Tax Credit Formula
Tax credit is available if two countries have agreement
to avoid double taxation. it means amount taxed in one country will not be
taxed again.
Tax Credit = Tax paid in foreign country
Tax
Credit Formula Example
Income
received from USA= 40,000
Tax
rate 40%
Tax
paid in USA was $ = 10,000
Calculate
tax Credit
Solution
Tax
amount = 40,000 x40% = 16,000
Tax
credit = 10,000
Tax
payable = 16,000-10,000
=
6,000
