How Is a Foreign Subsidiary Different from a Foreign Branch

question 22

Multiple Choice

How is a foreign subsidiary different from a foreign branch of a domestic corporation?

• A) Subsidiaries always generate more foreign source income than branches do.
• B) The subsidiary is a company incorporated in the foreign country, whereas a branch is not a separate corporation.
• C) A subsidiary is created to manufacture and distribute products in foreign markets, whereas a branch's only function is sales in the foreign market.
• D) The income of a subsidiary is taxable by the country where it is located, but branch income is not subject to tax by the country where it does business.

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