List and briefly explain methods of elimination of double taxation!

Expert Solution

Double taxation is a scenario in which same income is taxable in two different territories because of different taxation regimes.

Double taxation can be eliminated by-

A. Existence of a tax treaty in which when an income is taxable in one country is not taxable in the another country, so that double taxation can be eliminated to complete extent.

Tax treaty can exist between various nation in order to eliminate the impact of the double taxation.

B. Providing of a tax credit incentive that will help in eliminating the impact of double taxation as the income which is taxable in one country and the tax payable on that country would be provided with the credit in another country.

For example, If same income is taxable in India and United States, so if I am a person of India and I have been taxed in United States, then the amount of tax paid in United States will be provided as a Credit when assessment of my income in India.

C.it can also be eliminated through a clarity in the relationship between the two countries whether the taxation will be done on the source country or the country of residence.

jeff jeffy answered 1 year ago

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List and briefly explain methods of elimination of double taxation!

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