Page 150 - International Taxation IRS Training Guides

Tax Systems Overview

taxation, a jurisdiction
 In a worldwide system of
on its residents on all income earned both
imposes tax

at home or abroad. Double taxation is mitigated by
(FTCs).
foreign tax credits Taxpayers may pay

tax on foreign income if the foreign tax rate is
residual

less than the domestic tax rate.

taxation, a jurisdiction
 In a territorial system of
only on income earned at home. The
imposes tax

territoriality is a participation exemption, or
hallmark of

received deduction (DRD), for foreign
dividends
dividends.
No domestic tax on foreign income.

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