36 Questions
What is BEPS 2.0 pillar two?
A project aimed at addressing the digital economy and setting a global minimum tax of 15%
What is double non-taxation?
When MNEs reduce their global tax burden to 0% by taking advantage of different tax regimes worldwide
What are the general principles of international tax?
Inter-nation equity, capital export neutrality, harmonization, the benefit principle, value creation, and the single tax principle
What is tax competition?
When countries compete to attract investment by using preferential tax regimes
What are golden passports?
Incentives of offering citizenship or residence by investment aimed at attracting people to become tax residents
What is dual residency?
When an individual is considered a tax resident by two different countries
What is the primary test for determining tax residency of a company?
Central management and control
What is the Place of Effective Management test?
A test built upon the basis of the primary test for determining tax residency of a company
What is domicile?
The country that a person deems his permanent home or in which he lives and is willing to remain or has a substantial connection
What is the right of a country if residency criteria are met for an individual?
To tax the individual on his or her worldwide income, leading to double taxation
What is the source and residence principle for companies?
If residency criteria are met, the country has the right to tax the company on its worldwide income, leading to double taxation
What does Article 4 of the OECD Model Tax Convention on Income and Capital determine?
Residency status of an individual
What is BEPS 2.0?
A project aimed at addressing the digital economy and setting a global minimum tax of 15%
What is double non-taxation?
When MNEs reduce their global tax burden to 0% by taking advantage of different tax regimes worldwide
What are the general principles of international tax?
Inter-nation equity, capital export neutrality, harmonization, the benefit principle, value creation, and the single tax principle
What is tax competition?
When countries compete to attract investment by using preferential tax regimes
What are golden passports?
Incentives of offering citizenship or residence by investment aimed at attracting people to become tax residents
What is dual residency?
When an individual is considered a tax resident by two different countries
What is the primary test for determining tax residency of a company?
Central management and control
What is the Place of Effective Management test?
A test built upon the basis of the primary test for determining tax residency of a company
What is domicile?
The country that a person deems his permanent home or in which he lives and is willing to remain or has a substantial connection
What is the right of a country if residency criteria are met for an individual?
To tax the individual on his or her worldwide income, leading to double taxation
What is the source and residence principle for companies?
If residency criteria are met, the country has the right to tax the company on its worldwide income, leading to double taxation
What does Article 4 of the OECD Model Tax Convention on Income and Capital determine?
Residency status of an individual
What is the aim of the Base Erosion and Profit Shifting Project (BEPS 2.0)?
To address the digital economy and set a global minimum tax of 15%
What are the general principles of international tax?
Inter-nation equity, capital export neutrality, harmonization, the benefit principle, value creation, and the single tax principle
What is tax competition?
The use of preferential regimes to attract investment
What are golden passports?
Passports issued to individuals who invest in a particular country
What is dual residency?
The situation where a person is a tax resident of two or more countries
What is the primary test for determining tax residency for companies?
The Place of Effective Management
What is the Place of Effective Management?
A test built upon the basis of the primary test for determining tax residency for companies
What is the domicile?
The country that a person deems his permanent home or in which he lives and is willing to remain or has a substantial connection
What is the residency criteria for an individual to be taxed on his or her worldwide income?
Meeting the residency criteria of a country
What is the residency criteria for an individual to be taxed only on his or her income arising within a country's geographical borders?
Meeting the residency criteria of a country
What is Article 4 of the OECD Model Tax Convention on Income and Capital?
A test for determining tax residency for individuals
What did BEPS 1.0 fail to address?
The digital economy
Study Notes
Key Principles and Challenges of International Taxation
- There is no international tax system, and domestic tax systems interact with tax systems of other countries.
- Multinational companies (MNEs) take advantage of different tax regimes worldwide to reduce their global tax burden, even to 0%, leading to double non-taxation.
- The Base Erosion and Profit Shifting Project (BEPS 1.0) established by OECD failed to address the digital economy, leading to BEPS 2.0, which includes addressing the digital economy and setting a global minimum tax of 15%.
- General principles of international tax include inter-nation equity, capital export neutrality, harmonization, the benefit principle, value creation, and the single tax principle.
- Tax competition exists between countries to attract investment by using preferential regimes, such as different tax rates and special concessions.
- Incentives of offering citizenship or residence by investment are a form of tax competition, and golden passports are aimed at attracting people to become tax residents.
- Dual residency can lead to double taxation, and Article 4 of the OECD Model Tax Convention on Income and Capital determines residency status.
- For companies, the source and residence principles apply, and residence is determined by the legal or economic approach.
- The primary test for determining tax residency is central management and control, and the indicators include the location of directors' meetings, where decisions are made, and where strategic control is exercised.
- The Place of Effective Management is a test built upon the basis of the primary test, and there is controversy about whether it is the same as central management and control.
- The domicile is the country that a person deems his permanent home or in which he lives and is willing to remain or has a substantial connection.
- If residency criteria are met, the country has the right to tax the individual on his or her worldwide income, leading to double taxation, and if residency criteria are not met, the country only has the right to tax the individual on his or her income arising within its geographical borders.
Test your knowledge on the key principles and challenges of international taxation with this informative quiz! Learn about the various factors that influence international tax systems, such as tax competition, residency criteria, and the digital economy. Discover the principles of international tax, including inter-nation equity and value creation, and how they shape tax policies around the world. Test your understanding of double taxation, domicile, and the Place of Effective Management test. Get ready to become an expert on international taxation!
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