A Guatemalan tax on revenues qualified as an income tax because the taxpayer could elect instead to pay tax on net income

A Guatemalan tax calculated as around 6% of gross revenue qualified as an "income or profits tax" because it was imposed pursuant to an income tax statute which gave the taxpayer an option each year of paying tax instead on its net income – so that effectively the income of the taxpayer placed a cap on how much it could be required to pay as revenue tax.

However, if a foreign affiliate elected to pay tax on the revenue basis, it would be required for surplus purposes to compute its earning for that year under Canadian income tax rules rather than using the Guatemalan income tax law.

Neal Armstrong.  Summaries of 5 September 2013 T.I. 2011-0431031E5 under ss. 95(1) - foreign accrual tax, 126(7) – business income tax, and Reg. 5907(1) – earnings.