Problem 1: What role do tax credits play in international taxation? What considerations might cause tax credits to not achieve their intended results?
Problem 2. Sweden has a classical system of taxation. Calculate the total taxes that would be paid by a company headquartered in Stockholm that earns 750,000 swedish krona (SEK) and distributes 50% of its earnings as divides to its share holders. Assume the company's shareholders are in the 40% tax bracket and that the company's income tax rate is 28%.
Problem 3. Global enterprises has a manufacturing affiliate in country A that incurs cost of $300,000 for goods that it sells to its sales affiliate in country b. The sales affiliate resells these goods to final consumers for $850,000. Both affiliates incur operating expenses of $50,000 each. Counties A and B levy a corporate income tax of 35% on taxable income in their jurisdiction.
Required If Global enterprises raises its aggregated transfer price such that shipment form its manufacturing to its sales affiliate increase from $500,000 to $600,000, what effect would this have on consolidated taxes?
Problem 4. Using the facts as stated in problem 3 what would be the tax effects of the transfer pricing action if corporate income tax rates were 30% in country A and 40% in country b?