DoubleTaxationRelief1DeductionMethod2ExemptionMethod3CreditMethod4OtherMethodsBy蔡曉輝謝曦盛镕基徐雪輝蔡曉輝DeductionMethodComputationalFormula居住國政府應征所得稅額=（居民的國內國外所得-已納外國所得稅額）*適用稅率BasicDefinitionTheresidencecountryallowsitstaxpayerstoclaimadeductionfortaxes,includingincometaxes,paidtoaforeigngovernmentinrespectofforeign-sourceincomeCurrentSituationOnlytheexemptionmethodandcreditmethodaresanctionedbytheOCEDModelTreatyandUNModelTreatyasmethodsofgrantingdouble-taxrelief.Severalcountriesthathaveadoptedthecreditmethodhaveretainedthedeductionmethodasanoptionalformofreliefandaswayofdealingwithforeigntaxesthatarenotcreditableforonreasonoranother.isgoingtodisappearTaxpayers

maypaywidelydifferingamountsofforeigntaxABA:Althoughresidentswithequaknetworldwideincomewillpaythesamedomestictax.

B:Butwemaypaywidelydifferingamountsofforeigntax.CountriesgoodforthemselvescapitalflowdecreaseforeigninvestmentincreasedomesticinvestmentThistreatmentmaybejustifiedfromtheviewpointofnationselfinterest.Notonlyisdomesticinvestmentencouraged,butalsoresidentswithequalnetworldwideincomearetreatedequallyinthatwillpaythesamedomestictax.Thatwilloccurcapitalinflow謝曦ExemptionmethodFullExemptionmethodTheresidencecountryprovidesitstaxpayerswithanexemptionforforeign-sourceincome.居住國應征所得稅稅額=居民的國內所得*適用稅率ProgressiveExemptionmethodInsuchsystems,theforeign-sourceincomeisinitiallyincludedinincomeforthelimitedpurposeofdeterminingtheaveragetaxrateatwhichthetaxpayerwouldpayiftheforeign-incomeweretaxable.Thisaveragerateisthenusedtocomputetheactualtaxdueonthetaxpayers’sotherincome.在本國應納稅額=國內外所得總額×本國稅率×國內所得÷國內外所得總額TaxpayersIftheforeigntaxesarelowerthandomestictaxes,residenttaxpayersaretreatedmorefavorablythanotherresidents.Taxpayershaveastrongincentivetomovethefundstoaforeingncountrythatimposeslowornotaxes.Itmayshifttaxburdensfromtheincomeearnertotheincomepayers.GovernmentsTheexemptionmethodcompletelyeliminatesresidence-sourceinternationaldoubletaxation.Thecountryofresidencemayhavealossontaxrevenue.Apartialexemptionsystemcanminimizescompliancecostsfortaxauthorities..CapitalflowAnexemptionsystemencouragesresidenttaxpayerstoinvestabroadincountrieswithlowertaxrates,especiallyintaxhavens,anditencouragesthemtodivertdomestic-sourceincometosuchcountries.盛镕基CreditMethodHerecomesyourfooterPage14WhatisCreditMethod?UndertheCreditMethod,foreigntaxespaidbyaresidenttaxpayeronforeign-sourceincomegenerallyreducedomestictaxespayablebytheamountoftheforeigntax.Consequently,thecreditmethodcompletelyeliminatesinternationaldoubletaxationoftheresidencesourcetype.Infact,theforeigntaxesare“toppedup”bydomesticstaxessothatthecomboneddomesticsandforeigntaxrateontheforeign–sourceincomeisequaltothedomesticstaxrate.HerecomesyourfooterPage15WhatisLimitofTaxCredit?Domestictaxrate>foreigntaxrateForeigntaxpayable:Foreigntaxrate*foreignincomeDomestictaxpayable:(Domestictaxrate-foreigntaxrate)*foreignincomeLimitoftaxcredit=foreigntaxrate*foreignincomeDomestictaxrate<foreigntaxrateForeigntaxpayable:Foreigntaxrate*foreignincomeDomestictaxpayable:ZeroLimitoftaxrate=domestictaxrate*foreignincomeWeneedtocompareforeigntaxratewithdomestictaxrateHerecomesyourfooterPage16TypesoflimitationOverallorworldwidelimitationCountry-by-countrylimitationItem-by-itemlimitationTherearethreetypesoflimitationHerecomesyourfooterPage17Whatisindirectcredit?Theindirectcreditisacreditgrantedtoadomesticcorporationfortheforeignincometaxespaidbyaforeignaffiliatedcompany.ColorpalletHerecomesyourfooterPage18Howcreditmethodinfluencetax-payer,countrygovernmentandinternationalcapitalflows?Aforeigntaxcreditsystemmayencourageasourcecountrytoincreaseitstaxesonincomeearnedbynonresidentstotheleveloftaxinthecountryofresidence.Suchataxincreasewouldnotaffecttheafter-taxreturntononresidentinvestorsandthereforewouldnotdiscourageinvestmentfromabroad.Itwould,however,resultinashiftoftaxrevenuesfromthecountryofresidencetothesourcecountry.

徐雪輝OtherMethodsReductionMethodThereductionmethodallowsforeignincometaxratelowerthantheirnormaltaxrate

(iespecialofftaxrate)forcross-countrytaxpayersalreadypaidforeigntax.Featuresofthismethodisthataftercross-incometaxpayersinforeigntaxtreatmentafterrepatriation,theirgovernmenttaxagaininaratethatislowerthanthenormaltaxrate.Example

amultinationaltaxpayersget$1millioninrevenuefromcountryA,Anationalincometaxrateis30%.Ataxrateapplicabletothetaxpayer'shomecountrywhere50%ofitscross-countryportionofthetaxpayerrepatriateforeignincometaxrateof10percentbylevyingspecialoffers,thenthepartofthetaxpayertoobtainataxamountis?1.taxpayerinthecountryArealtaxamount:

100×30%=30

2.taxpayerinthehomecountrytaxpayable:

100×50%=50

3.taxpayerpreferential