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Dear sir,
I have some confusion regarding this qn1. When we calculate the no. of contracts, don’t we need to multiply by 6/3?
If not, are we doing so because these are 7 month futures? I dont understand.2. If there is a double taxation treaty, the additional tax is on pre tax profits or on final profits (ie after conversion)?
Also, if the foreign tax paid was more, and they have a lower rate in the home country, would this be offset against profits (as in deduct the extra percent) or just leave it alone since they already paid the tax.
Thanks
1. Why do you want to multiply by 6/3? These are currency futures (not interest rate futures) and therefore to calculate the number of contracts you divide the transaction amount by the contract size.
2. The additional tax is calculated on the pre-tax profits. If the foreign tax rate is higher then there is no extra tax (but there is no tax ‘refund’).
I do suggest that you watch my free lectures on both of these issues 🙂
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