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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.
Subsidiary Parent Receives Not Receive
Branch Imputation Credit* Imputation
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.
The content of this article is intended to provide a general information on the subject matter. It is therefore not a substitute for specialist advice.
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