Tax Sparing
Tax sparing refers to granting a home country foreign tax credit for specific foreign taxes that would have been payable but for tax exemption in the foreign country. The concept of tax sparing was once fairly widespread, but has been reconsidered by many countries. The apparent intent of the provisions was for developed nations to provide economic incentives for enterprises in such nations to invest in developing nations. Under the Germany/Indonesia tax treaty of 1977 (a typical provision), Germany allowed a credit with respect to dividends, interest and royalties for Indonesian taxes that would have been paid but for provisions of Indonesian law designed to promote economic development in Indonesia.
Read more about this topic: Foreign Tax Credit
Famous quotes containing the words tax and/or sparing:
“People buy their necessities in shops and have to pay dearly for them because they have to assist in paying for what is also on sale there but only rarely finds purchasers: the luxury and amusement goods. So it is that luxury continually imposes a tax on the simple people who have to do without it.”
—Friedrich Nietzsche (1844–1900)
“A sparing tongue is the greatest treasure among men.”
—Hesiod (c. 8th century B.C.)