Question 1

Which of the following is true about the taxes paid by Canadian-based MNC to Canadian government on the foreign-source income?

Accepted Answer

A)  They are equal to the firm's ordinal income tax rate times the amount of foreign-source income. 
B)  They are equal to half of the firm's ordinal income tax rate times the amount of foreign-source income. 
C)  They are equal to the firm's ordinal income tax rate times the amount of foreign-source income minus tax credits on taxes paid abroad. 
D)  They are equal to zero. 
A)  They are equal to the firm's ordinal income tax rate times the amount of foreign-source income. 
B)  They are equal to half of the firm's ordinal income tax rate times the amount of foreign-source income. 
C)  They are equal to the firm's ordinal income tax rate times the amount of foreign-source income minus tax credits on taxes paid abroad. 
D)  They are equal to zero.

Question 2

Income tax is:

Accepted Answer

A)  a tax levied on passive income earned by an individual or corporation of one country within the jurisdiction of another country. 
B)  a direct tax on personal and corporate income. 
C)  an indirect national tax levied on the value added in the production of a good or service. 
D)  an indirect national tax levied on personal and corporate income. 
A)  a tax levied on passive income earned by an individual or corporation of one country within the jurisdiction of another country. 
B)  a direct tax on personal and corporate income. 
C)  an indirect national tax levied on the value added in the production of a good or service. 
D)  an indirect national tax levied on personal and corporate income.

Question 3

A tax levied on passive income earned by an individual or a corporation of one country within the tax jurisdiction of another is called:

Accepted Answer

A)  foreign income tax. 
B)  value-added tax. 
C)  investment tax. 
D)  withholding tax. 
A)  foreign income tax. 
B)  value-added tax. 
C)  investment tax. 
D)  withholding tax.

Question 4

A foreign subsidiary is:

Accepted Answer

A)  an extension of the parent and is not an independently incorporated firm separate from the parent. 
B)  an affiliate organization of the MNC that is independently incorporated in the foreign country, and one in which the U.S. MNC owns at least 51 percent of the voting equity stock. 
C)  either a minority foreign subsidiary (an uncontrolled foreign corporation) or a controlled foreign corporation. 
D)  None of these. 
A)  an extension of the parent and is not an independently incorporated firm separate from the parent. 
B)  an affiliate organization of the MNC that is independently incorporated in the foreign country, and one in which the U.S. MNC owns at least 51 percent of the voting equity stock. 
C)  either a minority foreign subsidiary (an uncontrolled foreign corporation) or a controlled foreign corporation. 
D)  None of these.

Question 5

Two fundamental policy objectives in international taxation are:

Accepted Answer

A)  tax neutrality and international treatment. 
B)  tax revenues and national treatment. 
C)  tax neutrality and national treatment. 
D)  tax revenues and international treatment. 
A)  tax neutrality and international treatment. 
B)  tax revenues and national treatment. 
C)  tax neutrality and national treatment. 
D)  tax revenues and international treatment.

Question 6

Which of the following is true for VAT (in Europe)and GST (in Canada)?

Accepted Answer

A)  Both of them are applicable for export goods. 
B)  VAT is applicable for export goods while GST is not. 
C)  GST is applicable for export goods while VAT is not. 
D)  Neither of them are applicable for export goods. 
A)  Both of them are applicable for export goods. 
B)  VAT is applicable for export goods while GST is not. 
C)  GST is applicable for export goods while VAT is not. 
D)  Neither of them are applicable for export goods.

Question 7

The term "capital export neutrality" refers to:

Accepted Answer

A)  the criterion that an ideal tax should be effective in raising revenue for the government and not have any negative effects on the economic decision-making process of the taxpayer. 
B)  the fact that taxable income is taxed in the same rate by the taxpayer's national tax authority regardless of where in the world it is earned. 
C)  the criterion that the tax burden a host country imposes on the foreign subsidiary of a MNC should be the same regardless in which country the MNC is incorporated and the same as that placed on domestic firms. 
D)  underlying principle that all similarly situated taxpayers should participate in the cost of operating the government according to the same rules. 
A)  the criterion that an ideal tax should be effective in raising revenue for the government and not have any negative effects on the economic decision-making process of the taxpayer. 
B)  the fact that taxable income is taxed in the same rate by the taxpayer's national tax authority regardless of where in the world it is earned. 
C)  the criterion that the tax burden a host country imposes on the foreign subsidiary of a MNC should be the same regardless in which country the MNC is incorporated and the same as that placed on domestic firms. 
D)  underlying principle that all similarly situated taxpayers should participate in the cost of operating the government according to the same rules.

Question 8

When excess tax credits go unused,the foreign tax liability for a branch is greater than the corresponding U.S.tax liability when the foreign income tax rate is greater than the U.S.rate.Calculate the total tax liability for a wholly-owned subsidiary when excess tax credits cannot be used in a country given: U.S.tax rate = 35%
Foreign tax rate = 39%
Withholding tax rate = 5%

Accepted Answer

A)  30.00% 
B)  35.00% 
C)  39.00% 
D)  42.05% 
A)  30.00% 
B)  35.00% 
C)  39.00% 
D)  42.05%

Which of the following is true about the taxes paid by Canadian-based MNC to Canadian government on the foreign-source income?

Income tax is:

A tax levied on passive income earned by an individual or a corporation of one country within the tax jurisdiction of another is called:

A foreign subsidiary is:

Two fundamental policy objectives in international taxation are:

Which of the following is true for VAT (in Europe)and GST (in Canada)?

The term "capital export neutrality" refers to:

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

International Banking and Money Market

International Bond Market

International Equity Markets

Futures and Options on Foreign Exchange

Interest Rate and Currency Swaps

International Portfolio Investment

Management of Economic Exposure

Management of Transaction Exposure

Management of Translation Exposure

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

Exports and Imports

Corporate Governance Around the World

Filters

Exam 20: International Tax Environment

Which of the following is true about the taxes paid by Canadian-based MNC to Canadian government on the foreign-source income?

Income tax is:

A tax levied on passive income earned by an individual or a corporation of one country within the tax jurisdiction of another is called:

A foreign subsidiary is:

Two fundamental policy objectives in international taxation are:

Which of the following is true for VAT (in Europe)and GST (in Canada)?

The term "capital export neutrality" refers to:

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

International Banking and Money Market

International Bond Market

International Equity Markets

Futures and Options on Foreign Exchange

Interest Rate and Currency Swaps

International Portfolio Investment

Management of Economic Exposure

Management of Transaction Exposure

Management of Translation Exposure

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

Exports and Imports

Corporate Governance Around the World

Filters