Introduction to International Taxation

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Introduction to International Taxation

THE JURISDICTION TO TAX AND PUBLIC INTERNATIONAL LAW

The essence of the subject of international taxation is the issue of whether, and

to what extent, a country has the right to tax an individual or a company. In legal

terminology, what is its jurisdiction to tax? This is a matter of public international law.

A study of international taxation requires familiarization with both domestic taxation

laws of individual countries and international tax law. There is no international “tax

system” as such; each country has its own domestic system, which has often

developed over a long period of time. A country's domestic laws will provide for how

it intends to tax its residents and also what types of receipt it wishes to bring into the

tax net.

International tax law, according to Qureshi (1994) consists of customary

international law and international agreements. It covers the right of a state to tax, tax

treaties and dispute settlement where it is unclear what the respective taxing rights of

two states are. It may extend to protocols for exchange of information on taxpayers.

The sources of international tax law are difficult to pinpoint, as public international

law is often a matter of acceptance and interpretation by the countries affected. In

summary, there are certain international agreements which constitute international law

and the rest is merely customary.

The question is: what determines the right of a country to levy tax on a person

or company? What connection, if any, need there be between taxpayer and the taxing

authority? Most countries use the principles