Professional Documents
Culture Documents
subject
to
the tax
laws of
different
countries
or
the international aspects of an individual country's tax laws as the case may be.
Governments
usually
manner territorially or
limit
the
provide
scope
for
of
their income
offsets
to
taxation in
taxation
some
relating
Generally,
where
worldwide
income
is
taxed, reductions
of
tax or foreign 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.
2) 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
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