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Arthuro Co pays corporation tax at 30% and Bowerscots Co pays corporation tax at 20%. A withholding tax of 5% is deducted from any dividends remitted by Bowerscots Co. There is a bilateral tax treaty between Hittyland and Owlia. Corporation tax is payable by Arthuro Co on profits declared by Bowerscots Co, but Hittyland gives full credit for corporation tax already paid in Owlia. Hittyland gives no credit for withholding tax paid on dividends in Owlia.
Bowerscots Co’s pre-tax profits can be assumed to be $45 million
in this question sir why are we not charging the withholding tax on the additional tax calculus rather why we are only charging the excess 10% corporation tax on this $45m as additional tax?
Although you have headed the past as Mar/Jun, in future please say the year as well. I have all past exams but I cannot remember the name of every question in every exam 🙂 🙂
There is an extra 10% tax payable one Bowerscots profit because Arturo pays 30% tax and Bowerscots profits have already suffered tax of 20%.
There is no extra tax on the dividend because dividends are paid out of profits that have already suffered tax.
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