Under Australian tax law, a multinational corporation may not use any excess tax credits generated in high-tax foreign countries to offset its net Australian tax liabilities on earnings in low-tax foreign countries.

Question

Quizplus · Accepted Answer

This is known as the Foreign Income Tax Offset (FITO) rules and is designed to prevent profit shifting to low-tax jurisdictions. Excess tax credits can only be used to reduce tax on foreign income earned in high-tax countries.

Under Australian Tax Law, a Multinational Corporation May Not Use