Determine home country income tax liability

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Question: Avioco Limited has two branches located in Hong Kong and Australia, each of which manufactures goods primarily for export to countries in the AsiaPacific region. The corporate income tax rate in Avioco's home country is 20 percent. The amount of income before taxes and the actual tax paid (stated in terms of Avioco's home currency) are as follows:

                                       Hong Kong Branch               Austrailia Branch

Income before taxes               100,000                              100,000

Actual tax paid                      16,500 (16.5%)                    30,000 (30%)

Required: Determine the amount of foreign tax credit Avioco will be allowed to take in determining its home country income tax liability.

 

Reference no: EM131705660

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