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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

A resident Filipino individual, Marco Santos, derives 200,000 in foreign-sourced royalties from a foreign licensor in Country S. Country S withholds 40,000 as foreign tax on that royalty. The Philippine income tax on the foreign-sourced royalty would be 100,000. Assuming no double taxation relief under a treaty with Country S, which of the following statements best describes the doctrine and computes the foreign tax credit and net Philippine tax on this income?

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The doctrine is the foreign tax credit relief to avoid double taxation; the foreign tax credit is 40,000 and the net Philippine tax on the income after applying the credit is 60,000. There is no foreign tax credit without a tax treaty; therefore the domestic tax on the income is 100,000. The credit is limited to one-half of the Philippine tax on the foreign-sourced income; thus 50,000; net tax 50,000. The doctrine is the exemption method; the foreign-sourced royalty is exempt from Philippine tax; net tax is 0.

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