Page 13 - Strategic Tax Planning for Global Commerce & Investment

Strategic Tax Planning for Global Commerce and Investment

within that country, whether derived by resident or non-
resident taxpayers.

2. International Double Taxation

The coexistence of different tax systems leads to international
double taxation. This may be the result of different definitions
under different jurisdictions of: “residency for tax purposes”,
“different sourcing or attribution of income rules” or, from
taxation based on residence as opposed to taxation based on
the source of income.

International double taxation is generally divided into:

 Economic double taxation – it arises where
two different taxpayers are taxed in respect
to the same income. A classic example of
economic double taxation arises in the case
of transfer pricing adjustments.

 Juridical double taxation – it arises where the
same income is taxed in the hands of the
same person by more than one jurisdiction
and the total tax burden is higher than if it
had been taxed by only one jurisdiction.

3. Double Tax Relief Methods

Since double taxation constitutes an obstacle to the expansion
of cross border commerce, many countries grant relief under
their domestic legislation or any relevant double tax treaty so
that their resident taxpayers are in a neutral position when
conducting commerce abroad.

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