when calculation the NPV is appendix 2 Y do we calculate additional tax payable on pre tax profit as we have already converted the cash flow to JPY what does it mean by a bilateral tax treaty exists whcih helps to offset oversaes tax against japanese tax
Tax in Japan is 30% on overseas earnings. A bilateral tax treaty means that they only have to pay the extra above the tax charged in Airone. So here they have to pay just the extra 15% in Japan.
This is very standard in questions on foreign investment appraisal (which are very common in the exam) and I explain it (with an example) in my free lectures.