: Requires transactions between related entities (e.g., a parent company and its foreign subsidiary) to be priced as if they were between independent parties to prevent profit shifting. Key Instruments & Models
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 : INTERNATIONAL TAXATION
: Some countries use a territorial system , exempting certain foreign-source income from domestic tax entirely. Transfer Pricing : : Requires transactions between related entities (e
OECD Model Tax Convention : Favors capital-exporting (developed) countries. Taxing Rights & Jurisdiction : : Some countries
UN Model Tax Convention : Provides more taxing rights to "source" (developing) countries. :
: Countries tax their residents on worldwide income , regardless of where it is earned.
: Bilateral agreements that determine which country has the primary right to tax specific types of income (e.g., dividends, interest, royalties).
