It is a branch of tax law, also known as international taxation. It is responsible for the study of the rules that regulate international relations in tax matters. Today, due to the growth of the global economy, international taxation has become increasingly relevant as taxpayers must comply with the tax rules of various jurisdictions.
It is based on four principles to improve cross-border business or market operations in different parts of the world:
- Equity between governments: aims to ensure that states manage manage the distribution of income to the extent that it is intended that the benefits generated in a country remain in that country.
- Neutrality: Promotes investments that provide positive results for the countries without incurring in favoritism or differentiation so that the criterion for choosing one country or another is not taxation.
- Preventing tax evasion: governments and institutions must work together to prevent individuals or companies from failing to comply with their tax obligations.
- Mutually beneficial trade relations: States ‘ policies, standards, practices and communication patterns should promote investment and development .
International taxation is important because it ensures that taxpayers comply with their tax obligations both in their home country and in the countries where they operate, avoiding double taxation or evasion. Double taxation occurs when the same income or gain is taxed in two or more countries, which may result in an excessive tax burden for the taxpayer. In the case of Colombia, treaties have been ratified with countries such as Spain, Switzerland, Canada, South Korea, Portugal, Mexico, and indicates in order to avoid double taxation.
On the other hand, evasion refers to the practice of avoiding paying taxes, either by hiding income or moving assets to other jurisdictions with lower taxes.
Other important aspects of international taxation are the determination of tax residency and the tax treatment of cross-border transactions. The first is understood as the place where a person or company is considered to have its center of economic interests in order to determine in which country taxes must be paid. The second refers to commercial or financial transactions involving taxpayers from different countries.
In conclusion, international taxation is a complex but fundamental issue in the globalized world, so it is essential that taxpayers and companies understand the rules and principles of this branch of law in order to comply with their obligations and avoid tax and legal problems in different jurisdictions. Governments and international organizations also have a fundamental role to play in improving the efficiency and transparency of international taxation to ensure fair tax collection.