Taxpayers are eligible for relief from double taxation on its foreign incomes under tax treaties, subject to certain conditions.
Further, taxpayers are entitled to credit foreign taxes paid abroad against the tax liability in Cook Islands provided the amount of foreign tax credit does not exceed the tax payable in Cook Islands on such income.
Below is a summary of the available methods for various income tax streams based on domestic law.
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.