Hi i was wondering if anyone has an explanation for the main difference between the two tax rates and how am i meant to interpret them. I know that the statutory t= marginal tax rate in jurisdiction and effective = ITE/Pre Tax Income But what i dont understand is for example how tax exmept interest income affects these two tax rates? Thanks
Tax exempted income is a permanent difference between the income statement (to shareholders) and the tax report (to the government). Since it is not taxable, this income would not be listed on the tax report, and be a source of taxable income being lower than the pretax income.