Common use of Tax Equalization Methodology Clause in Contracts

Tax Equalization Methodology. The BKC-designated tax consultant will determine the appropriate method to ensure the executive and BKC pay their fair share of the taxes incurred during the assignment. The executive’s share of the tax burden is called “hypothetical tax” (see below). The appropriate approach will depend on whether there are multi-jurisdictional tax liabilities as a result of the executive’s employment relationship with the Company and its Affiliates. Whether or not there will be tax liabilities in more than one (1) jurisdiction will depend on the locations and circumstances involved, such as whether there is a tax treaty between the two countries. The methodology chosen will involve one or more of the following: • The executive continues to have actual home-country taxes deducted from their pay; • “Hypothetical tax” (see below) is deducted from the executive’s pay; or • BKC pays the USA tax liability and/or Canadian tax liability on “tax-equalized income” (see below).