The credit for foreign tax may not exceed the corporation tax attributable to the foreign income or gain (TIOPA 2010, s. 42(2)). The attributable UK tax is determined by applying to that foreign income or gain the rate at which the company pays corporation tax on the whole of its income and chargeable gains (before any double taxation credit) for the accounting period in question (TIOPA 2010, s. 42(2)). The amount of foreign tax is converted to sterling at the rate of exchange at the time when the tax becomes payable and not when it is paid: this is a matter of practice (see HMRC Manual, International Manual, INTM162160).

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