Pacific Jewel Airlines (Hong Kong). Pacific Jewel Airlines is a U.S.-based airfreight firm 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, in which it has estimated the following expected earnings and payout rates for the years 2011Ă˘â‚¬â€ś2014.
The current Hong Kong corporate tax rate on this category of income is 16.5%. Hong Kong imposes no withholding taxes on dividends remitted to U.S. investors (per the Hong KongĂ˘â‚¬â€śUnited States bilateral tax treaty). The U.S. corporate income tax rate is 35%. The parent company wants to repatriate 75% of net income as dividends annually.
Save your time - order a paper!
Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You wonâ€™t have to worry about the quality and deadlinesOrder Paper Now
a. Calculate the net income available for distribution by the Hong Kong subsidiary for the years 2004Ă˘â‚¬â€ś2007. b. What is the amount of the dividend remittance expected to the U.S. parent each year? c. After calculation of U.S. tax liabilities, what is the total dividend after tax (all Hong Kong and U.S. taxes) expected each year? d. What is the effective tax rate on this foreignsourced income per year?