (cash flows net of royalties converted to home currency) or the cash flows not including royalties?
Thanks
Why have you headed up this post ‘duration’? It has nothing to do with duration.
1. Why on earth should they be taxed twice – it is only income that is taxed!
The royalties would be an allowable expense in the UK, and taxable income in the US.2, The income in the US will be taxed at 25%.
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