Midnight Motors is a US multinational firm. The manager of Midnight Motors is evaluating its international tax situation. In the US, Midnight Motors’ corporate tax rate is currently 26%. Midnight Motors has major operations in Argentina, Brazil, and China, and the tax rate is 13%, 41%, and 31%, respectively. Assume Midnight Motors' profits are fully and immediately repatriated. The foreign taxes paid for the current year are listed as follows: Argentina Brazil China Earnings before interest and taxes (EBIT) ($million) $490 $560 $630 Host country taxes paid $63.7 $229.6 $195.3 Earnings before interest after taxes $426.3 $330.4 $434.7 Midnight Motors' net US tax liability on its foreign earnings is closest to: $437 million $-52 million $0 million $489 million
Midnight Motors is a US multinational firm. The manager of Midnight Motors is evaluating its international tax situation. In the US, Midnight Motors’ corporate tax rate is currently 26%. Midnight Motors has major operations in Argentina, Brazil, and China, and the tax rate is 13%, 41%, and 31%, respectively. Assume Midnight Motors' profits are fully and immediately repatriated. The foreign taxes paid for the current year are listed as follows:
|
|
Argentina |
Brazil |
China |
|
Earnings before interest and taxes (EBIT) ($million) |
$490 |
$560 |
$630 |
|
Host country taxes paid |
$63.7 |
$229.6 |
$195.3 |
|
Earnings before interest after taxes |
$426.3 |
$330.4 |
$434.7 |
Midnight Motors' net US tax liability on its foreign earnings is closest to:
$437 million
$-52 million
$0 million
$489 million
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