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Hi,
regarding part c i do not understand that why the dividend capacity of 10,4220 is grossed up to include tax of 6%?
Thank youThe question says that Limni pays tax on dividend remittances at 26% but gets credit for the 20% tax that had already been paid on the dividends – so an extra 6%.
Hi Sir, I am confused on the extra 6% tax.
Limni received 15M dividend, o which annual tax of 20% on average has been paid.So it mean 15M / 0.8= 18.75 original profit in oversea
pay tax in oversea 18.75M x 20% = 3.75M
pay tax to limni local gov when remited the dividend 18.75 x 26%= 4.88MDifference : 4.88M-3.75M= 1.13M additional tax to Limni local gov
why my answer is different from the examiner answer?
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