U.S. income tax treaties typically: a. Provide for taxation exclusively by the country of residence. b....

U.S. income tax treaties typically:

	a.	Provide for taxation exclusively by the country of residence.
	b.	Provide that the country with the highest tax rate will be allowed exclusive tax collection rights.
	c.	Provide for taxation exclusively by the source country.
	d.	Provide rules by which multinational taxpayers avoid double taxation.

Expert Solution

Answer is d. Provide rules by which multinational taxpayers avoid double taxation.

The treaties generally provide taxing rights with regard to taxable income of residents of one treaty country who have income sourced in the other treaty country. The primary taxing rights generally reside with the source country and require the other treaty partner to allow a credit or exemption for the taxes paid on the double-taxed income.Therefore, a U.S. citizen or resident who receives income from a treaty country and who is subject to taxes imposed by foreign countries may be entitled to certain credits, deductions, exemptions, and reductions in the rate of taxes of those foreign countries.

ekkarill92 answered 1 year ago

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