Understanding International taxation

International taxation policy has  set of rules and principles that   governs  the taxation of individuals and business that operate across the national borders. Taxation involves the interaction of tax-laws and regulations from various countries when a taxpayer has financial interest or activities in more than one country.

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we always  folow the  set of rules and principles that  has to be followed :

  1. Residency vs. Source Taxation: Most countries  taxe polices based on either residency/source.In  Residency taxation  a country taxes its residents on their worldwide  income, In other hand source-based taxation taxes income generated with in the country’s borders, regardless of the taxpayer’s residing place.

  2. Double Taxation: One of the primary issue in international taxation is the risk of double  time taxation, where the same income is taxed in more than one country. To avoid  this issue, many countries enter into double taxation agreements, which allocate taxing rights between the countries and provides mechanisms for tax credits or exemptions to reduce double taxation burden.

  3. Transfer Pricing: set of  rules aim to ensure the transactions are priced at arm’s length (between un-related parties) to prevent  tax avoidance and profit sharing.

  4. Tax Havens : Individuals and corporations use tax havens or low-tax jurisdictions to minimize their tax liabilities. This has led to the increased scrutiny and efforts to combat tax evasion and aggressive tax planning through the  international cooperation and initiatives like the (Common Reporting Standard )CRS and the (Foreign Account Tax Compliance Act )FATCA.

  5. Permanent Establishments (PE): Many of the  tax treaties define what constitutes  permanent establishment, which always can trigger tax obligations in the foreign country. Understanding this concepts of PE is essential for every businesses engaging in  and cross-border activities.

  6. Tax Planning and Compliance: International taxation requires careful tax compliance  and planning with the  laws of multiple countries. 

  7. GST/VAT and Customs Duties: VAT/GST and customs duties, can be significant  in considerations for international trades. Businesses must navigate through these indirect – taxes and customs regulations when engaging in cross the border transactions.

  8. Digital Taxation: The rise in  digital commerce has raised questions about how to  do tax digital services and products that can easily cross over borders. Various countries are exploring the new approaches to digital taxation.

  9. Global Tax Reform: Initiatives like  Pillar One and Pillar Two proposals by the OECD to address the challenge of taxing multinational enterprises in the digital era.

International taxation is a dynamic and miost evolving field, influenced by changes in  the global economic activities and international cooperation among the tax authorities.

Who should know about International taxation:

coming to INDIA?

Planning To  start up a business  or work in INDIA ,you need to apply for work permit and valid VISA and a permanent account number.

Going overseas?

If you  want to remain as INDIAN resident while working in OVERSEAS ,you need to pay taxes in INDIA .Based on your world wide income.
 

Investing in INDIA?

All  the foregin investors must pay taxes in india based on their income in  INDIA.

Why to choose us?

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