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Corporation Taxation – Foreign Tax Credit - Research Paper Example
Finance & Accounting
Pages 10 (2510 words)
This paper reveals issues that are related to foreign tax credit on corporate bodies. The paper has comprehensively discussed a lot of topics in order to paint a clear picture in relation to corporation taxation- foreign tax credit. …
This essay is the best example of comparison tax system of different countries. The United States tax system which allows foreign tax credit on the basis of limitations. These limitations are usually in relation to compulsory levies on gross receipts or net income. The countries that require participating in boycotts are not awarded the credit. This exemption also applies to taxes that are subjected to services and goods according to the relevant taxing authority. In the UK, foreign tax credit is allowed on foreign tax similar to corporation tax; subject to limitations. This situation is provided for in the respective tax treaties. Canada is known to limit the credit by way of deductions in relation to gas or oil businesses. A common observation has been that most tax systems across the world indicate the specific time when a foreign levy is eligible to receive credit. This has to be in accordance to the agreed requirements of the foreign tax credit. Rousslang further reveals that some tax systems offer credit simply because the tax can be taxed according to the existing domestic tax system. Other systems offer the credit on the basis of the time when the particular foreign item is being subject to income tax requirements. Some tax systems offer credit on the basis of recognition in their financial statements. The government plays a vital role when it comes to developing tax treaties. It is therefore expected that various countries across the world have different methods of approaching this issue. ...