Yet more change (TT Feb09 p38-39)

The UK taxes profits earned by overseas branches of UK companies but gives a credit for foreign income taxes suffered. Similarly, when a foreign subsidiary pays a dividend to its UK parent, that dividend receipt is taxable, but a credit is given for foreign withholding taxes and for corporate income taxes paid by the foreign subsidiary on the underlying income that has been used to pay the dividend. Accordingly, the UK tax system is classified as a credit system.