When a reciprocal tax treaty is not in force, the firm typically
A) pays the difference the higher income tax rate makes on the expatriates' take-home pay into a 401k plan.
B) pays the expatriate's income tax in the home country.
C) reduces the expatriate's take-home pay to cover the difference in tax rates.
D) pays the expatriate's income tax in the host country.

Question

Quizplus · Accepted Answer

When a reciprocal tax treaty is not in force, the firm typically pays the expatriate's income tax in the host country. In addition, firms normally make up the difference when a higher income tax rate in a host country reduces an expatriate's take-home pay.

When a Reciprocal Tax Treaty Is Not in Force, the Firm