International taxation

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Taxation
An aspect of fiscal policy
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V
T
E
International taxation is the study or determination of tax on a person or business subject to the tax
laws of different countries or the internationalaspects of an individual country's tax laws as the case
may be. Governments usually limit the scope of their income taxation in some manner territorially or
provide for offsets to taxation relating to extraterritorial income. The manner of limitation generally
takes the form of a territorial, residency, or exclusionary system. Some governments have attempted
to mitigate the differing limitations of each of these three broad systems by enacting a hybrid system
with characteristics of two or more.
Many governments tax individuals and/or enterprises on income. Such systems of taxation vary
widely, and there are no broad general rules. These variations create the potential for double
taxation (where the same income is taxed by different countries) and no taxation (where income is
not taxed by any country). Income tax systems may impose tax on local income only or on worldwide
income. Generally, where worldwide income is taxed, reductions of tax orforeign credits are provided
for taxes paid to other jurisdictions. Limits are almost universally imposed on such
credits. Multinational corporations usually employ international tax specialists, a specialty among
both lawyers and accountants, to decrease their worldwide tax liabilities.
With any system of taxation, it is possible to shift or recharacterize income in a manner that reduces
taxation. Jurisdictions often impose rules relating to shifting income among commonly controlled
parties, often referred to as transfer pricing rules. Residency based systems are subject to taxpayer
attempts to defer recognition of income through use of related parties. A few jurisdictions impose
rules limiting such deferral ("anti-deferral" regimes). Deferral is also specifically authorized by some
governments for particular social purposes or other grounds. Agreements among governments
(treaties) often attempt to determine who should be entitled to tax what. Most tax treaties provide for
at least a skeleton mechanism for resolution of disputes between the parties.
Contents
[hide]
1 Introduction
2 Taxation systems
o 2.1 Individuals
2.1.1 Residency
2.1.2 Citizenship
o 2.2 Corporations
2.2.1 Exclusion
3 Individuals vs. enterprises
4 Source of income
o 4.1 Definitions of income
o 4.2 Deductions
o 4.3 Thin capitalization
o 4.4 Enterprise restructure
5 Credits for taxes of other jurisdictions
6 Withholding tax
7 Treaties
8 Anti-deferral measures
9 Transfer pricing
10 Tax avoidance
11 See also
12 Notes
13 References
14 Further reading
15 External links
Introduction[edit]
Systems of taxation vary among governments, making generalization difficult. Specifics are intended
as examples, and relate to particular governments and not broadly recognized multinational rules.
Taxes may be levied on varying measures of income, including but not limited to net income under
local accounting concepts, gross receipts, gross margins (sales less costs of sale), or specific
categories of receipts less specific categories of reductions. Unless otherwise specified, the term
"income" should be read broadly.
Jurisdictions often impose different income based levies on enterprises than on individuals. Entities
are often taxed in a unified manner on all types of income while individuals are taxed in differing
manners depending on the nature or source of the income. Many jurisdictions impose tax at both an
entity level and at the owner level on one or more types of enterprises.
[1]
These jurisdictions often rely
on the company law of that jurisdiction or other jurisdictions in determining whether an entity's
owners are to be taxed directly on the entity income. However, there are notable exceptions,
including U.S. rules characterizing entities independently of legal form.
[2]

In order to simplify administration or for other agendas, some governments have imposed "deemed"
income regimes. These regimes tax some class of taxpayers according to tax system applicable to
other taxpayers but based on a deemed level of income, as if earned by the taxpayer. Disputes can
arise regarding what levy is proper. Procedures for dispute resolution vary widely and enforcement
issues are far more complicated in the international arena. The ultimate dispute resolution for a
taxpayer is to leave the jurisdiction, taking all property that could be seized. For governments, the
ultimate resolution may beconfiscation of property, incarceration or dissolution of the entity.
Other major conceptual differences can exist between tax systems. These include, but are not
limited to, assessment vs. self-assessment means of determining and collecting tax; methods of
imposing sanctions for violation; sanctions unique to international aspects of the system;
mechanisms for enforcement and collection of tax; and reporting mechanisms.
Taxation systems[edit]

Systems of taxation on personal income
No income tax on individuals
Territorial
Residential
Citizenship-based
Countries that tax income generally use one of two systems: territorial or residential. In the territorial
system, only local income income from a source inside the country is taxed. In the residential
system, residents of the country are taxed on their worldwide (local and foreign) income, while
nonresidents are taxed only on their local income. In addition, a very small number of countries,
notably the United States, also tax their nonresident citizens on worldwide income.
Countries with a residential system of taxation usually allow deductions or credits for the tax that
residents already pay to other countries on their foreign income. Many countries also sign tax
treaties with each other to eliminate or reduce double taxation. In the case of corporate income tax,
some countries allow an exclusion or deferment of specific items of foreign income from the base of
taxation.
Individuals[edit]
The following table summarizes the taxation of local and foreign income of individuals, depending on
their residence or citizenship in the country. It includes 244 entries: 194 sovereign countries, their 40
inhabited dependent territories (most of which have separate tax systems), and 10 countries with
limited recognition.

Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Bahamas no no no no no no No personal income tax.
[3]

Bahrain no no no no no no No personal income tax.
[3]

Bermuda no no no no no no No personal income tax.
[3]

British Virgin Islands no no no no no no No personal income tax.
[3]

Brunei no no no no no no No personal income tax.
[3]

Cayman Islands no no no no no no No personal income tax.
[3]

Kuwait no no no no no no No personal income tax.
[3]

Maldives no no no no no no No personal income tax.
[3]

Monaco no no no no no no No personal income tax.
[4]

Nauru no no no no no no No personal income tax.
[5]

Norfolk Island no no no no no no No personal income tax.
[6]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Oman no no no no no no No personal income tax.
[3]

Pitcairn Islands no no no no no no No personal income tax.
[7]

Qatar no no no no no no No personal income tax.
[3]

Saint Barthelemy no no no no no no No personal income tax.
[8][Note 1]

Saint Kitts and Nevis no no no no no no No personal income tax.
[11]

Somalia no no no no no no No personal income tax.
[12]

Turks and Caicos
Islands
no no no no no no No personal income tax.
[13]

United Arab Emirates no no no no no no No personal income tax.
[3]

Vanuatu no no no no no no No personal income tax.
[14]

Vatican City no no no no no no No personal income tax.
[15]

Wallis and Futuna no no no no no no No personal income tax.
[16]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Western Sahara no no no no no no No personal income tax.
[17]

Andorra yes no no no no no
Territorial taxation, only of
nonresidents.
[18]

Angola yes yes yes no no no Territorial taxation.
[3]

Anguilla yes yes yes no no no Territorial taxation.
[19]

Bhutan yes yes yes no no no Territorial taxation.
[20]

Botswana yes yes yes no no no Territorial taxation.
[3]

Costa Rica yes yes yes no no no Territorial taxation.
[3]

Democratic Republic
of the Congo
yes yes yes no no no Territorial taxation.
[3]

Djibouti yes yes yes no no no Territorial taxation.
[21]

French Polynesia yes yes yes no no no Territorial taxation.
[22]

Georgia yes yes yes no no no Territorial taxation.
[3]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Gibraltar yes yes yes no no no Territorial taxation.
[23]

Guatemala yes yes yes no no no Territorial taxation.
[3]

Hong Kong yes yes yes no no no Territorial taxation.
[3]

Lebanon yes yes yes no no no Territorial taxation.
[3]

Macau yes yes yes no no no Territorial taxation.
[3]

Malawi yes yes yes no no no Territorial taxation.
[3]

Malaysia yes yes yes no no no Territorial taxation.
[3]

Marshall Islands yes yes yes no no no Territorial taxation.
[24]

Micronesia yes yes yes no no no Territorial taxation.
[25]

Namibia yes yes yes no no no Territorial taxation.
[3]

Nicaragua yes yes yes no no no Territorial taxation.
[3]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Palau yes yes yes no no no Territorial taxation.
[26]

Palestinian Authority yes yes yes no no no Territorial taxation.
[3]

Panama yes yes yes no no no Territorial taxation.
[3]

Paraguay yes yes yes no no no Territorial taxation.
[3]

Saint Helena yes yes yes no no no Territorial taxation.
[27]

San Marino yes yes yes no no no Territorial taxation.
[28]

Seychelles yes yes yes no no no Territorial taxation.
[3]

Singapore yes yes yes no no no Territorial taxation.
[3]

Somaliland yes yes yes no no no Territorial taxation.
[29]

Syria yes yes yes no no no Territorial taxation.
[3]

Tokelau yes yes yes no no no Territorial taxation.
[30]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Tuvalu yes yes yes no no no Territorial taxation.
[31]

Zambia yes yes yes no no no Territorial taxation.
[3]

Cuba no yes yes yes no no
Residential taxation of citizens,
territorial taxation of foreigners.
Does not tax nonresidents.
[32][33]

Philippines yes yes yes yes no no
Residential taxation of citizens,
territorial taxation of
foreigners.
[3]

Saudi Arabia yes yes yes yes no no
Residential taxation of citizens,
territorial taxation of
foreigners.
[3][Note 2]

North Korea yes no yes no yes no
Residential taxation of
foreigners, territorial taxation of
nonresidents.
[34]
Does not tax
income of resident citizens.
[35]

Abkhazia yes yes yes yes yes no Residential taxation.
[36]

Afghanistan yes yes yes yes yes no Residential taxation.
[3]

Akrotiri and Dhekelia yes yes yes yes yes no Residential taxation.
[37]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Albania yes yes yes yes yes no Residential taxation.
[3]

Algeria yes yes yes yes yes no Residential taxation.
[38]

American Samoa yes yes yes yes yes no Residential taxation.
[39]

Antigua and Barbuda yes yes yes yes yes no Residential taxation.
[40]

Argentina yes yes yes yes yes no Residential taxation.
[3]

Armenia yes yes yes yes yes no Residential taxation.
[3]

Aruba yes yes yes yes yes no Residential taxation.
[3]

Australia, including:
[6]

Christmas
Island
Cocos Islands
yes yes yes yes yes no Residential taxation.
[3]

Austria yes yes yes yes yes no Residential taxation.
[3]

Azerbaijan yes yes yes yes yes no Residential taxation.
[3]

Bangladesh yes yes yes yes yes no Residential taxation.
[41]

Barbados yes yes yes yes yes no Residential taxation.
[3]

Belarus yes yes yes yes yes no Residential taxation.
[3]

Belgium yes yes yes yes yes no Residential taxation.
[3]

Belize yes yes yes yes yes no Residential taxation.
[42]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Benin yes yes yes yes yes no Residential taxation.
[43]

Bolivia yes yes yes yes yes no Residential taxation.
[3]

Bosnia and
Herzegovina
yes yes yes yes yes no Residential taxation.
[44]

Brazil yes yes yes yes yes no Residential taxation.
[3]

Bulgaria yes yes yes yes yes no Residential taxation.
[3]

Burkina Faso yes yes yes yes yes no Residential taxation.
[45]

Burundi yes yes yes yes yes no Residential taxation.
[46]

Cambodia yes yes yes yes yes no Residential taxation.
[3]

Cameroon yes yes yes yes yes no Residential taxation.
[3]

Canada yes yes yes yes yes no Residential taxation.
[3]

Cape Verde yes yes yes yes yes no Residential taxation.
[47]

Central
African Republic
yes yes yes yes yes no Residential taxation.
[48]

Chad yes yes yes yes yes no Residential taxation.
[49]

Chile yes yes yes yes yes no Residential taxation.
[3]

China yes yes yes yes yes no Residential taxation.
[3]

Colombia yes yes yes yes yes no Residential taxation.
[3]

Comoros yes yes yes yes yes no Residential taxation.
[50]

Congo yes yes yes yes yes no Residential taxation.
[3]

Cook Islands yes yes yes yes yes no Residential taxation.
[51]

Cte d'Ivoire yes yes yes yes yes no Residential taxation.
[3]

Croatia yes yes yes yes yes no Residential taxation.
[3]

Curaao yes yes yes yes yes no Residential taxation.
[3]

Cyprus yes yes yes yes yes no Residential taxation.
[3]

Czech
Republic
yes yes yes yes yes no Residential taxation.
[3]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Denmark yes yes yes yes yes no Residential taxation.
[3]

Dominica yes yes yes yes yes no Residential taxation.
[52]

Dominican
Republic
yes yes yes yes yes no Residential taxation.
[3]

East Timor yes yes yes yes yes no Residential taxation.
[53]

Ecuador yes yes yes yes yes no Residential taxation.
[3]

Egypt yes yes yes yes yes no Residential taxation.
[3]

El Salvador yes yes yes yes yes no Residential taxation.
[3]

Equatorial
Guinea
yes yes yes yes yes no Residential taxation.
[3]

Estonia yes yes yes yes yes no Residential taxation.
[3]

Ethiopia yes yes yes yes yes no Residential taxation.
[3]

Falkland
Islands
yes yes yes yes yes no Residential taxation.
[54]

Faroe Islands yes yes yes yes yes no Residential taxation.
[55]

Fiji yes yes yes yes yes no Residential taxation.
[3]

Finland,
including:
[56]

land
yes yes yes yes yes no*
Residential
taxation.
[3]

* except former
residents, temporarily
France yes yes yes yes yes no*
Residential
taxation.
[3]

* except in Monaco
Gabon yes yes yes yes yes no
Residential
taxation.
[3]

Gambia yes yes yes yes yes no
Residential
taxation.
[57]

Germany
yes yes yes yes yes no
Residential
taxation.
[3]

Ghana yes yes yes yes yes no
Residential
taxation.
[3]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Greece yes yes yes yes yes no
Residential
taxation.
[3]

Greenland
yes yes yes yes yes no
Residential
taxation.
[58]

Grenada yes yes yes yes yes no
Residential
taxation.
[59]

Guam yes yes yes yes yes no
Residential
taxation.
[3]

Guernsey
yes yes yes yes yes no
Residential
taxation.
[3]

Guinea-
Bissau
yes yes yes yes yes no
Residential
taxation.
[60]

Guinea yes yes yes yes yes no
Residential
taxation.
[3]

Guyana yes yes yes yes yes no
Residential
taxation.
[61]

Haiti yes yes yes yes yes no
Residential
taxation.
[62]

Honduras
yes yes yes yes yes no
Residential
taxation.
[3]

Hungary yes yes yes yes yes no*
Residential
taxation.
[3]

* with another
nationality or tax
treaty
Iceland yes yes yes yes yes no
Residential
taxation.
[3]

India yes yes yes yes yes no
Residential
taxation.
[3]

Indonesia
yes yes yes yes yes no
Residential
taxation.
[3]

Iran yes yes yes yes yes no
Residential
taxation.
[63]

Iraq yes yes yes yes yes no Residential

Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
taxation.
[3]

Ireland yes yes yes yes yes no
Residential
taxation.
[3]

Isle of
Man
yes yes yes yes yes no
Residential
taxation.
[3]

Israel yes yes yes yes yes no
Residential
taxation.
[3]

Italy yes yes yes yes yes no*
Residential
taxation.
[3]

* except in tax havens
Jamaica yes yes yes yes yes no
Residential
taxation.
[3]

Japan yes yes yes yes yes no
Residential
taxation.
[3]

Jersey yes yes yes yes yes no
Residential
taxation.
[3]

Jordan yes yes yes yes yes no
Residential
taxation.
[3]

Kazakhstan
yes yes yes yes yes no
Residential
taxation.
[3]

Kenya yes yes yes yes yes no
Residential
taxation.
[3]

Kiribati yes yes yes yes yes no
Residential
taxation.
[64]

Kosovo yes yes yes yes yes no
Residential
taxation.
[65]

Kyrgyzstan
yes yes yes yes yes no
Residential
taxation.
[66]

Laos yes yes yes yes yes no
Residential
taxation.
[3]

Latvia yes yes yes yes yes no
Residential
taxation.
[3]

Lesotho yes yes yes yes yes no Residential

Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
taxation.
[3]

Liberia yes yes yes yes yes no
Residential
taxation.
[67]

Libya yes yes yes yes yes no
Residential
taxation.
[3]

Liechtenstein
yes yes yes yes yes no
Residential
taxation.
[3]

Lithuania
yes yes yes yes yes no
Residential
taxation.
[3]

Luxembourg
yes yes yes yes yes no
Residential
taxation.
[3]

Macedonia
yes yes yes yes yes no
Residential
taxation.
[3]

Madagascar
yes yes yes yes yes no
Residential
taxation.
[3]

Mali yes yes yes yes yes no
Residential
taxation.
[68]

Malta yes yes yes yes yes no
Residential
taxation.
[3]

Mauritania
yes yes yes yes yes no
Residential
taxation.
[3]

Mauritius
yes yes yes yes yes no
Residential
taxation.
[3]

Mexico yes yes yes yes yes no
Residential
taxation.
[3]

Moldova yes yes yes yes yes no
Residential
taxation.
[3]

Mongolia
yes yes yes yes yes no
Residential
taxation.
[69]

Montenegro
yes yes yes yes yes no
Residential
taxation.
[3]

Montserrat
yes yes yes yes yes no
Residential
taxation.
[70]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Morocco yes yes yes yes yes no
Residential
taxation.
[3]

Mozambique
yes yes yes yes yes no
Residential
taxation.
[3]

Myanmar
yes yes yes yes yes no
Residential
taxation.
[71]

Nagorno-
Karabakh
yes yes yes yes yes no
Residential
taxation.
[72]

Nepal
yes yes yes yes yes no
Residential
taxation.
[73]

Netherlands
yes yes yes yes yes no
Residential
taxation.
[3]

New
Caledonia
yes yes yes yes yes no
Residential
taxation.
[74]

New
Zealand
yes yes yes yes yes no
Residential
taxation.
[3]

Niger yes yes yes yes yes no
Residential
taxation.
[75]

Nigeria yes yes yes yes yes no
Residential
taxation.
[3]

Niue yes yes yes yes yes no
Residential
taxation.
[76]

Northern
Cyprus
yes yes yes yes yes no
Residential
taxation.
[77]

Northern
Mariana
Islands
yes yes yes yes yes no
Residential
taxation.
[3]

Norway yes yes yes yes yes no
Residential
taxation.
[3]

Pakistan yes yes yes yes yes no
Residential
taxation.
[3]

Papua
New Guinea
yes yes yes yes yes no
Residential
taxation.
[3]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Peru yes yes yes yes yes no
Residential
taxation.
[3]

Poland yes yes yes yes yes no
Residential
taxation.
[3]

Portugal yes yes yes yes yes no
Residential
taxation.
[3]

Puerto
Rico
yes yes yes yes yes no
Residential
taxation.
[3]

Romania yes yes yes yes yes no
Residential
taxation.
[3]

Russia yes yes yes yes yes no
Residential
taxation.
[3]

Rwanda yes yes yes yes yes no
Residential
taxation.
[3]

Saint
Lucia
yes yes yes yes yes no
Residential
taxation.
[78]

Saint
Martin
yes yes yes yes yes no
Residential
taxation.
[79][Note 3]

Saint
Pierre and
Miquelon
yes yes yes yes yes no
Residential
taxation.
[81]

Saint
Vincent and
the
Grenadines
yes yes yes yes yes no
Residential
taxation.
[82]

Samoa yes yes yes yes yes no
Residential
taxation.
[83]

So
Tom and
Prncipe
yes yes yes yes yes no
Residential
taxation.
[84]

Senegal yes yes yes yes yes no
Residential
taxation.
[3]

Serbia yes yes yes yes yes no Residential

Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
taxation.
[3]

Sierra
Leone
yes yes yes yes yes no
Residential
taxation.
[85]

Sint
Maarten
yes yes yes yes yes no
Residential
taxation.
[3]

Slovakia yes yes yes yes yes no
Residential
taxation.
[3]

Slovenia yes yes yes yes yes no
Residential
taxation.
[3]

Solomon
Islands
yes yes yes yes yes no
Residential
taxation.
[86]

South
Africa
yes yes yes yes yes no
Residential
taxation.
[3]

South
Korea
yes yes yes yes yes no
Residential
taxation.
[3]

South
Ossetia
yes yes yes yes yes no
Residential
taxation.
[87]

South
Sudan
yes yes yes yes yes no
Residential
taxation.
[88]

Spain yes yes yes yes yes no*
Residential
taxation.
[3]

* except in tax
havens, temporarily
Sri
Lanka
yes yes yes yes yes no
Residential
taxation.
[3]

Sudan yes yes yes yes yes no
Residential
taxation.
[89]

Suriname
yes yes yes yes yes no
Residential
taxation.
[90]

Svalbard yes yes yes yes yes no
Residential
taxation.
[91]

Swaziland
yes yes yes yes yes no
Residential
taxation.
[3]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Sweden yes yes yes yes yes no
Residential
taxation.
[3]

Switzerland
yes yes yes yes yes no
Residential
taxation.
[3]

Taiwan yes yes yes yes yes no
Territorial taxation
in general, but
residential taxation
under the
alternative
minimum tax.
[3]

Tajikistan
yes yes yes yes yes no
Residential
taxation.
[92]

Tanzania yes yes yes yes yes no
Residential
taxation.
[3]

Thailand yes yes yes yes yes no
Residential
taxation.
[3]

Togo yes yes yes yes yes no
Residential
taxation.
[93]

Tonga yes yes yes yes yes no
Residential
taxation.
[94]

Transnistria
yes yes yes yes yes no
Residential
taxation.
[95]

Trinidad
and Tobago
yes yes yes yes yes no
Residential
taxation.
[3]

Tunisia yes yes yes yes yes no
Residential
taxation.
[3]

Turkey yes yes yes yes yes no*
Residential
taxation.
[96]

* except income not
taxed by other
countries of
employees of Turkish
government or
companies
Turkmenistan
yes yes yes yes yes no
Residential
taxation.
[97]


Taxes local
income of
Taxes foreign
income of

Country or territory

Notes and sources
nonresident
individuals
resident
citizens
resident
foreigners
resident
citizens
resident
foreigners
nonresident
citizens
Uganda yes yes yes yes yes no
Residential
taxation.
[3]

Ukraine yes yes yes yes yes no
Residential
taxation.
[3]

United
Kingdom
yes yes yes yes yes no
Residential
taxation.
[3]

United
States Virgin
Islands
yes yes yes yes yes no
Residential
taxation.
[3]

Uruguay yes yes yes yes yes no
Residential
taxation.
[3]

Uzbekistan
yes yes yes yes yes no
Residential
taxation.
[3]

Venezuela
yes yes yes yes yes no
Residential
taxation.
[3]

Vietnam yes yes yes yes yes no
Residential
taxation.
[3]

Yemen yes yes yes yes yes no
Residential
taxation.
[98]

Zimbabwe
yes yes yes yes yes no
Residential
taxation.
[3]

Eritrea yes yes yes yes yes yes
Residential and
citizenship-based
taxation.
[99]
Foreign
income of
nonresident
citizens is taxed at
a reduced flat
rate.
[100]

United
States
yes yes yes yes yes yes
Residential and
citizenship-based
taxation. Citizens
are taxed in the
same manner as
residents.
[3]

Residency[edit]
Residential systems face the daunting tasks of defining "resident" and characterizing the income of
nonresidents. Such definitions vary by country and type of taxpayer, but usually involve the location
of the person's main home and number of days the person is physically presence in the country.
Examples include:
The United States taxes its citizens as residents, and provides
lengthy, detailed rules for individual residency of foreigners,
covering:
Periods establishing residency (including a formulary
calculation involving three years);
Start and end date of residency;
Exceptions for transitory visits, medical conditions, etc.
[101]

The United Kingdom establishes three categories: non-resident,
resident, and resident but not ordinarily resident.
[102]

Switzerland residency may be established by having a permit to be
employed in Switzerland for an individual who is so employed.
[103]

Territorial systems usually tax local income regardless of the residence of the taxpayer. The key
problem argued for this type of system is the ability to avoid taxation on portable income by moving it
offshore. This has led governments to enact hybrid systems to recover lost revenue.
Citizenship[edit]
Almost all countries tax foreign income only of residents, if at all. Only two countries tax the
worldwide income of nonresidents who are citizens of the country:
[104][105]

Eritrea taxes its nonresident citizens on their foreign income at
a reduced flat rate of 2% (income tax rates for residents are
progressive from 2 to 30%).
[100]
It has been reported that Eritrea
enforces this tax on its citizens abroad through denial of passports,
denial of entry or exit from the country, confiscation of assets in
Eritrea, and even harassment of relatives living in Eritrea, until the
tax is paid.
[106]
In 2011, the United Nations Security Council passed
a resolutioncondemning the collection by illegal means of the
Eritrean 'diaspora tax',
[107]
and in 2013, the Canadian
governmentexpelled the Eritrean consul for collecting the
tax.
[108]
The Parliament of Sweden has also expressed its intention
to prohibit the practice there.
[109]

The United States taxes its citizens and resident foreigners on
their worldwide income, and nonresident foreigners on their local
income. US citizens residing in other countries may exclude some
of their foreign income from US taxation, and take credit for income
tax paid to other countries, but they must file a US tax return to
claim the exclusion or credit even if they result in no tax
liability.
[110][111]
"US persons" abroad, like US residents, are also
subject to various reporting requirements regarding foreign
finances, such as FBAR, FATCA, and IRS forms 3520, 5471, 8621,
8891 and 8938. The penalties for failure to file these forms on time
are often much higher than the penalties for not paying the tax
itself.
[112][113][114][115]

A few other countries tax based on citizenship in limited situations:
Finland continues taxing its citizens who move from Finland to
another country as residents of Finland, for the first three years after
moving there, unless they demonstrate that they no longer have any
ties to Finland. After this period, they are no longer considered
residents of Finland for tax purposes.
[116]

France taxes its citizens who reside in Monaco as residents of
France, according to a treaty signed between the two countries in
1963.
[9]
However, in 2014, the French supreme administrative
court ruled that the treaty only applies to those who actually moved
to Monaco, so French citizens by descent who were born and have
always lived in Monaco, who form the vast majority of the French
citizens in Monaco,
[117]
would not be subject to taxation as residents
of France. The decision is awaiting implementation by the fiscal
administration.
[118]
Other than this case, France does not tax the
foreign income of its nonresident citizens.
Hungary taxes its nonresident citizens as residents of Hungary,
unless they also have another nationality or reside in a country
which has a tax treaty with Hungary.
[119][120][Note 4]

Italy continues taxing its citizens who move from Italy to a tax
haven
[Note 5]
as residents of Italy, unless they demonstrate that they
no longer have any ties to Italy.
[125]
Other than this case, Italy does
not tax the foreign income of its nonresident citizens.
Spain continues taxing its citizens who move from Spain to
a tax haven
[Note 6]
as residents of Spain, for the first five years after
moving there. After this period, they are no longer considered
residents of Spain for tax purposes.
[126]
Other than this case, Spain
does not tax the foreign income of its nonresident citizens.
Turkey taxes its citizens who are residing abroad to work for
the Turkish government or Turkish companies as residents of
Turkey, but exempts their income that is already taxed by the
country where it is earned.
[96]
Other than this case, Turkey does not
tax the foreign income of its nonresident citizens.
A few other countries used to tax the foreign income of nonresident citizens, but have abolished this
practice:
Mexico used to tax its citizens in the same manner as
residents, on worldwide income. A new income tax law, passed in
1980 and effective 1981, determined only residence as the basis for
taxation of worldwide income.
[127]

The Soviet Union used to tax its citizens on worldwide income
regardless of where they resided.
[128]
After the country was dissolved
in 1991, none of its successor states kept taxation based on
citizenship, using instead residence as the basis for taxation of
worldwide income, or taxing only local income.
Bulgaria used to tax its citizens on worldwide income
regardless of where they resided.
[129]
A new income tax law, passed
in 1997 and effective 1998, determined residence as the basis for
taxation of worldwide income.
[130]

The Philippines used to tax the foreign income of nonresident
citizens at reduced rates of 1 to 3% (income tax rates for residents
were 1 to 35% at the time).
[131]
It abolished this practice in a new
revenue code in 1997, effective 1998.
[132]

Vietnam used to tax its citizens in the same manner as
residents, on worldwide income. The country passed a personal
income tax law in 2007, effective 2009, removing citizenship as a
criterion to determine residence.
[133]

Myanmar used to tax the foreign income of its nonresident
citizens at a flat rate of 10% (income tax rates for residents range
from 3 to 40%). As part of a series of reforms, the country abolished
this practice in 2011, effective 2012.
[134]

Corporations[edit]
Countries do not necessarily use the same system of taxation for individuals and corporations. For
example, France uses a residential system for individuals but a territorial system for
corporations,
[135]
while Singapore does the opposite,
[136]
andBrunei taxes corporate but not personal
income.
[137]

Exclusion[edit]
Many systems provide for specific exclusions from taxable (chargeable) income. For example,
several countries, notably Cyprus, Luxembourg, Netherlands and Spain, have enacted holding
company regimes that exclude from income dividends from certain foreign subsidiaries of
corporations. These systems generally impose tax on other sorts of income, such as interest or
royalties, from the same subsidiaries. They also typically have requirements for portion and time of
ownership in order to qualify for exclusion. The Netherlands offers a "participation exemption" for
dividends from subsidiaries of Netherlands companies. Dividends from all Dutch subsidiaries
automatically qualify. For other dividends to qualify, the Dutch shareholder or affiliates must own at
least 5% and the subsidiary must be subject to a certain level of income tax locally.
[138]

Some countries, such as the United States and Singapore,
[139]
allow deferment of tax on foreign
income of resident corporations until it is remitted to the country.
Individuals vs. enterprises[edit]
Many tax systems tax individuals in one manner and entities that are not considered fiscally
transparent in another. The differences may be as simple as differences in tax rates,
[140]
and are
often motivated by concerns unique to either individuals or corporations. For example, many
systems allow taxable income of an individual to be reduced by a fixed amount allowance for other
persons supported by the individual (dependents). Such a concept is not relevant for enterprises.
Many systems allow for fiscal transparency of certain forms of enterprise. For example, most
countries tax partners of a partnership, rather than the partnership itself, on income of the
partnership.
[141]
A common feature of income taxation is imposition of a levy on certain enterprises in
certain forms followed by an additional levy on owners of the enterprise upon distribution of such
income. For example, the U.S. imposes two levels of tax on foreign individuals or foreign
corporations who own a U.S. corporation. First, the U.S. corporation is subject to the regular income
tax on its profits, then subject to an additional 30% tax on the dividends paid to foreign shareholders
(the branch profits tax). The foreign corporation will be subject to U.S. income tax on its effectively
connected income, and will also be subject to the branch profits tax on any of its profits not
reinvested in the U.S.
[142]
Thus, many countries tax corporations under company tax rules and tax
individual shareholders upon corporate distributions. Various countries have tried (and some still
maintain) attempts at partial or full "integration" of the enterprise and owner taxation. Where a two
level system is present but allows for fiscal transparency of some entities, definitional issues become
very important.
Source of income[edit]
Determining the source of income is of critical importance in a territorial system, as source often
determines whether or not the income is taxed. For example, Hong Kong does not tax residents
on dividend income received from a non-Hong Kong corporation.
[143]
Source of income is also
important in residency systems that grant credits for taxes of other jurisdictions. Such credit is often
limited either by jurisdiction or to the local tax on overall income from other jurisdictions.
Source of income is where the income is considered to arise under the relevant tax system. The
manner of determining the source of income is generally dependent on the nature of income. Income
from the performance of services (e.g., wages) is generally treated as arising where the services are
performed.
[144]
Financing income (e.g., interest, dividends) is generally treated as arising where the
user of the financing resides.
[145][citation needed]
Income related to use of tangible property (e.g., rents) is
generally treated as arising where the property is situated.
[146][citation needed]
Income related to use
of intangible property (e.g., royalties) is generally treated as arising where the property is used.
Gains on sale of realty are generally treated as arising where the property is situated.
Gains from sale of tangible personal property are sourced differently in different jurisdictions. The
U.S. treats such gains in three distinct manners: a) gain from sale of purchased inventory is sourced
based on where title to the goods passes;
[147]
b) gain from sale of inventory produced by the person
(or certain related persons) is sourced 50% based on title passage and 50% based on location of
production and certain assets;
[148]
c) other gains are sourced based on the residence of the seller.
[149]

In specific cases, the tax system may diverge for different categories of individuals. U.S. citizen and
resident alien decedents are subject to estate tax on all of their assets, wherever situated. The
nonresident aliens are subject to estate tax only on that part of the gross estate which at the time of
death is situated in the U.S. Another significant distinction between U.S. citizens/RAs and NRAs is in
the exemptions allowed in computing the tax liability.
[150]

Where differing characterizations of an item of income can result in differing tax results, it is
necessary to determine the characterization. Some systems have rules for resolving characterization
issues, but in many cases resolution requires judicial intervention.
[151]
Note that some systems which
allow a credit for foreign taxes source income by reference to foreign law.
[152]

Definitions of income[edit]
Some jurisdictions tax net income as determined under financial accounting concepts of that
jurisdiction, with few, if any, modifications.
[citation needed]
Other jurisdictions determine taxable
income without regard to income reported in financial statements.
[153]
Some jurisdictions compute
taxable income by reference to financial statement income with specific categories of adjustments,
which can be significant.
[154]

A jurisdiction relying on financial statement income tends to place reliance on the judgment of local
accountants for determinations of income under locally accepted accounting principles. Often such
jurisdictions have a requirement that financial statements be audited by registered accountants who
must opine thereon.
[155]
Some jurisdictions extend the audit requirements to include opining on such
tax issues as transfer pricing.
[citation needed]
Jurisdictions not relying on financial statement income must
attempt to define principles of income and expense recognition, asset cost recovery, matching, and
other concepts within the tax law. These definitional issues can become very complex. Some
jurisdictions following this approach also require business taxpayers to provide a reconciliation of
financial statement and taxable incomes.
[156]

Deductions[edit]
For more details on this topic, see Tax deduction.
Systems that allow a tax deduction of expenses in computing taxable income must provide for rules
for allocating such expenses between classes of income. Such classes may be taxable versus non-
taxable, or may relate to computations of credits for taxes of other systems (foreign taxes). A system
which does not provide such rules is subject to manipulation by potential taxpayers. The manner of
allocation of expenses varies. U.S. rules provide for allocation of an expense to a class of income if
the expense directly relates to such class, and apportionment of an expense related to multiple
classes. Specific rules are provided for certain categories of more fungible expenses, such as
interest.
[157]
By their nature, rules for allocation and apportionment of expenses may become
complex. They may incorporate cost accounting or branch accounting principles,
[157]
or may define
new principles.
Thin capitalization[edit]
Main article: Thin capitalization
Most jurisdictions provide that taxable income may be reduced by amounts expended as interest on
loans. By contrast, most do not provide tax relief for distributions to owners.
[158]
Thus, an enterprise is
motivated to finance its subsidiary enterprises through loans rather than capital. Many jurisdictions
have adopted "thin capitalization" rules to limit such charges. Various approaches include limiting
deductibility of interest expense to a portion of cash flow,
[159]
disallowing interest expense on debtin
excess of a certain ratio,
[citation needed]
and other mechanisms.
Enterprise restructure[edit]
The organization or reorganization of portions of a multinational enterprise often gives rise to events
that, absent rules to the contrary, may be taxable in a particular system. Most systems contain rules
preventing recognition of income or loss from certain types of such events. In the simplest form,
contribution of business assets to a subsidiary enterprise may, in certain circumstances, be treated
as a nontaxable event.
[160]
Rules on structuring and restructuring tend to be highly complex.
Credits for taxes of other jurisdictions[edit]
Further information: Tax credit and Foreign tax credit
Systems that tax income earned outside the system's jurisdiction tend to provide for a unilateral
credit or offset for taxes paid to other jurisdictions. Such other jurisdiction taxes are generally
referred to within the system as "foreign" taxes. Tax treatiesoften require this credit. A credit for
foreign taxes is subject to manipulation by planners if there are no limits, or weak limits, on such
credit. Generally, the credit is at least limited to the tax within the system that the taxpayer would pay
on income earned outside the jurisdiction.
[161]
The credit may be limited by category of income,
[162]
by
other jurisdiction or country, based on an effective tax rate, or otherwise. Where the foreign tax credit
is limited, such limitation may involve computation of taxable income from other jurisdictions. Such
computations tend to rely heavily on the source of income and allocation of expense rules of the
system.
[163]

Withholding tax[edit]
For more details on this topic, see Withholding tax.
Many jurisdictions require persons paying amounts to nonresidents to collect tax due from a
nonresident with respect to certain income by withholding such tax from such payments and
remitting the tax to the government.
[164]
Such levies are generally referred to as withholding taxes.
These requirements are induced because of potential difficulties in collection of the tax from
nonresidents. Withholding taxes are often imposed at rates differing from the prevailing income tax
rates.
[165]
Further, the rate of withholding may vary by type of income or type of
recipient.
[166][167]
Generally, withholding taxes are reduced or eliminated under income tax treaties (see
below). Generally, withholding taxes are imposed on the gross amount of income, unreduced by
expenses.
[168]
Such taxation provides for great simplicity of administration but can also reduce the
taxpayer's awareness of the amount of tax being collected.
[169]

Treaties[edit]

OECD members
Accession candidate countries
Enhanced engagement countries

Ratio of German assets in tax havens to German GDP.
[170]
Havens in countries with tax information sharing allowing
for compliance enforcement have been in decline. The "Big 7" shown are Hong Kong, Ireland, Lebanon, Liberia,
Panama, Singapore, and Switzerland.
Main article: Tax treaty
Tax treaties exist between many countries on a bilateral basis to prevent double
taxation (taxes levied twice on the same income, profit, capital gain, inheritance or other item). In
some countries they are also known as double taxation agreements, double tax treaties, or tax
information exchange agreements (TIEA).
Most developed countries have a large number of tax treaties, while developing countries are less
well represented in the worldwide tax treaty network.
[171]
TheUnited Kingdom has treaties with more
than 110 countries and territories. The United States has treaties with 56 countries (as of February
2007). Tax treaties tend not to exist, or to be of limited application, when either party regards the
other as a tax haven. There are a number of model tax treaties published by various national and
international bodies, such as the United Nations and the OECD.
[172]

Treaties tend to provide reduced rates of taxation on dividends, interest, and royalties. They tend to
impose limits on each treaty country in taxing business profits, permitting taxation only in the
presence of a permanent establishment in the country.
[173]
Treaties tend to impose limits on taxation
of salaries and other income for performance of services. They also tend to have "tie breaker"
clauses for resolving conflicts between residency rules. Nearly all treaties have at least skeletal
mechanisms for resolving disputes, generally negotiated between the "competent authority" section
of each country's taxing authority.
Anti-deferral measures[edit]
Residency systems may provide that residents are not subject to tax on income outside the
jurisdiction until that income is remitted to the jurisdiction.
[174]
Taxpayers in such systems have
significant incentives to shift income offshore. Depending on the rules of the system, the shifting may
occur by changing the location of activities generating income or by shifting income to separate
enterprises owned by the taxpayer. Most residency systems have avoided rules which
permit deferring offshore income without shifting it to a subsidiary enterprise due to the potential for
manipulation of such rules. Where owners of an enterprise are taxed separately from the enterprise,
portable income may be shifted from a taxpayer to a subsidiary enterprise to accomplish deferral or
elimination of tax. Such systems tend to have rules to limit such deferral through controlled foreign
corporations. Several different approaches have been used by countries for their anti-deferral
rules.
[175]

In the United States, rules provides that U.S. shareholders of a Controlled Foreign
Corporation (CFC) must include their shares of income or investment of E&P by the CFC in U.S.
property.
[176]
U.S. shareholders are U.S. persons owning 10% or more (after the application of
complex attribution of ownership rules) of a foreign corporation. Such persons may include
individuals, corporations, partnerships, trusts, estates, and other juridical persons. A CFC is a
foreign corporation more than 50% owned by U.S. shareholders. This income includes several
categories of portable income, including most investment income, certain resale income, and certain
services income. Certain exceptions apply, including the exclusion from Subpart F income of CFC
income subject to an effective foreign tax rate of 90% or more of the top U.S. tax rate.
[176]

The United Kingdom provides that a UK company is taxed currently on the income of its controlled
subsidiary companies managed and controlled outside the UK which are subject to "low" foreign
taxes.
[177]
Low tax is determined as actual tax of less than three-fourths of the corresponding UK tax
that would be due on the income determined under UK principles. Complexities arise in computing
the corresponding UK tax. Further, there are certain exceptions which may permit deferral, including
a "white list" of permitted countries and a 90% earnings distribution policy of the controlled company.
Further, anti-deferral does not apply where there is no tax avoidance motive.
[178]

Rules in Germany provide that a German individual or company shareholder of a foreign corporation
may be subject to current German tax on certain passive income earned by the foreign corporation.
This provision applies if the foreign corporation is taxed at less than 25% of the passive income, as
defined.
[citation needed]
Japan and some other countries have followed a "black list" approach, where
income of subsidiaries in countries identified as tax havens is subject to current tax to the
shareholder. Sweden has adopted a "white list" of countries in which subsidiaries may be organized
so that the shareholder is not subject to current tax.
Transfer pricing[edit]
Main article: Transfer pricing
The setting of the amount of related party charges is commonly referred to as transfer pricing. Many
jurisdictions have become sensitive to the potential for shifting profits with transfer pricing, and have
adopted rules regulating setting or testing of prices or allowance of deductions or inclusion of income
for related party transactions. Many jurisdictions have adopted broadly similar transfer pricing rules.
The OECD has adopted (subject to specific country reservations) fairly comprehensive
guidelines.
[179]
These guidelines have been adopted with little modification by many
countries.
[180]
Notably, the U.S. and Canada have adopted rules which depart in some material
respects from OECD guidelines, generally by providing more detailed rules.
Arm's length principle: It is a key concept of most transfer pricing rules, that prices charged between
related enterprises should be those which would be charged between unrelated parties dealing at
arm's length. Most sets of rules prescribe methods for testing whether prices charged should be
considered to meet this standard. Such rules generally involve comparison of related party
transactions to similar transactions of unrelated parties (comparable prices or transactions). Various
surrogates for such transactions may be allowed. Most guidelines allow the following methods for
testing prices: Comparable uncontrolled transaction prices, resale prices based on comparable
markups, cost plus a markup, and an enterprise profitability method.
Tax avoidance[edit]
Tax avoidance schemes may take advantage of low or no-income tax countries known as tax
havens. Corporations may reincorporate into a low-tax company through reversing a merger with a
foreign corporation ("inversion" similar to a reverse merger). In addition, transfer pricing may allow
for "earnings stripping" as profits are attributed to subsidiaries in low-tax countries.
[181]

See also[edit]
Public finance
List of countries by tax rates
Tax equalization
Tax haven
Tax treaty
Functional currency
Tariff
Notes[edit]
1. Jump up^ New residents of Saint Barthelemy are considered
residents of France for tax purposes, for the first five years after
moving there.
[9]
After this period, they become residents of Saint
Barthelemy for tax purposes.
[10]

2. Jump up^ Saudi Arabia taxes nonresidents, as well as residents
who are not citizens of the countries in the Gulf Cooperation
Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the
United Arab Emirates), only on their local income. Residents of
Saudi Arabia who are citizens of these countries do not pay
income tax, but pay mandatory zakat instead, calculated on their
worldwide assets and some kinds of income.
3. Jump up^ Residents of France who move to Saint Martin are not
considered residents of Saint Martin for tax purposes, and continue
to be taxed as residents of France, for the first five years after
moving there.
[9]
After this period, they become residents of Saint
Martin for tax purposes.
[80]

4. Jump up^ As of 2012, Hungary has tax treaties with the following
countries and territories: Albania, Armenia, Australia, Austria,
Azerbaijan, Bahrain, Belarus, Belgium, Bosnia and Herzegovina,
Brazil, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic,
Denmark, Egypt, Estonia, Finland, France, Georgia, Germany,
Greece, Hong Kong, Iceland, India, Indonesia, Ireland, Israel, Italy,
Japan, Kazakhstan, Kuwait, Latvia, Lithuania, Luxembourg,
Macedonia, Malaysia, Malta, Moldova, Mongolia, Montenegro,
Morocco, Netherlands, Norway, Pakistan, Philippines, Poland,
Portugal, Qatar, Romania, Russia, San Marino, Serbia, Singapore,
Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden,
Switzerland, Taiwan, Thailand, Tunisia, Turkey, Ukraine, United
Kingdom, United States, Uruguay, Uzbekistan, Vietnam.
[121][122][123]

5. Jump up^ As of 2010, the following countries and territories are
considered tax havens by Italy: Andorra, Anguilla, Antigua and
Barbuda, Aruba, Bahamas, Bahrain, Barbados, Belize, Bermuda,
British Virgin Islands, Brunei, Cayman Islands, Cook Islands, Costa
Rica, Djibouti, Dominica, Ecuador, French Polynesia, Gibraltar,
Grenada, Guernsey (including Alderney and Sark), Hong Kong,
Isle of Man, Jersey, Lebanon, Liberia, Liechtenstein, Macau,
Malaysia, Maldives, Marshall Islands, Mauritius, Monaco,
Montserrat, Nauru, Netherlands Antilles (Bonaire, Curaao, Saba,
Sint Eustatius, Sint Maarten), Niue, Oman, Panama, Philippines,
Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the
Grenadines, Samoa, San Marino, Seychelles, Singapore,
Switzerland, Taiwan, Tonga, Turks and Caicos Islands, Tuvalu,
United Arab Emirates, Uruguay, Vanuatu.
[124]

6. Jump up^ As of 2013, the following countries and territories are
considered tax havens by Spain: Anguilla, Antigua and Barbuda,
Bahrain, Bermuda, British Virgin Islands, Brunei, Cayman Islands,
Cook Islands, Cyprus, Dominica, Falkland Islands, Fiji, Gibraltar,
Grenada, Guernsey, Isle of Man, Jersey, Jordan, Lebanon, Liberia,
Liechtenstein, Macau, Mauritius, Monaco, Montserrat, Nauru,
Northern Mariana Islands, Oman, Saint Lucia, Saint Vincent and
the Grenadines, Seychelles, Solomon Islands, Turks and Caicos
Islands, United States Virgin Islands, Vanuatu.
References[edit]
1. Jump up^ E.g., the U.S. taxes corporations on their income and
their shareholders on dividends distributed from the corporation.
See U.S. IRC sections 11, 1, and 61.
2. Jump up^ U.S. Internal Revenue Service (U.S. IRS) Reg.
(hereafter 26 CFR) 301.7701-2 and -3.
3. ^ Jump up
to:
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b

c

d

e

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y

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ab

ac

ad

ae

af

agah

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aj

ak

al

am

an

ao

ap

aq

ar

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au

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aw

ax

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az

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bdbe

bf

bg

bh

bi

bj

bk

bl

bm

bn

bo

bp

bq

br

bs

bt

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bv

bw

bx

by

bz

cac
b

cc

cd

ce

cf

cg

ch

ci

cj

ck

cl

cm

cn

co

cp

cq

cr

cs

ct

cu

cv

cw

cxcy

cz

da

db

dc

dd

de

df

dg

dh

di

dj

dk

dl

dm

dn

do

dp

dq

dr

ds

dt

dudv

dw

dx

dy

dz

ea

eb

ec

ed

ee

ef

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eh

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ek

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eu

The 2011 global executive, Ernst & Young, August 2011.
4. Jump up^ Monaco Tax Rates, TaxRates.cc.
5. Jump up^ Expat Nauru, Expat Intelligence.
6. ^ Jump up to:
a

b
Taxation Options for Norfolk Island, Australian
Department of the Treasury, 2003.
7. Jump up^ Pitcairn Today, OnlinePitcairn.com.
8. Jump up^ A French island without taxes, Le Monde diplomatique,
January 2006. (French)
9. ^ Jump up to:
a

b

c
Individuals whose residence for tax purposes is
outside France, Fiscal Administration of France, 2013.(French)
10. Jump up^ Code of Contributions of Saint Barthelemy, Collectivity
of Saint Barthelemy, January 15, 2014. (French)
11. Jump up^ St. Kitts and Nevis Personal Taxation, Lowtax.
12. Jump up^ Somalia, Franklin Amoo.
13. Jump up^ Turks and Caicos Tax Rates, TaxRates.cc.
14. Jump up^ Vanuatu Tax Rates, TaxRates.cc.
15. Jump up^ Vatican City: Fun Facts, Information, and Resources,
The Free Resource.
16. Jump up^ The rip-off of the century in Wallis and Futuna,
ActuFinance. (French)
17. Jump up^ Moroccan Sahara, that tax haven, Omar El
Hyani.(French)
18. Jump up^ Andorra Undertakes First Phase Of Tax Regime
Overhaul, Tax-News.com, April 29, 2011.
19. Jump up^ Interim Stabilisation Levy Act, Government of Anguilla,
March 7, 2011.
20. Jump up^ Personal Income Tax Guide Book, Department of
Revenue and Customs of Bhutan.
21. Jump up^ General Code of Taxes 2011, Ministry of Economy and
Finances of Djibouti. (French)
22. Jump up^ French Polynesia Tax Rates, TaxRates.cc.
23. Jump up^ Gibraltar Tax Rates, TaxRates.cc.
24. Jump up^ Income Tax Act 1989, Pacific Islands Legal Information
Institute.
25. Jump up^ Code of the Federated States of Micronesia, Legal
Information System of the Federated States of Micronesia.
26. Jump up^ Palau National Code, Government of Palau.
27. Jump up^ Income Tax Ordinance, Government of Saint Helena.
28. Jump up^ Fiscal policy San Marino, SanMarinoSite.com.
29. Jump up^ The Body of Laws on Direct Taxation, Republic of
Somaliland.
30. Jump up^ Income Tax Rules 1997, Pacific Islands Legal
Information Institute.
31. Jump up^ Income Tax Act 1992, Pacific Islands Legal Information
Institute.
32. Jump up^ General description of taxes applied in Cuba, Inter-
American Center of Tax Administrations, August 1, 2004.(Spanish)
33. Jump up^ Study on labor and fiscal regulation for individuals in
Cuba, Economic and Social Office of Spain in Cuba, May
2010. (Spanish)
34. Jump up^ Enforcement Regulations for Foreign-Invested
Business and Foreign Individual Tax Law, World Intellectual
Property Organization.
35. Jump up^ Tax? What Tax? The North Korean Taxation Farce,
Yoo Gwan Hee, 2008.
36. Jump up^ Law on the income tax on individuals, RN-Shelf
Abkhazia, August 17, 2011. (Russian)
37. Jump up^ The Income Tax Ordinance 2003, Sovereign Base
Areas Administration, July 7, 2003.
38. Jump up^ Algeria Tax Rates, TaxRates.cc.
39. Jump up^ Filing Information for Individuals in Certain U.S.
Possessions, Internal Revenue Service.
40. Jump up^ Antigua and Barbuda Tax Rates, TaxRates.cc.
41. Jump up^ International tax - Bangladesh Highlights 2012, Deloitte.
42. Jump up^ Income and Business Tax Act, Income Tax Department
of Belize.
43. Jump up^ Benin Tax Rates, TaxRates.cc.
44. Jump up^ Bosnia and Herzegovina Tax Rates, TaxRates.cc.
45. Jump up^ Burkina Faso tax highlights, PricewaterhouseCoopers,
June 2012.
46. Jump up^ General code of taxes and fees, Ministry of Finances of
Burundi, January 1, 2006. (French)
47. Jump up^ Fiscal Guide, Ministry of Finances of Cape
Verde.(Portuguese)
48. Jump up^ Report on internship at DRIDCNNE, Odilon Wakanga,
2009. (French)
49. Jump up^ General tax code, Ministry of Finances of Chad, August
14, 2006. (French)
50. Jump up^ General tax code, Comores-droit.com. (French)
51. Jump up^ Taxation, Business Trade Investment Board of the
Cook Islands.
52. Jump up^ Income Tax Act, Government of the Commonwealth of
Dominica.
53. Jump up^ A guide for income taxpayers, Ministry of Finance of
East Timor, June 30, 1905.
54. Jump up^ Employment and Taxation, Falkland Islands
Government.
55. Jump up^ General information about income tax in the Faroe
Islands, TAKS.
56. Jump up^ land residents get most state money per
capita,Helsingin Sanomat.
57. Jump up^ Gambia Tax Rates, TaxRates.cc.
58. Jump up^ General information about income tax in Greenland,
Nordisk eTax.
59. Jump up^ Grenada Tax Rates, TaxRates.cc.
60. Jump up^ Convention between the Portuguese Republic and the
Republic of Guinea-Bissau to avoid double taxation in the matter of
income taxes and to prevent tax evasion,Assembly of
Portugal. (Portuguese)
61. Jump up^ Guyana Tax Rates, TaxRates.cc.
62. Jump up^ Income tax, Ministry of Economy and Finances of
Haiti.(French)
63. Jump up^ Iran Tax Rates, TaxRates.cc.
64. Jump up^ Income Tax Act 1990, Pacific Islands Legal Information
Institute.
65. Jump up^ Law on personal income tax, Assembly of Kosovo.
66. Jump up^ What should a foreigner know about Kyrgyzstan's tax
system, The Times of Central Asia.
67. Jump up^ Revenue Code of Liberia Act of 2000, Ministry of
Foreign Affairs of Liberia, August 2002.
68. Jump up^ General tax code, Chamber of Commerce and Industry
of Mali, July 1999.(French)
69. Jump up^ Personal Income Tax of Mongolia, China Radio
International, August 26, 2008.
70. Jump up^ Income Tax Act, Inland Revenue Department of
Montserrat, January 1, 2002.
71. Jump up^ Myanmar Tax Rates, TaxRates.cc.
72. Jump up^ Summary of taxes, State Tax Service of the Nagorno-
Karabakh Republic, 2010. (Armenian)
73. Jump up^ Income Tax Act 2002 Handbook, Inland Revenue
Department of Nepal.
74. Jump up^ Tax code of New Caledonia, Juridical documentation of
New Caledonia. (French)
75. Jump up^ International tax - Niger Highlights 2012, Deloitte.
76. Jump up^ Income Tax Act 1961, Pacific Islands Legal Information
Institute.
77. Jump up^ Income Tax Act, Ministry of Finance, Revenue and Tax
Administration of the Turkish Republic of Northern Cyprus,
2010. (Turkish)
78. Jump up^ Know Your Taxes, Inland Revenue Department of Saint
Lucia.
79. Jump up^ General tax code of the Collectivity of Saint Martin,
Collectivity of Saint Martin, January 1, 2012. (French)
80. Jump up^ General code of territorial collectivities, Legifrance, July
26, 2012. (French)
81. Jump up^ Instructions to fill in your tax return, Administration of
Fiscal Services of Saint Pierre and Miquelon. (French)
82. Jump up^ St. Vincent and the Grenadines: Offshore Structures
and Onshore Tax and Residency Laws, Offshore Investment.
83. Jump up^ Income Tax Act 1974, Pacific Islands Legal Information
Institute.
84. Jump up^ Code of personal income tax, Ministry of Planning and
Finances of So Tom and Prncipe, October 8,
2009.(Portuguese)
85. Jump up^ Sierra Leone Tax Rates, TaxRates.cc.
86. Jump up^ 2008 Income Tax Guide, Inland Revenue Division of
the Solomon Islands.
87. Jump up^ Law on the income tax on individuals, Committee on
Taxes and Duties of the Republic of South Ossetia. (Russian)
88. Jump up^ International tax - South Sudan Highlights
2012,Deloitte.
89. Jump up^ International tax - Sudan Highlights 2012, Deloitte.
90. Jump up^ Personal, Tax Service of Suriname. (Dutch)
91. Jump up^ Law on tax in Svalbard, Lovdata, August 10,
2012.(Norwegian)
92. Jump up^ Tax Code of the Republic of Tajikistan, State
Committee on Investments and State Property Management of the
Republic of Tajikistan.
93. Jump up^ Tax assessment, liquidation and control, eRegulations
Togo. (French)
94. Jump up^ Income Tax Act, Pacific Islands Legal Information
Institute.
95. Jump up^ Law on the income tax on individuals, Law of
Pridnestrovian Moldavian Republic, September 30, 2000.(Russian)
96. ^ Jump up to:
a

b
Income Tax Law, Turkish Tax Law.
97. Jump up^ Lega and tax aspects of doing business in
Turkmenistan 2009, Central Asia Business Consultants, August
13, 2009.
98. Jump up^ Yemen Tax Rates, TaxRates.cc.
99. Jump up^ A proclamation to provide for payment of income tax,
Economic and Commercial Counsellor's Office of the Embassy of
the People's Republic of China in Eritrea, July 24, 2008.
100. ^ Jump up to:
a

b
Eritrea: Selected Issues and Statistical
Appendix,International Monetary Fund, July 2003.
101. Jump up^ See, e.g., "Tax Information for Visitors to the United
States", Publication 513 (annual), Internal Revenue Service, U.S.
Department of Treasury, page 2.
102. Jump up^ See, e.g., "Residents and non-residents", IR20,
Inland Revenue, HMRC, page 6 et seq.
103. Jump up^ Switzerland requires a work permit to be employed in
Switzerland. A person working in Switzerland for more than 30
days may be a resident.
Seehttp://www.taxation.ch/index.cfm/fuseaction/show/temp/default/
path/1-534.htm
104. Jump up^ Tax History: Why U.S. Pursues Citizens
Overseas, Wall Street Journal, May 18, 2012.
105. Jump up^ Canadian banks to be compelled to share clients' info
with U.S., CBC News, November 25, 2013.
106. Jump up^ A form of extortion Eritrea's 2% Diaspora tax,
Daniel Berhane, November 20, 2011.
107. Jump up^ Security Council, by Vote of 13 in Favour, Adopts
Resolution Reinforcing Sanctions Regime against Eritrea
'Calibrated' to Halt All Activities Destabilizing Region,United
Nations, December 5, 2011.
108. Jump up^ Canada expels Eritrea envoy over expat fees
claims,BBC, May 29, 2013.
109. Jump up^ Riksdag wants to halt Eritrean exile taxes, The Local,
February 24, 2012.
110. Jump up^ Information for U.S. Citizens or Dual Citizens
Residing Outside the U.S., Retrieved November 28, 2013
111. Jump up^ IRS expatriation exit tax, Retrieved November 28,
2013
112. Jump up^ Despite FATCA, FBAR Penalties Still Under
Fire Forbes, March 12, 2012.
113. Jump up^ FBARs & FATCA Form 8938: Maddening
Duplication?,Forbes, April 10, 2012.
114. Jump up^ FBAR Penalties: When Will IRS Let You Off With A
Warning?, Forbes, June 4, 2012.
115. Jump
up^http://americansabroad.org/files/1413/7848/1535/harvey_2013.
pdf
116. Jump up^ Finnish citizens and the 3-year rule, Finnish Tax
Administration.
117. Jump up^ Honouring of obligations and commitments by
Monaco,Parliamentary Assembly of the Council of Europe, June 7,
2007.
118. Jump up^ Article Monaco Matin of April 18, 2014, on the subject
of ruling no. 362237 of the Conseil d'tat, Union des Franais de
l'Etranger, April 18, 2014. (French)
119. Jump up^ Individual taxation of foreign-source income and
social contribution obligations, National Tax and Customs
Administration of Hungary, 2012. (Hungarian)
120. Jump up^ Hungary Now Imposes Tax on Non-Resident
Citizens, The Nestmann Group, October 2, 2012.
121. Jump up^ Double taxation treaties of Hungary, National Tax
and Customs Administration of Hungary, January 1, 2009.
122. Jump up^ Double Tax Treaties in Hungary, Company Formation
Hungary, 2012.
123. Jump up^ Agreement between the Government of the Hong
Kong Special Administrative Region of the People's Republic of
China and the Government of the Republic of Hungary for the
Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income, Department of Justice of
Hong Kong.
124. Jump up^ Identification of states and territories with a privileged
tax regime, Department of the Treasury of Italy. (Italian)
125. Jump up^ International taxation, Revenue Agency of
Italy. (Italian)
126. Jump up^ Taxation of nonresidents, Tax Agency of Spain, July
3, 2012. (Spanish)
127. Jump up^ The income tax on resident individuals, in Mexico and
Spain (generalities), National Autonomous University of
Mexico. (Spanish)
128. Jump up^ History of US Taxes Abroad, American Citizens
Abroad.
129. Jump up^ Personal income tax act, United Nations Public
Administration Network.
130. Jump up^ Law of income taxes on natural
persons, Constitutional Court of Bulgaria. (Bulgarian)
131. Jump up^ An act amending certain provisions of the National
Internal Revenue Code of 1977 as amended, and for other
purposes, PhilippineLaw.info.
132. Jump up^ National Internal Revenue Code, Bureau of Internal
Revenue of the Philippines.
133. Jump up^ Vietnam: Law on Personal Income Tax, Library of
Congress.
134. Jump up^ Burmese Abroad Welcome Tax Break, but More
Reforms Needed, Myanmar News Linking Site, January 10, 2012.
135. Jump up^ International tax - France Highlights 2012, Deloitte.
136. Jump up^ International tax - Singapore Highlights
2012, Deloitte.
137. Jump up^ International tax - Brunei Darussalam Highlights
2012,Deloitte.
138. Jump up^ The rules have changed over the years. For a good
explanation of the 2006 changes by a major UK law firm,
seehttp://www.freshfields.com/publications/pdfs/2006/corp-tax-
reform.pdf.
139. Jump up^ "What is taxable income", Inland Revenue Authority
of Singapore.
140. Jump up^ The U.S. taxes businesses generally at rates from
15% to 35%. However, the graduated rates for individuals are
different from those for corporations. United States Code Title 26
sections 1 and 11, hereafter 26 USC 1 and 11
141. Jump up^ E.g., 26 USC 701, et seq.
142. Jump up^ Jacob Stein (September 2013). "Taxes Across
Borders". California CPA Magazine. Retrieved June 16, 2014.
143. Jump
up^"www.gov.hk/en/residents/taxes/salaries/salariestax/exemption
/employee.htm".
144. Jump up^ Supra. 26 USC 861(a)(3)
145. Jump up^ 26 USC 861(a)(1) and (2) and 862(a)(1) and
(2), supra.
146. Jump up^ U.S. IRC sections 861(a)(4) and 862(a)(4), supra.
147. Jump up^ 26 USC 861(a)(6) and 862(a)(6), supra.)
148. Jump up^ 26 USC 863(b).
149. Jump up^ 26 USC 865(a). (other examples needed)
150. Jump up^ Robert F. Klueger (2012). "Overview of International
Estate Planning". Valley Lawyer. Retrieved June 26, 2014.
151. Jump up^ See, e.g., Pierre Boulez, in which a U.S. court
determined that income received by a performer relating to sale of
recordings of a musical performance was sourced to where such
recordings were purchased by consumers.
152. Jump up^ See, e.g., Indias rules
153. Jump up^ The U.S. and many of its states define taxable
income independently of financial statement income, but require
reconciliation of the two. See, e.g., California Revenue and
Taxation Code sections 17071 et seq.
154. Jump up^ "www.cra-arc.gc.ca/E/pbg/tf/t2sch1/t2sch1-
08e.pdf"(PDF).
155. Jump up^ "Auditors - GBA4".
156. Jump up^ U.S. IRS Form 1120 Schedule M-3; Canadian CRA
Form T-2 Schedule 1
157. ^ Jump up to:
a

b
U.S. regulations under 26 CFR 1.861-8, et seq.
at (hereafter U.S. regulations )
158. Jump up^ Contrast to "integrated" systems providing a credit to
enterprise owners for a portion of enterprise level taxation.
[citation needed]

159. Jump up^ 26 USC 163(j) and long proposed regulations
thereunder
160. Jump up^ 26 USC 351.
161. Jump up^ E.g., Egypt limits the credit to the Egyptian income
tax "that may have been payable with respect to profits from works
performed abroad," but without a thorough definition of terms.
Article (54).
162. Jump up^ U.S. rules limit the credit by categories based on the
nature of the income. 26 USC 904. For 20 years prior to changes
first effective in 2007, there were at least nine such categories.
These included, e.g., financial services income, high-taxed income,
other passive income, and other (operating or general) income. UK
rules provide for separate limitations based on the schedule of
income on which UK tax is computed. Thus, credits were
separately limited for salaries versus dividends and interest.
163. Jump up^ E.g., under U.S. rules, the credit is limited to U.S. tax
on foreign source taxable income for a particular category. The
rules for determining source for taxation of foreign persons
(sections 861-865) apply in computing such credit, and detailed
rules are provided in regulations (above) for allocating and
apportioning expenses to such income.
164. Jump up^ Materials from one major accounting firm provide a
table of over sixty such countries. Such table is not
comprehensive.
165. Jump up^ E.g., Australia imposes a 10% withholding tax rate on
interest, subject to treaty reduction.
166. Jump up^ E.g., Thailand taxes dividends at 10% and interest at
15%.
167. Jump up^ E.g., Italy taxes dividends paid to nonresidents
having voting rights in the company paying the dividends at 27%
but taxes dividends paid to nonresidents not having such rights at
12.5%.
168. Jump up^ See, e.g., 26 USC 871, 881, and 1441.
169. Jump up^ "History of the U.S. Tax System". U.S. Department of
Treasury. Retrieved 2006-10-31.
170. Jump up^ Shafik Hebous (2011) "Money at the Docks of Tax
Havens: A Guide", CESifo Working Paper Series No. 3587, p. 9
171. Jump up^ Christians, Allison (April 2005). "Tax Treaties for
Investment and Aid to Sub-Saharan Africa: A Case
Study".Northwestern Public Law Research Paper No. 05-10;
Northwestern Law & Econ Research Paper No. 05-15.
172. Jump up^ "Model Tax Convention on Income and on Capital".
OECD. July 2008. Retrieved 2009-06-26.
173. Jump up^ Permanent establishment is defined under most
treaties using language identical to the OECD model. Generally, a
permanent establishment is any fixed place of business, including
an office, warehouse, etc.
174. Jump up^ See, for example, Singapore's provision that offshore
income is not taxed until brought onshore.
175. Jump up^ Anti-deferral and other shifting measures have also
been combatted by granting broad powers to revenue authorities
under "general anti-avoidance" provisions. See a discussion of
Canadian GAAR a CTF article.
176. ^ Jump up to:
a

b
Subpart F (sections 951-964)
177. Jump up^ Part XVII of Chapter IV ICTA 1988
178. Jump
up^http://www.hmrc.gov.uk/manuals/intmanual/INTM200000.htm
179. Jump up^ "Transfer Pricing Guidelines for Multinational
Enterprises and Tax Administrations".
180. Jump up^ E.g., UK ICTA Section 28AA and guidelines
thereunder
181. Jump up^ U.S. Department of the Treasury. (2007). Earnings
Stripping, Transfer Pricing and U.S. Income Tax Treaties.
Further reading[edit]
Thruonyi, Viktor, Comparative Tax Law, Aspen Publishers (2003)
Lymer, Andrew and Hasseldine, John, eds., The International
Taxation System, Kluwer Academic Publishers (2002)
Kuntz, Joel D. and Peroni, Robert J.; U.S. International Taxation
International Bureau of Fiscal Documentation offers subscription
services detailing taxation systems of most countries, as well as
comprehensive tax treaties, in multiple languages. Also available
and searchable by subscription through Thomson subsidiaries.
CCH offers shorter descriptions for fewer countries (at a lower fee)
as well as certain computational tools.
At least six international accounting firms (BDO, Deloitte, Ernst &
Young, Grant Thornton, KPMG, and PriceWaterhouseCoopers) and
several law firms have individual country and multi-country guides
available, often to non-clients. See the in-country web sites for each
for contact information.
External links[edit]
Hong Kong IRD
India Income Tax Department
UK HM Revenue & Customs (formerly Inland Revenue)
UK International Manual (non-technical guidance)
U.S. law by code section
U.S. regs
USTC post-94 decisions
USSC cases 1937-1975
OECD - Centre for Tax Policy and Administration
United Nations Taxation Committee
Categories:
International taxation
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