Tax liability on its ethiopian? subsidiary

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Reference no: EM131926359

Tailor? Johnson, a U.S. maker of fine? menswear, has a subsidiary in Ethiopia. This? year, the subsidiary reported and repatriated earnings before interest and taxes? (EBIT) of 202 million Ethiopian birrs. The current exchange rate is 7.1844?birrs/dollar or S=$0.1392/birr. The Ethiopian tax rate on this activity is 28 %. U.S. tax law requires Tailor Johnson to pay taxes on the Ethiopian earnings at the same rate as on profits earned in the United? States, which is currently 44 %. ?However, the United States gives a full tax credit for foreign taxes paid up to the amount of the U.S. tax liability. What is Tailor? Johnson's U.S. tax liability on its Ethiopian? subsidiary?

Reference no: EM131926359

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