Page 16 - Strategic Tax Planning for Global Commerce & Investment
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Cross Border Tax Planning Strategies
Taxation Systems around the World
Most countries have a territorial system of taxation. Among the
G-7 countries, only the U.S.A. has a worldwide tax system .
1
Among OECD countries, 26 have territorial systems including
Australia, Canada, France, Germany, Japan, Spain and the
U.K.. Eigth (8) OECD nations have worldwide taxation
2
systems, including the U.S.A. , Greece, Ireland, South Korea
and Mexico. The other OECD nations with worldwide taxation
systems have top tax rates far bellow the U.S.A. corporate tax
rate.
1. Worldwide Taxation System
A worldwide system subjects to tax:
Its residents on their worldwide income –
derived from sources within and outside
its territory and,
Non-residents only on the income derived
from its territory
This system is by far the most common around the world
2. Territorial Taxation System
A territorial system subjects to tax residents and non-residents
only on the income derived from sources located in its territory.
1 Effective with the enacment of the Tax Cuts and Jobs Act (TCJA) , the
U.S.A. converted to a Territorial Taxation System.
2 Effective in 2018, the U.S.A. converted to a Territorial Taxation System
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