Answer:
correct option is d. 5%
Step-by-step explanation:
given data
corporate tax rate = 42%
tax on dividends = 5%
to find out
marginal rate of tax on remitted profits
solution
we know that here withholding tax is a tax which is subsidiary need to pay before remitting dividend to foreign parent company
marginal rate of tax on remitted profits base on these 2 factors
1st is the foreign tax credits
2nd is tax rate in home country
for marginal 1st entire foreign tax credit used and when its completely exhausted after that tax rate of the home country is used
and here withholding tax on dividend = surplus foreign tax credits
so marginal tax rate on remitted profits = withholding tax
so that marginal rate of tax on remitted profit = 5%
correct option is d. 5%