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HomeShop has a branch/local office in Japan. HomeShop sells 30000 units to customers in Bulgaria and...

HomeShop has a branch/local office in Japan. HomeShop sells 30000 units to customers in Bulgaria and 100000 units to customers in Japan. Profit per unit is € 89 (Ignore all other costs). All profits are repatriated from Japan. The corporate tax rate in Bulgaria is 40% and 32% in Japan.

1. With no Tax relief agreement in Japan, what are the total taxes that HomeShop has to pay in both countries?

2. Now assume that there is a possibility to use foreign tax credit (FTC) in Bulgaria. What will be the total taxes HomeShop has to pay in this scenario in both countries?

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ekkarill92 answered 1 year ago
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