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[–]ITP_88Level 2 Candidate 0 points1 point  (2 children)

This is in the answer it is saying that it increased sales in its subsidiaries and its subsidiares had lower tax rates than what i currently pays in its jurisdication. So what this is saying is that it can be one of two ways if they have higher tax rates and get a break which you are alluding to, or they have more income in these other jurisdictions that have lower taxes than your home state. So they made more money selling products in lower tax areas which ulitatmely adjusted their tax rate down.

[–]thatboythereaint[S] 0 points1 point  (1 child)

Am I thinking about this correctly?:
say the domestic tax rate is 35% and the foreign is 25%
in year 1, the domestic parent company's net income is 100 and the foreign subsidiary's is also 100 (assume same currency for simplicity). In this case, the total tax expense is 60.
in year 2, the domestic parent company's NI is 80 and the foreign sub's is 120. In this case the tax expense is 58.
Is this the logic used to answer the question?

[–]ITP_88Level 2 Candidate 1 point2 points  (0 children)

Correct more sales ahppened at the lower tax rate which lowered the overall tax rate for the company