PT 58 & 59 - Double Tax Relief & Double Taxation Treaties

Question 1

Double tax relief applies where tax is levied on the same income in more than one country. What are the three types of relief?

Answer 1

• Unilateral Relief
• Deduction Relief
• Double Tax Agreements

Question 2

Unilateral relief allows for foreign tax….

Answer 2

to be given as a tax credit in the income tax computation.

Question 3

Unilateral Relief. The tax credit is the _____ of:

Answer 3

lower of:

• the overseas tax suffered; or
• the UK tax liability on that income

Question 4

To calculate the UK tax on the foreign income, we treat the foreign income as….
The foreign tax credit can ______, but it cannot ______

Answer 4

‘top slice’

reduce a tax liability to nil, but it cannot create a ‘negative’
liability.

Question 5

Deduction relief enables the taxpayer to treat the foreign tax…..

This may be advantageous where…..

Answer 5

as a deduction from foreign income.

the taxpayer has losses in the year, which means they have no tax liability.

Question 6

The UK has double taxation treaties (DTTs) with a variety of countries in the world whichdeal with double taxation.

Answer 6

Many follow the OECD Model Treaty.

If you need to refer to this in the exam you will be sent the treaty ahead of time.