Page 6 - U.S, International Taxation Inbound - Outbound Transactions_Neat
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Inbound Transactions (continued)
Branch Profits Tax Example
FOREIGN COPORATION OPERATING IN FOREIGN CORPORATION OPERATING
THE U.S. THRU A SUBSIDIARY IN THE U.S. THRU A BRANCH
U.S. TAX U.S. TAX
Taxable Income $100 Taxable income $100
U.S. tax @21% $ 21 U.S. tax @21% $ 21
Cash after tax $ 79 Cash after tax $ 79
Dividend $ 79 Dividend $ 79
distribution to equivalent
Foreign parent
Withholding tax $ 23.70 Branch Profit Tax $ 23.70
on dividends
@30%
Total Tax $ 44.70 Total Tax $44.70
The 30% withholding tax could be minimized thru tax planning techniques
