Looking for the best resource to know about Cross Border Transactions and Double taxation agreement? Well, you have landed on the right blog post. Here in this article, you will get to know all about Cross-Border Transactions and Double taxation agreement.
The international trade law and planning a cross border transaction is a very interesting thing and more an art than any specific ruling or science. Though most of the international transactions are being done with one’s guts and instincts the planning had also found its way in every transaction.
In the end, I have also tried to bring specific aspects of India, as the primary point of attraction to bring the interest of the Foreign Investors.
How do cross border payments work?
Cross-Border Payment may seem to scare off SME’s, the reason being a difference in the currency. It is known for a fact that the value of currencies differs from country to country. Coming from my end, I have a small business and sell across different countries.
In the initial stages, I found it quite difficult to find a cross-border enabler to streamline my business. After doing a lot of research I found out that Euimart had all the solutions to my problems.
Be it in terms of Logistics, Finding the right marketplaces, or even payments. They provide feasible solutions to every problem circling around Cross Border E-commerce.
What is a double taxation agreement?
The requirement that an entity or individual pay two separate taxes on the same property for the same purpose and during the same time period. Under Subchapter C of the Internal Revenue Code, the federal government imposes double taxation on corporations by taxing both the profits received by the corporation and the earnings distributed to shareholders of the corporation through stock dividends.
Double taxation occurs when the same transaction or income source is subject to two or more taxing authorities. This can occur within a single country when independent governmental units have the power to tax a single transaction or source of income, or may result when different sovereign states impose separate taxes, in which case it is called international double taxation.
The source of the double taxation problem is that the taxing jurisdictions do not follow a common principle of taxation. One taxing jurisdiction might tax income at its source, while others will tax income based on the residence or nationality of the recipient. Indeed, a jurisdiction might use all three of these basic approaches in imposing taxes.
The consequence of double taxation is to tax certain activities at a higher rate than a similar activity that is located solely within a taxing jurisdiction. This leads to unnecessary relocation of economic activity in order to lower the incidence of taxation or other, more objectionable forms of tax avoidance.
Businesses especially have had the most trouble with double taxation, but individuals also might find it uneconomic to work abroad if all of their income is subject to taxation by two authorities, regardless of the origin of the income.
The problems that double taxation presents have long been recognized, and with the growing Integration of domestic economies into a world economy, countries have undertaken several measures to reduce the problem of double taxation. An individual country can offer tax credits for foreign taxes paid, or outright exemptions from taxation of foreign-source income.