Globalized world and taxation
Added: (Sun Sep 02 2018)
Pressbox (Press Release) -
What is international double taxation?
International double taxation arises when income or properties are being received or owned in countries other than the one in which they are resident and the two countries (that of the origin and that of the domicile) attempt to impose taxation on the same income or assets earnedd by the same subject within a certain time period.
The root of global duplicate taxation lies in the overlap of tax territories in the international sphere. This superposition arises when tax rules employ different criteria for subjection to taxes, or even when using the samebut configure them differently.
Traditionally, there are two approaches for eliminating or mitigating double cross-border tax that are the credit or deductive system for double taxation and the exemption system.
A consequence of the application of the global income principle is the need for the state of residence to mitigate the impacts of double taxation on residents earning income abroad. The ways for removing double tax can be classified according to the font or method employed. These mechanisms may be provided for in the domestic regulation of each of the countries but also in the framework of the double taxation treats themselves.
We inhabit a global context with a global economic system, which involves that corporations and individuals make multiple transnational operations and transactions on a day to day basis, operations that in many cases are subject to international taxes.
Any international operation implies the fulfillment of some tax obligation, either in the country that offers the service or in the one that contracts it, or in the one that sells the goods or in the one that is purchasing it, and it is necessary to have clarity on these aspects to prevent inconveniences and to carry out the appropriate steps so that any commercial operation is made without setbacks.
In transnational taxation issues, simple taxes such as sales tax, income taxation, and customs duties come into play, as well as more elaborate issues such as transfer prices and international treaties to prevent double taxation, as well as the strategies used to implement financial engineering by making investments in various territories, also included in international tax.
Currently, if the subject is not importing or exporting but making investments in other countries, the challenge is more complicated because optimal taxation planning is required to avoid overpaying or underpaying where the law permits, or to prevent any investigation by tax officials, and that planning to succeed as long as we have proper understanding of how global tax functions.
Finally, it should be borne in mind that making world-wide business is not limited to large corporations, but that any mortal nowadays can import or export any product or service from the comfort of his home or office using e-commerce, and in some instances will have to comply with some international taxation obligation, or at minimum to know what treatment we should give to a payment made abroad or received from abroad.
Today, we are all conscious of the crucial role that taxes play in the corporate and civil field. It must not be forgotten that taxation is one of the major tools used by all governments in the field of economic and social policies, and that there is an increasing need for better practical training in this field and for global knowledge of it.
For cross-border tax experts, it is essencial to identify the tax consequences of choosing a particular legal form of intervention in the international market. In addition to knowing about fraud and tax evasion and the strategies to combat them, examining critically the anti-abusive policies with a view to their application to real life situations.
Global corporations use schemes to transfer the earnings of their activity from one country to another with reduced taxes, through the billing of services with pumped rates. For instance, with the weakening of the tax burden and the relocation of revenues.
not pay taxes of transnational economic relationships that currently have an impact this situation are the growing internationalised economies, the high level of mobility of supply resources, especially capital, the existence of transnational institutions (such ie the European Union) that encourage the economic integration of their countries, and the maintenance of taxation as an instrument of national economic policy.