Using the data in Extracts E and F, calculate the amount Pfizer would save based on the corporation tax rate in Ireland, rather than the USA - Edexcel - A-Level Business - Question 2 - 2017 - Paper 1

The corporation tax rate in Ireland for 2014 was 12.5%. To find the profits after tax in Ireland:

$\text{Profits After Irish Tax} = \text{Profits Before Tax} \times \left(1 - \text{Irish Tax Rate}\right)$

Substituting the calculated profits before tax:

$\text{Profits After Irish Tax} = 15.225 \text{ billion} \times (1 - 0.125) = 15.225 \times 0.875 = 13.304375 \text{ billion}$

To find the tax saved by being based in Ireland instead of the USA, we subtract the after-tax profits:

$\text{Tax Saved} = \text{Profits After USA Tax} - \text{Profits After Irish Tax}$

Substituting the values:

$\text{Tax Saved} = 9.135 \text{ billion} - 13.304375 \text{ billion} = -4.169375 \text{ billion}$

Thus, Pfizer would have saved approximately $4.2 billion.