Double Taxation

Double taxation occurs when income or other financial assets are taxed twice. This can occur when earnings or assets are subject to two different taxing authorities at the same time. For instance, one form of double taxation occurs when income from foreign investments is taxed both by the country in which it is earned and by the country in which the investor resides. To prevent this type of double taxation, many double taxation treaties currently exist between countries that allow income recipients to offset the tax already paid on investment income in another country against the tax liability in their country of residence. A number of Third World countries have specifically sought to engage in such treaties on the grounds that doing so will help ...