Over the past decades, globalization has accelerated quickly. The globe feels closer and more accessible than it ever has because we live in the digital age. Small enterprises and freelancers can now develop their businesses overseas, not just big multinational corporations.
The importance of international taxation likewise rises as cross-border trade and services increase. One of the key topics that governments all around the world want to focus on is revenue. Businesses and people with revenue, profit and losses accruing from numerous jurisdictions should be aware of their tax responsibilities.
Imagine you have a big jar of candies to be shared between you and your friends. Now, let’s say you have some friends from different countries, and they also want to have some candies. International taxation is like a rule that decides how many candies each friend should get and how much they should contribute in return.
So, let us say your friend from another country wants to have some candies. They would need to give something back in exchange, like maybe a toy or some money. This is called paying taxes. Taxes are like a way of sharing the candies with everyone and making sure everyone is contributing fairly.
Now, the number of candies your friend should get and the amount they need to contribute might be different from what you and your other friends have to do. This is because different countries have different rules about taxes. Some countries might have higher taxes, which means your friend would need to give more toys or money for the candies. Other countries might have lower taxes, so your friend would need to give less.
International taxation is all about figuring out these rules and making sure that people from different countries can have a fair share of the tax due from taxable persons especially multinational companies. It helps countries decide how much taxable persons should give in taxes and how much they should get in return ( in instance of tax credit or rebate where applicable to avoid double taxation). It’s like a way of keeping things balanced and making sure everyone is treated fairly.
The various tax regimes, rules, and policies in many nations make up the global tax landscape. Organizations and individuals involved in cross-border transactions need to have a thorough understanding of each tax jurisdiction in order to manage the complexities of international taxation. Additionally, each nation has tax residency regulations that specify a person’s or a business’s tax obligations.
The OECD has been in the vanguard of the fight against tax evasion, ending bank secrecy and tax havens and addressing tax avoidance especially base erosion profit shifting (BEPS) by multinational firms since the London Summit in April 2009. The worldwide tax system has been reformed, reshaped, and modernized thanks to OECD contributions to the G20 on taxes.
The OECD Secretary-General updates the G20 Finance Ministers and Leaders on the development of global tax cooperation through reports.
In the coming weeks, we will be covering other aspects of international taxation which includes sources of international law, double taxation and Tax Treaties, Transfer Pricing and Base Erosion and Profit Sharing (BEPS).
For further information or inquiries, you can reach us at taxservices@kcp.com.ng or info@kcp.com.ng. You can also visit our website at www.kcp.com.ng. Stay tuned!