: Some countries use a territorial system , exempting certain foreign-source income from domestic tax entirely. Transfer Pricing :
: Countries tax income generated within their borders , regardless of the taxpayer's residence. Mitigating Double Taxation :
: Designed to prevent taxpayers from deferring tax on mobile income by shifting it to foreign "controlled" corporations.
: Allow taxpayers to reduce their domestic tax liability by the amount of taxes paid to a foreign government.
International taxation involves the rules and principles governing how income, profits, and taxable activities are taxed when they cross national borders. The primary goal is to allocate taxing rights between countries fairly while preventing double taxation. Taxing Rights & Jurisdiction :
: Bilateral agreements that determine which country has the primary right to tax specific types of income (e.g., dividends, interest, royalties).
UN Model Tax Convention : Provides more taxing rights to "source" (developing) countries. :
