How might a parent company's home country eliminate double taxation on foreign source income?

Question

Quizplus · Accepted Answer

All of the options listed can help eliminate or reduce double taxation on foreign source income. Tax credits for taxes paid to foreign countries and tax deductions for taxes paid to foreign countries both provide relief from paying taxes twice on the same income. Taking a territorial approach to taxing income means that only income earned within the country is subject to taxation, so foreign source income would not be taxed by the home country. Using all of these options in combination can help parent companies avoid double taxation on foreign source income.

How Might a Parent Company's Home Country Eliminate Double Taxation