What are the differences between domestic and international taxation?

The primary difference between domestic and international taxation is the jurisdiction in which the taxes are assessed. Domestic taxation refers to the taxes levied within the boundaries of a single country or economic region, such as the U.S. or Hawaii. The revenue generated from domestic taxation is used to fund government programs and activities within the national borders. International taxation, on the other hand, is typically a complex system of treaties, agreements and laws between different countries or jurisdictions that are designed to determine how income and assets from those territories will be taxed. Many of these agreements are outlining how income will be divided among different governments when it originates from two or more countries. This helps regulate investments and business operations that span multiple jurisdictions, and makes the international tax system more efficient. In addition, international taxation helps prevent companies from “shifting” their income to take advantage of lower taxes with other countries. International tax laws can also help protect U.S. citizens and businesses from potential double taxation, where they are being taxed on the same income in two different countries. Hawaii follows the same international tax laws as the rest of the United States. These laws dictate how individuals or businesses will pay the applicable taxes, and how income or profits that are earned in other countries is taxed. The international tax law system in Hawaii also complies with the current U.S. Tax Code. That means any income or assets earned in Hawaii can be subject to taxation by the U.S. government if the applicable laws or treaties allow.

Related FAQs

What is the taxation of foreign financial assets?
How can countries protect their tax base from aggressive international tax planning?
How is taxation of foreign services different from taxation of goods?
What is the taxation of foreign income?
What are the rules for taxing employees who work abroad?
What are the implications of the European Union's Common Consolidated Corporate Tax Base (CCCTB)?
How do the differences between national tax laws complicate international taxation?
What is the role of taxation in international trade?
What is the role of the Organisation for Economic Co-operation and Development (OECD)?
How do governments tax the income of non-residents?

What are the differences between domestic and international taxation?

Related FAQs

Related Blog Posts