Double Taxation: Forms, Relief Methods, and Treaty Rules

All flashcards

Jurisdictional double taxation

Two or more jurisdictions tax the same transaction, income, or capital under their domestic laws.

Economic double taxation

The same economic value is taxed in the hands of different people.

Double taxation of corporate dividends

Corporate profits may be taxed when earned and again when distributed to shareholders.

Foreign tax credit (FTC)

A credit against domestic tax for qualifying foreign income tax already paid.

Double tax agreement (DTA)

An agreement that coordinates tax rules between countries and may reduce double taxation.

Quiz questions

1. Under India's Income Tax Act, which section provides unilateral relief when no double taxation agreement applies?Answer: Section 91 provides unilateral relief when no treaty applies.
2. How should a taxpayer interpret a treaty's 183-day threshold for work in Germany?Answer: Check whether that treaty uses a calendar year or a rolling 12-month period.
3. What happened to qualifying investments made before 1 April 2017 under the described India–Mauritius treaty change?Answer: They were grandfathered from the change to source-based taxation.
4. What may happen when two U.S. states apply different residence rules to the same person?Answer: Both states may claim taxing rights, and a credit from one state is not guaranteed.
5. What role can the Mutual Agreement Procedure (MAP) play in a transfer-pricing dispute?Answer: It allows tax authorities to consult about a treaty-related dispute.