2002 Volume 10 Issue 2 Pages 45-56
Appraisal of a project requires measuring the cash flow of the corporate income taxes, as a part of cash flow, incurred by investment. The effective tax rate is used in measuring this cash flow of the corporate income taxes, but when Japan-based multinational enterprises make investment through their subsidiaries abroad, the foreign tax credit method is employed to eliminate international double taxation effects, which should be factored into the effective tax rate. This study, therefore, will propose an effective tax rate into which the foreign tax credit method is factored. It will then consider the effects of changes in several factors that affect the effective tax rate; namely, the corporate income tax rates in Japan and abroad, the business tax rate, the foreign withholding tax rate, and the discount rate.
