Conduit Approach Law and Legal Definition

Conduit Approach is a method whereby income or deductions flow through to another party.

It is an approach whereby, arrangement is made to avoid paying tax twice on an income where the country in which a parent firm is located. It may not have a taxation treaty with the state in which its subsidiary is located. In this method, a holding company is formed in a country which has such treaties with both countries, to serve as a pipeline for income from the subsidiary to the parent.