Bittersweet (Tax) Symphony

Abstract

The increased globalization has given rise to many new opportunities for companies to conduct their business. Companies reach out, far beyond the boundaries of their home state. However, conducting business abroad leads to a plethora of tax rules which a company should take into account. They are no longer limited to the tax legislation of their home state, but the companies should also adhere to the tax laws applicable in the state where they conduct their business. This may lead to the undesired effect of double taxation. In order to prevent this effect, many countries have signed tax treaties through which they allocate taxing. The interface of a variety of domestic legislations and tax treaties leads to higher compliance costs to companies, but many companies have been able to utilize the rules to severely limit their tax liability.