-Illustration of Income Tax
Below we demonstrate an example of corporate income tax, surtax on undistributed profits, and withholding tax on dividends:
| Account | Calculation | Amount |
|---|---|---|
| Sales | a | 1,000 |
| -) Cost | b | -800 |
| =) Gross profit | c=a-b | 200 |
| -) Expense | d | -30 |
| =) Income before tax | e=c-d | 170 |
| -) Corporate income tax | f=e*20% | -34 |
| =) Income after tax | g=e-f | 136 |
| -) Dividends to foreign parent company | h | -86 |
| =) Undistributed profit | i=g-h | 50 |
| Withholding Tax on Dividends | j=h*21% | -18 |
| Surtax on undistributed profit | k=i*5% | -3 |