Practice question
A domestic corporation elects and validly claims a foreign income-tax credit under NIRC Section 34(C). It also deducts the same foreign income-tax payment from gross income, insisting that the credit election has no effect on deductibility. Assume all credit eligibility facts are satisfied and no special alternative relief applies. Which is correct?
- The same payment always receives both benefits.
- The same foreign tax cannot also be deducted contrary to the statutory credit election rules.
- The credit must be added to gross income as sales.
- Every foreign tax automatically produces an unlimited refund.
- Foreign income tax can never qualify for any statutory relief.
Legal references
- NIRC Section 31, as amended by RA 10963 Section 8; https://lawphil.net/statutes/repacts/ra2017/ra_10963_2017.html
- NIRC Section 34(C), distinction between deduction and credit for qualifying foreign taxes; https://lawphil.net/statutes/repacts/ra1997/ra_8424_1997.html
Answer this question in flashcards to review your response and continue practicing.