Page 12 - Strategic Tax Planning for Global Commerce & Investment

Cross Border Tax Planning Strategies

In that light, tax strategy and planning should be integral to
corporate strategy and transformation, and should be, more
substantive in nature. The best managed MNEs take this view
and take steps to lower their worldwide ETR through a
comprehensive and integrated approach to tax strategy and
planning.

Sources of Cross-Border Tax Principles

International tax principles are set of rules constituted
primarily of domestic tax rules, whose application in the
international context is generally limited by double tax treaties
and other international law instruments such as the U.S.A. Tax
Treaties, European Union Tax Treaties, IRS Treasury
Regulations and Directives and the EC Regulations and
Directives, etc.

1. Domestic Tax Rules

The right to tax the income of an enterprise is generally based
on a factor that determines its connection to a jurisdiction
through:

 Incorporation or,
 Effective management

This type of right to tax is commonly referred to as “residence
jurisdiction” and it typically includes the right to tax the
worldwide income of the person resident in that jurisdiction for
tax purposes. In addition, a country may base its right to tax on
the source of the income being situated within its territory. This
typically is restricted to the income that arises from sources

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