How has the globalisation of markets impacted international taxation?

Globalisation has had a massive effect on international taxation. Globalisation has made it easier for businesses to conduct transactions across international borders and for individuals to live and work in multiple countries. This increased mobility has created significant challenges for international taxation, as governments must now look to taxation policies that will create a level playing field between domestic and international transactions. One way that international taxation has been impacted by globalisation is with the introduction of new tax laws. For example, the United States has the Foreign Account Tax Compliance Act and the OECD’s Base Erosion and Profit Shifting policies. These laws are designed to help reduce the ability of businesses to avoid paying taxes by shifting profits to low-tax jurisdiction. Some nations have also sought to reduce the double taxation of income which can occur when a taxpayer has income from a foreign source. To accomplish this, countries have either signed tax treaties or implemented unilateral reliefs, which allow taxpayers to seek a refund of foreign taxes paid. In Texas, a tax treaty between the U.S. and Mexico exists, which allows taxpayers in both countries to only be taxed on the income they receive from the other country. Additionally, Texas has implemented the Foreign Earned Income Exclusion, which allows taxpayers to exclude a portion of their foreign-earned income from their taxable income. Ultimately, globalisation has had a major effect on international taxation, as nations have had to introduce new tax laws and explore new ways to reduce double taxation.

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How has the globalisation of markets impacted international taxation?

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