A _____ allows an entity to reduce the taxes paid to the home government by the amount of taxes paid to the foreign government.

Question

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A tax credit allows an entity to reduce the taxes paid to the home government by the amount of taxes paid to the foreign government. A tax treaty is an agreement between two countries that sets out the tax rules for cross-border income and investments. The deferral principle postpones the payment of taxes on foreign income until it is repatriated to the home country. A tax benefit is a general term that refers to any deduction, credit, or other favorable tax treatment that reduces an entity's tax liability.

A _____ Allows an Entity to Reduce the Taxes Paid