Merivale is an American corporation with operations throughout the United States. In addition to its U.S. operations, it has a sales office in Calgary. Canadian employees who work out of this sales office take orders for the company's products. The orders are filled from a warehouse in Montana.

Question

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Merivale has a sales office in Calgary and Canadian employees taking orders for the company's products. As per the territorial source principle, merivale will be subject to the taxation in the country where the profit is earned irrespective of where the company is incorporated. Therefore, Merivale is subject to Canadian tax on the income that is earned by the Calgary office.

Merivale Is an American Corporation with Operations Throughout the United