To Avoid Paying Commissions to Travel Agents and Online Booking

question 7

Multiple Choice

To avoid paying commissions to travel agents and online booking services, hotels are now trying to:

• A) drive potential guests directly to their websites.
• B) contract with CVB and Chamber and Commerce.
• C) sell their inventories to tour wholesalers.
• D) adopt vertical integration and purchase travel agents.

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Definitions:

Foreign Taxes Paid

This represents taxes paid to foreign governments on income earned outside of the taxpayer’s country of residence, often creditable against domestic taxes in the taxpayer’s home country to avoid double taxation.

Deferred Tax Liability

An accounting term that refers to a tax due in the future for income that has already been recognized in the financial statements.

Effective Tax Rate

The average rate at which an individual or a corporation is taxed, calculated by dividing the total amount of taxes paid by the taxable income.

Temporary Difference

A difference that arises between the tax base of an asset or liability and its carrying amount in the financial statements, which will result in taxable or deductible amounts in future years.