Taxation in a Global Economy

Abstract

Students can examine how international taxation is a system of global tax rules that apply to transactions between two or more countries. They will see how, given differing tax consequences across countries, taxpayers must incorporate tax planning into their strategic decisions to avoid excessive taxation by structuring transactions to limit their additional global tax exposure while taxpayers, seeking to maximize after-tax returns, can structure transactions to chase the lowest tax consequences. Excerpt UVA-C-2328 Nov. 4, 2011 TAXATION IN A GLOBAL ECONOMY International taxation is a system of global tax rules that apply to transactions between two or more countries. While tax planning for purely domestic transactions is subject to a unified country tax code enforced by a single governing body, tax planning for cross-border transactions depends on the interaction of tax laws and enforcement agencies in multiple countries. This interaction can lead to excessive taxation or minimal taxation on cross-border transactions. Given differing tax consequences across countries, taxpayers must incorporate tax planning into their strategic decisions. Taxpayers, fearful of excessive taxation, can simply structure transactions to limit their additional global tax exposure while taxpayers, seeking to maximize after-tax returns, can structure transactions to chase the lowest tax consequences. The Importance of Understanding the Taxation on Foreign Investment and Services During 2010, the United States imported approximately $ 2.34 trillion and exported approximately $ 1.84 trillion of goods and services, both 90% increases since 1999. Today's global marketplace demands that participants have a thorough understanding of the cultural, legal, and financial impacts of cross-border transactions. As businesses pursue cross-border transactions, they will benefit from a general understanding of international taxation, and the benefit will only increase as more transactions span multiple borders in the future. . . .