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Getwell Inc. is a U.S.based global manufacturer and distributor of a wide array of pharmaceutical products. In 2016, a foreign subsidiary of the company had
Getwell Inc. is a U.S.based global manufacturer and distributor of a wide array of pharmaceutical products. In 2016, a foreign subsidiary of the company had $3,400,000 in gross earnings and distributed 100% of its earnings as dividends to Getwell. U.S. corporate taxes were 35% and foreign corporate taxes were 28%. Additionally, foreign withholding taxes on dividends were 15%.
a. What was the total tax payment, foreign and domestic combined, for this income? b. What was the effective tax rate paid on this income by the U.S. parent company?
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