extensive system of foreign tax credits allows

Question

Quizplus · Accepted Answer

The extensive system of foreign tax credits allows multinational corporations (MNCs) to avoid double taxation on foreign-source income. This means that when an MNC earns income in a foreign country, it is subject to tax in that country, but it may also be subject to U.S. taxes on that same income when it is repatriated to the U.S. However, the foreign tax credit system allows the MNC to offset the U.S. tax liability by the amount of foreign taxes paid on that income, thus avoiding double taxation.

Extensive System of Foreign Tax Credits Allows