Halifax Inc operates its business in Country U through a subsidiary incorporated under Country U law The subsidiary has never paid a dividend and has accumulated over $10 million after tax earnings a Country U has a 45 percent corporate income tax Describe the tax consequences to Halifax if it rece...

a Halifax would gross up the 5 million dividend by the Country U tax paid compute tax o ...

Halifax Inc. operates its business in Country U through a subsidiary incorporated under Country U law. The

Question:

Halifax Inc. operates its business in Country U through a subsidiary incorporated under Country U law. The subsidiary has never paid a and has accumulated over $10 million after-tax earnings.
a. Country U has a 45 percent corporate income tax. Describe the tax consequences to Halifax if it receives a $5 million from the subsidiary.
b. How would the tax consequences change if Country U’s corporate income tax rate is only 20 percent?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...