What Is an Adjustment Credit?
Allowable credit refers to the amount of tax paid by the government of the country of residence (country of nationality) in the non-resident country (non-nationality). Under the full credit, it is equal to the tax paid by the transnational taxpayer to the government of the non-resident country (non-nationality); under the limit credit, the allowable credit is based on the credit limit and the non-resident tax paid by the transnational taxpayer. State (non-nationality) government taxes vary. [1]
Allowed credit
discuss
- Chinese name
- Allowed credit
- Subject
- economic
- Nature
- noun
- Country
- China
- Allowable credit refers to the amount of tax paid by the government of the country of residence (country of nationality) in the non-resident country (non-nationality). Under the full credit, it is equal to the tax paid by the transnational taxpayer to the government of the non-resident country (non-nationality); under the limit credit, the allowable credit is based on the credit limit and the non-resident tax paid by the transnational taxpayer. State (non-nationality) government taxes vary. [1]
- For example
- Or it refers to the amount of foreign income tax that can be deducted from the income tax of the residents' domestic and foreign income. Usually refers to the smaller of the credit limit and the amount of income tax actually paid by taxpayers abroad in the method of limit credit. That is, the smaller of the credit limit and the foreign tax amount already paid is the deductible amount, which is allowed to be deducted from the taxable amount of the domestic tax payable calculated by the taxpayer's total domestic and foreign income. For example, in a tax year, the head office of country A received 1 million yuan from country A and the income from country B's branch office 4 million yuan. The company income tax rates of countries A and B were 33% and 35%, respectively. Since the branch of the parent company in Country B has paid 1.4 million yuan (400 × 35%) in income tax to the government of Country B, which has exceeded the credit limit of 132 million (400 × 33%), the company can only allow 132 Ten thousand yuan, that is, the allowable credit amount is 1.32 million yuan, which can be deducted from the amount of 165 [(100 ten 400) × 33%] ten thousand yuan of the government income tax payable in country A that is calculated based on the domestic income of the head office.