Commentary on Sections Overview Overview Section 4: Meaning of “double taxation” in sections 2 and 3
34.This section deems tax spared because of international development relief to have been payable for the purposes of sections 2 and 3. It is based on section 788(5) of ICTA.
35.Sections 2 and 3 refer to “double taxation” in general terms. Broadly speaking, there is double taxation if the same (for example) income is taxed in more than one territory. But that will not be the case if the income (in this example) is not in fact taxed in one of the territories concerned as a result of a relief. This section supplements sections 2 and 3. It requires certain reliefs to be ignored, with the result that one is to assume in certain cases that tax has been paid even though it has in fact not been paid. This deemed tax (in the territory giving the relief), taken with the actual tax (in the other territory), then means that there is “double taxation”. As a result of this section, therefore, statutory effect can be given to provisions in arrangements which are about such cases.
36.See also section 20 (foreign tax includes tax spared because of international development relief).