Referring to problem 2, consider the case of Fluor’s wholly owned subsidiary in Ireland, which is taxed at the corporate income tax rate of 12. 5 percent. Fluor-Ireland earned $27 million in 2012.

a. How much in taxes is Fluor-USA liable for on its earnings generated by Fluor-Ireland?

b. Assuming that Fluor decides to repatriate 100 percent of profits earned in Ireland, would Fluor’s global tax bill change?

c. Assuming that both Fluor-Brazil and Fluor-USA decide to repatriate 100 percent of their profits to their U.S. parent, what would be Fluor’s global tax bill?

Data from problem 2

Fluor Inc. is a U.S.-based global engineering and construction company. Its Brazilian subsidiary earned $112 million in 2012, which is taxed at the Brazilian corporate income tax of 30 percent. Dividends repatriated to the U.S. parent are further subjected to a 10 percent withholding tax. Corporate income tax in the United States stands at 34 percent and is applicable to foreign-source income.