Answer:
a. A) $25,000
b. $10,000
Step-by-step explanation:
A. Calculation for what is the total amount of income taxes Green Valley Exporters will pay to the host country
Total amount of income taxes to pay host country=$100,000*corporate income tax rate of 25%
Total amount of income taxes to pay host country=$25,000
Therefore the total amount of income taxes Green Valley Exporters will pay to the host country will be $25,000
B. Calculation for how much will they pay in U.S income taxes on the foreign earned income
First step is to calculate tax amount in US
Tax amount in US=$100,000*35%
Tax amount in US=$35,000
Second step is to calculate host country corporate income tax rate
Host country corporate income tax rate =$100,000*25%
Host country corporate income tax rate=$25,000
Last step is to calculate how much will they pay in U.S income taxes on the foreign earned income
U.S income taxes on the foreign earned income=$35,000-$25,000
U.S income taxes on the foreign earned income=$10,000
Therefore how much will they pay in U.S income taxes on the foreign earned income is $10,000