Double Taxation; Methods of Avoiding DTouble Taxation

TAXATION QUESTION 1997

What are the usual methods of avoiding the occurrence of double taxation?

SUGGESTED ANSWER:

The usual methods of avoiding the occurrence of double taxation are:

1          Allowing reciprocal exemption either by law or by treaty;

2          Allowance of tax credit for foreign taxes paid;

3          Allowance of deduction for foreign taxes paid; and

4          Reduction of the Philippine tax rate.

Note: Any three of the methods shall be given full credit.