Question 1

In a growing economy,the VAT would raise prodigious amounts of money

Accepted Answer

A) in a way almost invisible to tax-paying voters. 
B) in a way obvious to tax-paying voters. 
C) but would discourage savings. 
D) none of the options 
A) in a way almost invisible to tax-paying voters. 
B) in a way obvious to tax-paying voters. 
C) but would discourage savings. 
D) none of the options

Question 2

A "tax haven" country is one that has a low,or zero percent,national tax rates.Some of the countries that fall into this category are

Accepted Answer

A) Bahamas,Bahrain,Bermuda,and the Cayman Islands. 
B) Denmark,Norway,Switzerland,and Sweden. 
C) Bulgaria,Canada,Saudi Arabia,and South Africa. 
D) Congo,Egypt,Kuwait,and Zaire. 
A) Bahamas,Bahrain,Bermuda,and the Cayman Islands. 
B) Denmark,Norway,Switzerland,and Sweden. 
C) Bulgaria,Canada,Saudi Arabia,and South Africa. 
D) Congo,Egypt,Kuwait,and Zaire.

Question 3

A withholding tax is

Accepted Answer

A) an indirect tax. 
B) a direct tax. 
C) both a direct and an indirect tax. 
D) none of the options 
A) an indirect tax. 
B) a direct tax. 
C) both a direct and an indirect tax. 
D) none of the options

Question 4

Tax equity means that

Accepted Answer

A) similarly situated taxpayers should participate in the cost of operating the government according to the same rules. 
B) regardless of the country in which an affiliate of an MNC earns taxable income,the same tax rate and tax due date apply. 
C) a dollar earned by a foreign affiliate is taxed under the same rules as a dollar earned by a domestic affiliate of the MNC. 
D) all of the options 
A) similarly situated taxpayers should participate in the cost of operating the government according to the same rules. 
B) regardless of the country in which an affiliate of an MNC earns taxable income,the same tax rate and tax due date apply. 
C) a dollar earned by a foreign affiliate is taxed under the same rules as a dollar earned by a domestic affiliate of the MNC. 
D) all of the options

Question 5

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: $ 35 \% $ U.S. tax rate
$ 41 \% $ Foreign tax rate
$ 4\% $Withholding tax rate

Accepted Answer

A) 35.00 percent 
B) 37.00 percent 
C) 43.36 percent 
D) 42.05 percent 
A) 35.00 percent 
B) 37.00 percent 
C) 43.36 percent 
D) 42.05 percent

Question 6

An income tax is defined in your textbook as

Accepted Answer

A) a direct tax. 
B) an indirect tax. 
C) being collected with a withholding tax. 
D) none of the options 
A) a direct tax. 
B) an indirect tax. 
C) being collected with a withholding tax. 
D) none of the options

Question 7

The current U.S.marginal tax rate for domestic nonfinancial corporations is 35 percent.

Accepted Answer

A) This is positioned pretty well in the middle of the rates assessed by the majority of countries,as reported in the PricewaterhouseCoopers annual Corporate Taxes: Worldwide Tax Summaries. 
B) Is positioned toward the upper end of the rates assessed by the majority of countries. 
C) But this is reduced on a dollar-for-dollar basis for any and all taxes paid to foreign governments,so this is an upper limit for the tax rate faced by U.S.MNCs. 
D) all of the options 
A) This is positioned pretty well in the middle of the rates assessed by the majority of countries,as reported in the PricewaterhouseCoopers annual Corporate Taxes: Worldwide Tax Summaries. 
B) Is positioned toward the upper end of the rates assessed by the majority of countries. 
C) But this is reduced on a dollar-for-dollar basis for any and all taxes paid to foreign governments,so this is an upper limit for the tax rate faced by U.S.MNCs. 
D) all of the options

Question 8

A transfer price

Accepted Answer

A) is the price that one division of a firm charges to another division of a firm. 
B) is an accounting issue,not a finance issue. 
C) does not involve actual cash flows,therefore does not impact the share price. 
D) none of the options 
A) is the price that one division of a firm charges to another division of a firm. 
B) is an accounting issue,not a finance issue. 
C) does not involve actual cash flows,therefore does not impact the share price. 
D) none of the options

Question 9

As a rule,payments to and from foreign affiliates

Accepted Answer

A) involve the issue of transfer pricing. 
B) involve accounting values assigned to goods or services exchanged between foreign affiliates. 
C) involve tax credits trading between affiliates. 
D) involve the issue of transfer pricing,as well as accounting values assigned to goods or services exchanged between foreign affiliates. 
A) involve the issue of transfer pricing. 
B) involve accounting values assigned to goods or services exchanged between foreign affiliates. 
C) involve tax credits trading between affiliates. 
D) involve the issue of transfer pricing,as well as accounting values assigned to goods or services exchanged between foreign affiliates.

Question 10

Which statement is false?

Accepted Answer

A) Active income is defined as income that results from production by the firm or individual or from services that have been provided. 
B) Passive income includes dividends and interest income,and income from royalties,patents,or copyrights paid to the taxpayer. 
C) A withholding tax is a tax levied on passive income earned by an individual or corporation of one country within the tax jurisdiction of another country. 
D) The current marginal U.S.income tax rate is positioned towards the lower end of the rates assessed by the majority of other countries. 
A) Active income is defined as income that results from production by the firm or individual or from services that have been provided. 
B) Passive income includes dividends and interest income,and income from royalties,patents,or copyrights paid to the taxpayer. 
C) A withholding tax is a tax levied on passive income earned by an individual or corporation of one country within the tax jurisdiction of another country. 
D) The current marginal U.S.income tax rate is positioned towards the lower end of the rates assessed by the majority of other countries.

Question 11

Value-added tax (VAT)is

Accepted Answer

A) a direct national tax levied on the value added in the production of a good (or service)as it moves through various stages of production. 
B) an indirect national tax levied on the value added in the production of a good (or service)as it moves through various stages of production. 
C) the equivalent of imposing a national sales tax. 
D) an indirect national tax levied on the value added in the production of a good (or service)as it moves through various stages of production,and is also the equivalent of imposing a national sales tax. 
A) a direct national tax levied on the value added in the production of a good (or service)as it moves through various stages of production. 
B) an indirect national tax levied on the value added in the production of a good (or service)as it moves through various stages of production. 
C) the equivalent of imposing a national sales tax. 
D) an indirect national tax levied on the value added in the production of a good (or service)as it moves through various stages of production,and is also the equivalent of imposing a national sales tax.

Question 12

A tax haven is

Accepted Answer

A) a country that has a low corporate income tax rate and low withholding tax rates on passive income. 
B) a country with no taxes and no enforcement of foreign tax laws within its borders. 
C) any country with a higher tax rate than available domestically. 
D) none of the options 
A) a country that has a low corporate income tax rate and low withholding tax rates on passive income. 
B) a country with no taxes and no enforcement of foreign tax laws within its borders. 
C) any country with a higher tax rate than available domestically. 
D) none of the options

Question 13

You are a U.S.MNC with a 40 percent U.S.tax rate.You have an Irish subsidiary.The corporate income tax there is 12½ percent.For every $10,000,000 of income the subsidiary reports,you will owe taxes to the U.S.Treasury in the amount of

Accepted Answer

A) $4,000,000. 
B) $1,250,000. 
C) $2,750,000. 
D) none of the options 
A) $4,000,000. 
B) $1,250,000. 
C) $2,750,000. 
D) none of the options

Question 14

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 percent
Foreign tax rate = 39 percent
Withholding tax rate = 5 percent

Accepted Answer

A) 44.00 percent 
B) 35.00 percent 
C) 43.36 percent 
D) 42.05 percent 
A) 44.00 percent 
B) 35.00 percent 
C) 43.36 percent 
D) 42.05 percent

Question 15

The undistributed income of a minority foreign subsidiary of a U.S.MNC

Accepted Answer

A) is tax deferred until it is remitted via a dividend. 
B) is taxed as imputed income. 
C) is withheld under subpart U.S.income restrictions. 
D) none of the options 
A) is tax deferred until it is remitted via a dividend. 
B) is taxed as imputed income. 
C) is withheld under subpart U.S.income restrictions. 
D) none of the options

Question 16

Affiliates of foreign MNCs are taxed on the income earned in the source country under

Accepted Answer

A) the territorial method of declaring a national tax jurisdiction. 
B) the source method of declaring a tax jurisdiction. 
C) all of the options 
D) none of the options 
A) the territorial method of declaring a national tax jurisdiction. 
B) the source method of declaring a tax jurisdiction. 
C) all of the options 
D) none of the options

Question 17

The three basic types of taxation are

Accepted Answer

A) income tax,withholding tax,and value-added tax. 
B) income tax,withholding tax,and business tax. 
C) withholding tax,value-added tax,and corporate tax. 
D) personal tax,corporate tax,and operating tax. 
A) income tax,withholding tax,and value-added tax. 
B) income tax,withholding tax,and business tax. 
C) withholding tax,value-added tax,and corporate tax. 
D) personal tax,corporate tax,and operating tax.

Question 18

The idea that taxable income is taxed in the same manner by the taxpayer's national tax authority regardless of where in the world it is earned is referred to as

Accepted Answer

A) capital-export neutrality. 
B) capital-import neutrality. 
C) national neutrality. 
D) none of the options 
A) capital-export neutrality. 
B) capital-import neutrality. 
C) national neutrality. 
D) none of the options

Question 19

A tax inversion is

Accepted Answer

A) a country that has a low corporate income tax rate and low withholding tax rates on passive income. 
B) a maneuver in which a firm (usually U.S.)acquires or merges with a foreign rival incorporated in a low-tax country,then shifts its domicile abroad to reap tax benefits. 
C) any country with a higher tax rate than available domestically. 
D) none of the options 
A) a country that has a low corporate income tax rate and low withholding tax rates on passive income. 
B) a maneuver in which a firm (usually U.S.)acquires or merges with a foreign rival incorporated in a low-tax country,then shifts its domicile abroad to reap tax benefits. 
C) any country with a higher tax rate than available domestically. 
D) none of the options

Question 20

Under the territorial method of declaring a national tax jurisdiction

Accepted Answer

A) the possibility of double taxation exists if the parent county of a foreign affiliate also levies a tax on worldwide income. 
B) tax is levied on all income earned within the country by any taxpayer,domestic or foreign. 
C) tax is levied on foreign residents of the country on their home-country income but not foreign-earned income. 
D) none of the options 
A) the possibility of double taxation exists if the parent county of a foreign affiliate also levies a tax on worldwide income. 
B) tax is levied on all income earned within the country by any taxpayer,domestic or foreign. 
C) tax is levied on foreign residents of the country on their home-country income but not foreign-earned income. 
D) none of the options

In a growing economy,the VAT would raise prodigious amounts of money

A "tax haven" country is one that has a low,or zero percent,national tax rates.Some of the countries that fall into this category are

A withholding tax is

Tax equity means that

An income tax is defined in your textbook as

The current U.S.marginal tax rate for domestic nonfinancial corporations is 35 percent.

A transfer price

As a rule,payments to and from foreign affiliates

Which statement is false?

Value-added tax (VAT)is

A tax haven is

You are a U.S.MNC with a 40 percent U.S.tax rate.You have an Irish subsidiary.The corporate income tax there is 12½ percent.For every $10,000,000 of income the subsidiary reports,you will owe taxes to the U.S.Treasury in the amount of

The undistributed income of a minority foreign subsidiary of a U.S.MNC

Affiliates of foreign MNCs are taxed on the income earned in the source country under

The three basic types of taxation are

The idea that taxable income is taxed in the same manner by the taxpayer's national tax authority regardless of where in the world it is earned is referred to as

A tax inversion is

Under the territorial method of declaring a national tax jurisdiction

International Monetary System

Globalization and the Multinational Firm

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

Filters

Exam 21: International Tax Environment and Transfer Pricing

In a growing economy,the VAT would raise prodigious amounts of money

A "tax haven" country is one that has a low,or zero percent,national tax rates.Some of the countries that fall into this category are

A withholding tax is

Tax equity means that

An income tax is defined in your textbook as

The current U.S.marginal tax rate for domestic nonfinancial corporations is 35 percent.

A transfer price

As a rule,payments to and from foreign affiliates

Which statement is false?

Value-added tax (VAT)is

A tax haven is

You are a U.S.MNC with a 40 percent U.S.tax rate.You have an Irish subsidiary.The corporate income tax there is 12½ percent.For every $10,000,000 of income the subsidiary reports,you will owe taxes to the U.S.Treasury in the amount of

The undistributed income of a minority foreign subsidiary of a U.S.MNC

Affiliates of foreign MNCs are taxed on the income earned in the source country under

The three basic types of taxation are

The idea that taxable income is taxed in the same manner by the taxpayer's national tax authority regardless of where in the world it is earned is referred to as

A tax inversion is

Under the territorial method of declaring a national tax jurisdiction

International Monetary System

Globalization and the Multinational Firm

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

Filters