What are the primary types of international tax structures?
International tax structures refer to the methods and systems used to assess the taxes that entities from different countries must pay. In Utah, three primary types of international tax structures are frequently used: residence-based taxation, source-based taxation, and territorial taxation. Under residence-based taxation, any entity operating or earning income within the country will be subject to taxation, regardless of where the majority of the entity’s operations occur. In other words, income sourced from other countries is also subject to taxation. Source-based taxation involves taxing income earned from activities that occur within the country, regardless of the entity’s residence. This type of taxation is frequently used for income earned from investments, real estate, and sales. Territorial taxation focuses on taxation of income earned within the country’s territory. This type of tax structure is typically used for companies selling goods or services, or to assess taxes on the profits generated from investments. In summary, the three primary types of international tax structures used in Utah are residence-based taxation, source-based taxation, and territorial taxation. Each of these structures has its own set of benefits and limitations, and the appropriate one should be chosen based upon the specific economic activities and entities involved.
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