Parent Does Subsidiary Parent Receives Not Receive Branch Imputation Credit* Imputation Credit FIM FIM FIM Income before taxes 100.00 100.00 100.00 Tax at 25% ( 25.00) ( 25.00) ( 25.00) Net income after taxes 75.00 75.00 75.00 Imputation credit, if applicable, 5/16 x 1/3 x cash dividend - 7.81 - 75.00 82.81 75.00 5% withholding tax - ( 4.14) ( 3.75) Received by parent company 75.00 78.67 71.25* An imputation credit is available to a parent company resident in the United Kingdom based on the double tax treaty between Finland and the United Kingdom, as amended.
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The summary below compares the taxation of a subsidiary corporation to that of a branch. The financial period for both entities is assumed to be 1 January 1993 to 31 December 1993. Net income after taxes is assumed to be distributed on 1 March 1994.