Dobly Systems Ltd a Mongolian company is considering establishing operations in Vietnam. It is undecided whether to establish a branch or a wholly owned subsidiary. Vietnam taxes income of both resident companies and branch companies at a flat rate of 30%. It also withholds taxes at a flat rate of 10% on dividends paid by resident companies to companies in Mongolia. Mongolia has income tax rate of 20% on income earned worldwide, but gives a tax credit for taxes paid to another country. Based on the above information, is a branch or subsidiary the recommended form to establish the operations? Justify your answer
Dobly Systems Ltd a Mongolian company is considering establishing operations in Vietnam. It is undecided whether to establish a branch or a wholly owned subsidiary. Vietnam taxes income of both resident companies and branch companies at a flat rate of 30%. It also withholds taxes at a flat rate of 10% on dividends paid by resident companies to companies in Mongolia. Mongolia has income tax rate of 20% on income earned worldwide, but gives a tax credit for taxes paid to another country. Based on the above information, is a branch or subsidiary the recommended form to establish the operations? Justify your answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Dobly Systems Ltd a Mongolian company is considering establishing operations in Vietnam. It is undecided whether to establish a branch or a wholly owned subsidiary. Vietnam taxes income of both resident companies and branch companies at a flat rate of 30%. It also withholds taxes at a flat rate of 10% on dividends paid by resident companies to companies in Mongolia. Mongolia has income tax rate of 20% on income earned worldwide, but gives a tax credit for taxes paid to another country.
Based on the above information, is a branch or subsidiary the recommended form to establish the operations? Justify your answer.
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