Income tax withheld at source from a payment to a corporation may be credited against the tax on ordinary income and on undistributed profits, unless such payment is excluded from gross income.
To eliminate international double taxation on income, the foreign taxes levied on a Japanese domestic corporation may be credited against Japanese corporation tax. This is called an ordinary foreign tax credit. A corporation has the option of crediting foreign taxes or of treating them as deductible expenses. The choice should be exercised on the total amount of foreign taxes on income.