Domestic corporations can take either deduction or credit for taxes paid overseas. Foreign corporations are not allowed foreign tax credits.

In Philippines, foreign tax credits are determined on a country-by-country basis limited to the tax against which the tax credit is taken calculated based on the taxpayer’s income from the country bears to its total taxable income. In addition, a further limitation is imposed based on the total amount of foreign-sourced income that the taxpayer earns. The total amount of foreign tax credits may not exceed the total taxes due on foreign-sourced income.

Below is a summary of the available methods for various income tax streams based on domestic law.

Royalty Copyright	OC
Capital Gains	OC
Dividends	OC
Interest	OC
Royalty Patent	OC
Sales	OC
Service Management	OC
Service Technical	OC
Royalty Trademark	OC

The credit column shows the type of foreign tax credit granted when the receiving country receives a payment. Four abbreviations are used for the type of foreign tax credit available:

NC means no credit but foreign withholding taxes can be deducted.
OC means ordinary credit, i.e., credit for foreign withholding taxes (e.g., withholding taxes).
IC means indirect credit, i.e., credit for underlying corporate taxes as well as foreign withholding taxes.
ND means no credit and no deduction for any foreign withholding taxes incurred.

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