Tax credits
A? U.S.-based MNC has a foreign subsidiary that earns $255,000 before local? taxes, with all the? after-tax funds to be available to the parent in the form of dividends. The applicable taxes consist of a 38% foreign income tax? rate, a foreign dividend withholding tax rate of 9.3%?, and a U.S. tax rate of 28%.
Calculate the net funds available to the parent MNC? if:
a. Foreign taxes can be applied as a credit against the? MNC's U.S. tax liability.
b. No tax credits are allowed.