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Triton, Inc., a California Corporation, has subsidiaries located in China and Zimbabwe. Earnings before taxes for...

Triton, Inc., a California Corporation, has subsidiaries located in China and Zimbabwe. Earnings before taxes for China and Zimbabwe are $3,000,000 and $3,500,000, respectively. Corporate Income Tax Rate for China and Zimbabwe are 40% and 26%, respectively. The US corporate income tax rate is set at 35%, and its dividend withholding tax rate is 0%. The dividend withholding tax rate for China and Zimbabwe are 10% and 5%, respectively.

Question: What is the minimum effective tax rate that Triton can achieve on its foreign-sourced income?

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Answer #1

the minimum effective tax rate that Triton can achieve on its foreign-sourced income = 35%

Triton is the U.S. corporation and its subsidiaries are in China and Zimbabwe. So, the minimum effective tax rate on foreign-sourced income refers to the corporation tax rate in the U.S. Therefore, it will be 35%.

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