Question 1

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 direct 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 international 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. D

Question 2

To tax national residents of a country on their worldwide income is called:

Accepted Answer

A)   worldwide or residential taxation.
B)   worldwide or source taxation.
C)   territorial or residential taxation.
D)   territorial or source taxation. A

Question 3

The three basic types of taxation are:

Accepted Answer

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

Question 4

Withholding 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.

Question 5

A product sells in the first stage of production for EUR600,the second stage of production for EUR 1,400 and the third stage of production for EUR 1,700.If the value-added tax (VAT)rate is 15%,what would be the total VAT?

Accepted Answer

A)   EUR 90.
B)   EUR120.
C)   EUR210.
D)   EUR255.

Question 6

If country A imposes tax on interest payment received by foreign residents,such tax is known as:

Accepted Answer

A)   direct tax.
B)   foreign Income tax.
C)   withholding tax.
D)   capital export tax.

Question 7

Calculate the American foreign tax credit for a subsidiary in Germany.Assume that the German income tax rate is 50%,the American income tax rate is 35%,and the withholding tax rate is 10%.The taxable income in Germany is 500.Assume that all income is remitted to the parent immediately.

Accepted Answer

The answer of Calculate the American foreign tax credit for...

Question 8

A controlled foreign corporation (CFC)is:

Accepted Answer

A)   a foreign corporation established as an affiliate of a U.S. corporation for the purpose of "buying" from the U.S. corporation property for resale and use abroad.
B)   a foreign subsidiary that has more than 50 percent of its voting equity owned by U.S. shareholders.
C)   is a separate domestic U.S. corporation actively engaged in business in a U.S. possession (Puerto Rico and the U.S. Virgin Islands) .
D)   one that has no "overall limitation" as regards to its foreign tax credits.

Question 9

Assume that a product as the following three stages of production: $\begin{array}{ll}
 \text {Production  }& \text { Selling  }\
\text { Stage } & \text { Price } \
1 & \text { EUR600 } \
2 & \text { EUR1,400 } \
3 & \text { EUR1,700 }
\end{array}$ If the value-added tax (VAT)rate is 15%,what would be the incremental VAT at Stage 2 of production?

Accepted Answer

A)   EUR90.
B)   EUR120.
C)   EUR210.
D)   EUR255.

Question 10

A product has the following stages of production: $\begin{array}{ll}
 \text {Production  }& \text { Selling  }\
\text { Stage } & \text { Price } \
1 & \text { EUR500 } \
2 & \text { EUR1,500 } \
3 & \text { EUR2,000 }
\end{array}$ If the value-added tax (VAT)rate is 20%,what would be the incremental VAT at the final stage of production?

Accepted Answer

A)   EUR50.
B)   EUR100.
C)   EUR200.
D)   EUR400.

Question 11

In Canada:

Accepted Answer

A)   Canadian-based MNC do not pay taxes on foreign-source income.
B)   Canadian-based MNC pay taxes on foreign-source income but they are allowed to claim foreign tax credits on the taxes paid abroad.
C)   there is no federal corporate taxes.
D)   there is no provincial corporate taxes.

Question 12

How can double taxation result out of the two major ways to determine who has to pay taxes?

Accepted Answer

The answer of How can double taxation result out of...

Question 13

A product sells for EUYR 1,6000 in the first production stage,EUR2,000 the second and EUR2,700 in the third and last production stage.If the value-added tax (VAT)rate is 20%,what would be the incremental VAT at each state of production?

Accepted Answer

The answer of A product sells for EUYR 1,6000 in...

Question 14

ABC Inc.,an exporting firm,expects to earn $20 million if the dollar depreciates,but only $10 million if the dollar appreciates.Assume that the dollar has an equal chance of appreciating or depreciating.Calculate the expected tax of ABC if it is operating in a foreign country that has progressive corporate taxes as shown below:
Corporate income tax rate = 15% for the first $7,500,000.
Corporate income tax rate = 30% for earnings exceeding $7,500,000.

Accepted Answer

The answer of ABC Inc.,an exporting firm,expects to earn $20...

Question 15

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.

Question 16

What are the major ways in which countries levy taxes?

Accepted Answer

The answer of What are the major ways in which...

Question 17

To tax all income earned within the country by any taxpayer is called:

Accepted Answer

A)   worldwide or residential taxation.
B)   worldwide or source taxation.
C)   territorial or residential taxation.
D)   territorial or source taxation.

Question 18

The foreign tax credit method followed by the United States is:

Accepted Answer

A)   to grant the parent firm credit against its foreign tax liability for taxes paid to U.S. tax authorities on foreign-source income.
B)   for the purpose of avoiding taxation.
C)   to grant the parent firm credit against its U.S. tax liability for taxes paid to foreign tax authorities on foreign-source income.
D)   None of these.

Question 19

Value-added tax is:

Accepted Answer