Income tax created a jurisdictional conflict between the two countries. The international convention is to make sure the tax is paid in at least one country. This is accomplished by the foreign country applying a with holding tax to dividends. and the investor receiving the net amount . the home country then taxed the gross amount of the dividends but gives the investor a tax credit equal to the foreign country withholding,. The result is that the investor pays the percentage tax rate that applied in the investors home country.