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Can you tell how they got the additional UK tax of 5% on S.Am profits? With what did they multiply that tax rate with? And also can you tell why are they again charging tax on the contribution we earned on the imported chips at the UK tax rate at 30% when it was already deducted from the South American tax rate of 25%? Thank you
Sorry – I don’t know how I came to miss it 🙁
I assume you are happy with the reason for needing an extra 5% tax (30% – 25%).
The easiest way of getting the figure is to say that (for year 4) the tax at 25% is 16.50 (in pesos). So 5% tax would be 5/25 x 16.50 = 3.3M pesos. Converted to GBP at 21.141 gives GBP 0.16M.
With regard to the imported chips, in south america they are an allowable expense and therefore save foreign tax at 25%.
However it is income into the UK and therefore increase taxable profits in the UK where they are taxable at 30%.
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