Defining Foreign Source Income (FSI)
Where a system imposes limits on FTC based in some manner on foreign source income (FSI), the system generally provides rules for determining whether income is foreign or domestic source. These rules may be relatively simple or quite complex. (For simplicity of wording below, the phrase "sourced to" specifies in the target the place (foreign or domestic) constituting the source of the income in the object for computing FTC limitation.) The following discussion explains U.S. and Canadian rules and certain other variations on one of these rules to illustrate the manners in which systems define FSI and the potential level of complexity. These rules vary highly by country.
Read more about this topic: Foreign Tax Credit
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