TAX 9869 Lecture Notes - Lecture 4: Foreign Tax Credit

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30 Jun 2020

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Two schools of thought: taxation on worldwide basis or territorial tax systems. No matter where you earn income, you pay tax on it. If you decide to live in budapest, you"re a us citizen and you earn income there you pay tax on that income even though earned while in. Budapest and may not be sourced to us (sourced to budapest)still have to pay tax on worldwide income. Now, if in worldwide tax sys like us. Budapest might say we might tax you as well. Budapest puts tax on him too and now taxed twice on income. Generally speaking, same person shouldn"t be paying tax on same income twice. Tax paid to budapest would be allowed as a credit for tax to be paid to us. Don"t need to worry about his in territorial tax system. Tax on income earned while i was here. Even if get dividend from foreign company still pay us tax on everything.

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TAX 9869 Lecture Notes - Lecture 4: Foreign Tax Credit

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