The issue of municipal surtax on the tax credit for international juridical double taxation of income

Abstract

This essay analyses whether the municipal surtax has an impact on the tax credit for international juridical double taxation of income, regardless of the existence of a Double Taxation Convention (DCT) with the Source State. The problem arises because the ordinary credit method restricts the deduction to the part of the Resident State´s own tax which is appropriate to the income which may be taxed in the Source State. And this method exists in the internal rules, regardless of the CDT (articles 23-A and 23-B). Thus, the question is whether in the calculation of the Resident State´s own tax should it be considered or not the municipal surtax together with the corporate tax, even in the absence of a CDT. This essay begins address the methodology of legal hermeneutics. Then, it tries to explorer the strength and legitimacy of the Organization for Economic Co-operation and Development (OECD) Commentaries on the Articles of the Model Tax Convention on Income and on Capital onto the interpretation on internal rules. Furthermore, this essay analysis the principle of nondiscrimination in international taxation and fair tax treatment, as well the principle of the principle of justice and contributive capacity.