2. Pacific Jewel Airlines (Hong Kong). Pacific Jewel Airlines is a U.S.-based air freight fim with a wholly owned subsidiary in Hong Kong. The subsidiary, Jewel Hong Kong, has just completed a long-term planning report for the parent company in San Francisco, 1, in which it has estimated the following expected earnings and payout rates for the years 2011-2014 The current Hong Kong o porate tax rate on this category of ncome is 15%. Hong Kong imposes no withholding taxes on dv dends remitted to U investors per he Hong Kong treaty). The U.S. corporate income tax rate is 36%. The parent company wants to repatriate 70% of net income as dividends annually. United States bilateral tax a. Calculate the net income available for distribution by the Hong Kong subsidiary for the years 2011-2014 b. What is the expected aount of the dividend to be remitted to the U.S. parent each year? year? c. After estimating the theoretical U.S. tax liability on the expected dividend (what is often termed gross-up in the U.S.), what is the total dividend after tax, including all Hong Kong and U.S. taxes, expected each d. What is the effective tax rate on this foreign-sourced income per year? a. Calculate the net income available for distribution by the Hong Kong subsidiary for the years 2011 2014 in the following table. (Round to the nearest dollar.) 2011 Jewel Hong Kong Income Items (millions US$) Earnings before interest and taxes (EBIT) Less interest expenses Earnings before taxes (EBT) Less Hong Kong corporate income taxes Net incorme 2012 2013 2014 $ 9,000$ 11,000$ 13,000$ 15,000 (900) (1,100) (1,300) $ 8,100S 9,900$ 11,700S 13,500 b. Calculate the expected amount of the dividend to be remitted to the U.S. parent for the years 2011-2014 in the following table. Round to the nearest dollar.) 2014 Jewel Hong Kong Income Items (millions US$) Earnings before interest and taxes (EBIT) Less interest expenses Earnings Less Hong Kong corporate income taxes Net income Dividend remitted to U.S. parent 2011 2012 2013 $ 9,000$ 11,000 13,000$ 15,000 (1,100) before taxes (EBT) $ 8,100 S 9,900 S11,700$ 13,500 1,215 1485) ,755)(2,025) 8,415S 9,945 11,475 $6,885 S