PART 1: WHAT IS INTERNATIONAL
TAXATION?
WHAT?
International taxation: refers to tax levied on cross-border transaction
➔ Transaction takes place between 2 or more persons/entities in 2 or more countries/tax jurisdictions
Eg transaction involves person in country with property and income flows in another
➔ Evaluating tax policy choices made by states particularly in context of cross-border structures + flow
of capital, income and persons
➔ Examining interaction among forces that shape international tax and domestic law, bilateral treaties,
multinational agreements, inter-governmental organizations, case law and academic writing
TYPES
1) Residence based taxation
= residents of country are taxed on worldwide income
2) Source based taxation
= only local income from source inside country is taxed (usually non-residents are taxed only on local
income)
CONCEPT OF DOUBLE TAXATION
Double taxation = transaction taking place in more than 1 country such may be subject to more than 1 tax
authority OR taxed twice by same or different tax authorities
➔ Avoidance required
,EXAM QUESTIONS
Exam question: residence based taxation + source based taxation
Exam question: difference between tax avoidance and tax evasion
Exam questions: non bis in idem
, PART 2: PERSONAL INCOME TAX
TAX
• Contribution
• Government
• Support for facilities of common interest
Functions:
1) Financial function
− Supply for government spending
− BE: Taxes = 94% of overall income for government
2) Economical function
− Pricing (eg VAT)
− Consumption (eg Excise)
− Investment (eg Capital gains tax)
3) Social function
− More income => more taxes to pay
GOVERNMENT
Supra-National Government
(ex. EU)
Federal government
Region
Province
Municip
ality/cit
y
• Each government can levy taxes BUT non bis in idem
= not twice the same thing = you can’t be taxed twice for same cause of action
DIRECT
1) Direct tax
= born entirely by entity that pays it
Eg personal income tax
2) Indirect tax
= tax paid when certain transactions take place
Eg VAT
TAXATION?
WHAT?
International taxation: refers to tax levied on cross-border transaction
➔ Transaction takes place between 2 or more persons/entities in 2 or more countries/tax jurisdictions
Eg transaction involves person in country with property and income flows in another
➔ Evaluating tax policy choices made by states particularly in context of cross-border structures + flow
of capital, income and persons
➔ Examining interaction among forces that shape international tax and domestic law, bilateral treaties,
multinational agreements, inter-governmental organizations, case law and academic writing
TYPES
1) Residence based taxation
= residents of country are taxed on worldwide income
2) Source based taxation
= only local income from source inside country is taxed (usually non-residents are taxed only on local
income)
CONCEPT OF DOUBLE TAXATION
Double taxation = transaction taking place in more than 1 country such may be subject to more than 1 tax
authority OR taxed twice by same or different tax authorities
➔ Avoidance required
,EXAM QUESTIONS
Exam question: residence based taxation + source based taxation
Exam question: difference between tax avoidance and tax evasion
Exam questions: non bis in idem
, PART 2: PERSONAL INCOME TAX
TAX
• Contribution
• Government
• Support for facilities of common interest
Functions:
1) Financial function
− Supply for government spending
− BE: Taxes = 94% of overall income for government
2) Economical function
− Pricing (eg VAT)
− Consumption (eg Excise)
− Investment (eg Capital gains tax)
3) Social function
− More income => more taxes to pay
GOVERNMENT
Supra-National Government
(ex. EU)
Federal government
Region
Province
Municip
ality/cit
y
• Each government can levy taxes BUT non bis in idem
= not twice the same thing = you can’t be taxed twice for same cause of action
DIRECT
1) Direct tax
= born entirely by entity that pays it
Eg personal income tax
2) Indirect tax
= tax paid when certain transactions take place
Eg VAT
