[DRAFT] Elimination of double taxation

[Lestianica]

The world assembly,

Recognizing the importance of cross-border investments and trade in the international economies,

Believing there is a need for international rules to guarantee a basis of certainty in taxation instead of relying solely on bilateral agreements,

The WA hereby enact as follows:

1. Definitions for the purpose of this resolution:
Double taxation: the levying of taxes by two or more jurisdictions on the same income.
Resident jurisdiction: The jurisdiction in which a taxpayer is considered domiciled or has the primary place of business.
Source jurisdiction: The jurisdiction in which income is generated.
Taxpayer: Any persons (natural and legal), entity, or organization subject to taxation under the laws of the domestic jurisdictions.

2. Allocation of taxing rights:

a. The source jurisdiction shall have the primary right to tax income arising within its territory.
b. The resident jurisdiction retains the right to tax global income but must apply the methods outlined in section 3 to prevent double taxation.

3. Methods to employ:

a. Tax credit:

i. Taxpayers may receive a credit in their resident jurisdiction for taxes paid in the source jurisdiction on the same income.
ii. The credit shall not exceed the amount of tax payable on such income in the resident jurisdiction.
b. Tax exemption:

i. Income taxed in the source jurisdiction may be exempted from taxation in the resident jurisdiction.
c. Tax deduction:

i. Taxes paid in the source jurisdiction may be deducted from taxable income in the resident jurisdiction, reducing the tax base accordingly.

4. Provisions on specific types of incomes:

a. Employment income

i. salaries, wages, and other remuneration for services performed in one jurisdiction shall be taxable in the jurisdiction where the work is performed,
regardless of the citizenship of the employer and employee.
b. Business income

i. Business profits shall be taxed in the source jurisdiction if the taxpayer has a permanent establishment therein.
ii. If no permanent establishment exists, profits shall be taxed only in the residence jurisdiction.
c. Dividends, interest, and royalties

i. Taxes of dividends, interest, and royalties shall be taxed in the source jurisdiction.
d. In all the examples above the taxes on the income shall be credited, exempted, or deducted according to the provisions in section 3, in the relevant jurisdiction.

[The Overmind]

Unfortunately, illegal in its entirety due to contradiction with GA#17 "WA General Fund", specifically clause 8. which reads:

"8. Affirms the right of member nations to maintain full authority over domestic taxation policies, barring those that may include unfair discriminatory practices;"

There is a repeal draft for GA#17 in the forum, but when, or even if, it will pass is uncertain.

[Desmosthenes and Burke]

Indeed, the author would be well advised to add the (truthful) assertion that double taxation is an unfair discriminatory policy.

[Simone Republic]

Unfortunately, illegal in its entirety due to contradiction with GA#17 "WA General Fund", specifically clause 8. which reads:

"8. Affirms the right of member nations to maintain full authority over domestic taxation policies, barring those that may include unfair discriminatory practices;"

There is a repeal draft for GA#17 in the forum, but when, or even if, it will pass is uncertain.

Refer to 2024 [GAS] 2. D&B's comment below should suffice.

[The Overmind]

Indeed, the author would be well advised to add the (truthful) assertion that double taxation is an unfair discriminatory policy.

Fair point. I think it qualifies given that it is generally intersectional with class, nationality, and naturalization status. However, this proposal currently only covers "natural and legal" persons, and it's unclear to me what that is supposed mean.

[The Overmind]

Unfortunately, illegal in its entirety due to contradiction with GA#17 "WA General Fund", specifically clause 8. which reads:

"8. Affirms the right of member nations to maintain full authority over domestic taxation policies, barring those that may include unfair discriminatory practices;"

There is a repeal draft for GA#17 in the forum, but when, or even if, it will pass is uncertain.

Refer to 2024 [GAS] 2. D&B's comment below should suffice.

Ninja'd apparently

[Barfleur]

“Barfleur supports this in principle. In general, we believe it to be inherently unfair for a person to be subject to double taxation when they are only availing themselves, at any one time, of the benefits of residing in one jurisdiction. Now, if a person is transacting business across national borders and availing themselves of the benefits of both countries, such as police protection and state subsidies, then this might be different.”

OOC: Welcome to the GA! I’m glad you posted this on the forum; this will allow you to benefit from feedback and to interact with other participants prior to submitting. Also, your national flag is very beautiful.

[Lestianica]

Indeed, the author would be well advised to add the (truthful) assertion that double taxation is an unfair discriminatory policy.

Thank you for the suggestion, I will include it in the preamble of the next draft

[Lestianica]

“Barfleur supports this in principle. In general, we believe it to be inherently unfair for a person to be subject to double taxation when they are only availing themselves, at any one time, of the benefits of residing in one jurisdiction. Now, if a person is transacting business across national borders and availing themselves of the benefits of both countries, such as police protection and state subsidies, then this might be different.”

OOC: Welcome to the GA! I’m glad you posted this on the forum; this will allow you to benefit from feedback and to interact with other participants prior to submitting. Also, your national flag is very beautiful.

Thank you for your support, I agree with the assertion which is why income is generally taxed in the source jurisdiction as it is the most likely to have to spend for governmental functions such as police protection. In regards to other benefits such as subsidies I didn't include it to not seem to invasive while laying out standards and wider principles, if I were to include this part do you have any suggestions?

OOC: Thank you! I'm still learning a bit of everything since it's my first resolution but it seems so far so good. Thanks and your national flag looks very good too.

[Bananaistan]

OOC: Not to be a negative nelly. But the exception in GAR#17 is in respect of "unfair discriminatory practices". This is not merely unfair practices or discriminatory practices. To qualify it needs to be both unfair and discriminatory. Double taxation might be unfair but is it also discriminatory?

[Attempted Socialism]

Indeed, the author would be well advised to add the (truthful) assertion that double taxation is an unfair discriminatory policy.

Fair point. I think it qualifies given that it is generally intersectional with class, nationality, and naturalization status. However, this proposal currently only covers "natural and legal" persons, and it's unclear to me what that is supposed mean.

Natural and legal persons is to include both people (natural) and entities such as corporations or organisations that can enter into contract, purchase property, etc., and thus possesses both rights and responsibilities. Although I don't quite know why they're called legal persons in many languages' legalese.

[The Overmind]

Fair point. I think it qualifies given that it is generally intersectional with class, nationality, and naturalization status. However, this proposal currently only covers "natural and legal" persons, and it's unclear to me what that is supposed mean.

Natural and legal persons is to include both people (natural) and entities such as corporations or organisations that can enter into contract, purchase property, etc., and thus possesses both rights and responsibilities. Although I don't quite know why they're called legal persons in many languages' legalese.

Ah! Thank you! Given that, I think it is a reach, or even an impropriety, to say that "legal" persons could fall under the anti-discrimination exemption to GA#17's domestic taxation blocker.

[Attempted Socialism]

Natural and legal persons is to include both people (natural) and entities such as corporations or organisations that can enter into contract, purchase property, etc., and thus possesses both rights and responsibilities. Although I don't quite know why they're called legal persons in many languages' legalese.

Ah! Thank you! Given that, I think it is a reach, or even an impropriety, to say that "legal" persons could fall under the anti-discrimination exemption to GA#17's domestic taxation blocker.

I too would need a very good argument for how and why legal persons can face discrimination in any sensible way.

[Cessarea]

Ah! Thank you! Given that, I think it is a reach, or even an impropriety, to say that "legal" persons could fall under the anti-discrimination exemption to GA#17's domestic taxation blocker.

I too would need a very good argument for how and why legal persons can face discrimination in any sensible way.

One could argue that legal persons are entitled to be treated as equal in the eyes of the law to all their peers, and that a double tax on a particular form of income may target a certain type of legal person more than others, thus being both unfair and discriminatory.

In truth, I find the very idea that double taxation can be "discriminatory" to be a misinterpretation of GA#17 that we seem willing to accept due to the usefulness of prohibiting such a practice.

[Simone Republic]

OOC: Not to be a negative nelly. But the exception in GAR#17 is in respect of "unfair discriminatory practices". This is not merely unfair practices or discriminatory practices. To qualify it needs to be both unfair and discriminatory. Double taxation might be unfair but is it also discriminatory?

I would be inclined to argue that it's discriminatory against rich corporations and billionaires and thus would be legal. An alternative is to argue that some nations do not tax their own residents' foreign income, so it's a reverse discrimination of sorts in giving low tax jurisdictions an advantage. Your mileage may vary.

[The Overmind]

OOC: Not to be a negative nelly. But the exception in GAR#17 is in respect of "unfair discriminatory practices". This is not merely unfair practices or discriminatory practices. To qualify it needs to be both unfair and discriminatory. Double taxation might be unfair but is it also discriminatory?

I would be inclined to argue that it's discriminatory against rich corporations and billionaires and thus would be legal. An alternative is to argue that some nations do not tax their own residents' foreign income, so it's a reverse discrimination of sorts in giving low tax jurisdictions an advantage. Your mileage may vary.

I don't think anyone could possibly argue that's a good faith interpretation of what "discriminatory" means. And since member nations face the dual burden of GA#17 and GA#654, I don't believe anything but a good faith interpretation can resolve the potential blocker contradiction faced by this proposal. Reframing double taxation as "discrimination" against rich corporations and billionaires does not, in my opinion, rescue the legality of this proposal for that reason.

Under a good faith interpretation of GA#17's clause 8 blocker exemption, I can see this as not being a contradiction for natural persons because double taxation would be broadly discriminatory if we adopt the mindset that it applies overwhelmingly to persons who are targets of discrimination on the basis of class, nationality, and naturalization. But I'd argue that's where your mileage may vary, since that relies on extratextual wrangling with the discriminatory realities manifest for those likely to be doubly taxed.

However, I think discussions about "discrimination" against corporations and billionaires are total nonstarters under any good faith interpretation requirement (vis-à-vis the meaning of "discrimination" in a resolution like GA#17 where it is not explicitly defined), and can just be discarded outright.

[The Overmind]

Indeed, the author would be well advised to add the (truthful) assertion that double taxation is an unfair discriminatory policy.

Revisiting this in light of Bananaistan's reply, I think the burden for calling double taxation unfair is easily met, but that it is, for sure, not inherently discriminatory. Can the fact that it may, in some proportion of cases, though certainly not all, be discriminatory, actually satisfy the blocker exemption? I'm leaning toward no.

[Desmosthenes and Burke]

Indeed, the author would be well advised to add the (truthful) assertion that double taxation is an unfair discriminatory policy.

Revisiting this in light of Bananaistan's reply, I think the burden for calling double taxation unfair is easily met, but that it is, for sure, not inherently discriminatory. Can the fact that it may, in some proportion of cases, though certainly not all, be discriminatory, actually satisfy the blocker exemption? I'm leaning toward no.

The main thrust of the proposal is about double taxation resulting from nations that have non-territorial taxation regimes. I consider that unfairly discriminatory having been subjected to it multiple times. Whether others do, or not, is naturally a matter of opinion. However, GenSec has a long history of simply alleging something to be so as sufficient, see, e.g. any conversation about the blocker in Natoinal Economic Freedoms for how very unseriously GenSec polices such claims.

[The Overmind]

Revisiting this in light of Bananaistan's reply, I think the burden for calling double taxation unfair is easily met, but that it is, for sure, not inherently discriminatory. Can the fact that it may, in some proportion of cases, though certainly not all, be discriminatory, actually satisfy the blocker exemption? I'm leaning toward no.

The main thrust of the proposal is about double taxation resulting from nations that have non-territorial taxation regimes. I consider that unfairly discriminatory having been subjected to it multiple times. Whether others do, or not, is naturally a matter of opinion. However, GenSec has a long history of simply alleging something to be so as sufficient, see, e.g. any conversation about the blocker in Natoinal Economic Freedoms for how very unseriously GenSec polices such claims.

If you don't mind me asking, in what way was it discriminatory and not just unfair?

[Desmosthenes and Burke]

The main thrust of the proposal is about double taxation resulting from nations that have non-territorial taxation regimes. I consider that unfairly discriminatory having been subjected to it multiple times. Whether others do, or not, is naturally a matter of opinion. However, GenSec has a long history of simply alleging something to be so as sufficient, see, e.g. any conversation about the blocker in Natoinal Economic Freedoms for how very unseriously GenSec polices such claims.

If you don't mind me asking, in what way was it discriminatory and not just unfair?

It discriminates against non-resident persons over whom the state claims jurisdiction as against residents and those over whom the state does not claim jurisdiction.

You are, of course, free to agree or not, but I maintain GenSec precedent says disagreement over that is a matter for voters.

[Attempted Socialism]

If you don't mind me asking, in what way was it discriminatory and not just unfair?

It discriminates against non-resident persons over whom the state claims jurisdiction as against residents and those over whom the state does not claim jurisdiction.

You are, of course, free to agree or not, but I maintain GenSec precedent says disagreement over that is a matter for voters.

But that is an example of discrimination against a natural person. Let's say we agree that it is, and thus this resolution would be legal when it comes to natural persons. How can that logic apply to legal persons? How is double taxation discrimination against a corporation when that corporation doesn't have citizenship or residency? On what basis could a corporation claim discrimination?

[Desmosthenes and Burke]

It discriminates against non-resident persons over whom the state claims jurisdiction as against residents and those over whom the state does not claim jurisdiction.

You are, of course, free to agree or not, but I maintain GenSec precedent says disagreement over that is a matter for voters.

But that is an example of discrimination against a natural person. Let's say we agree that it is, and thus this resolution would be legal when it comes to natural persons. How can that logic apply to legal persons? How is double taxation discrimination against a corporation when that corporation doesn't have citizenship or residency? On what basis could a corporation claim discrimination?

Corporations have citizenship in sane legal regimes. For example an LLC in the US has the citizenship of each of its members. Corps in general are citizens of their place of incorporation and/or place of pricinpal business/siège sociale, and so on.

Edit: reply got eaten

Edit 2:

Expanding slightly. Presumably any functional legal system is capable of separating foreign and domestic legal entities: their citizenship and residence if you will, for jurisdiction purposes.

Of course, thank you for exposing a weakness of the proposal: nothing aside from a desire not to be stupid and/or evil prevents a state from declaring all legal entities operating within their borders to be citizens.

[Bananaistan]

If you don't mind me asking, in what way was it discriminatory and not just unfair?

It discriminates against non-resident persons over whom the state claims jurisdiction as against residents and those over whom the state does not claim jurisdiction.

You are, of course, free to agree or not, but I maintain GenSec precedent says disagreement over that is a matter for voters.

OOC: There is possible opening there tbf in terms of the worldwide taxation of citizens argument but the likes of section 4a and 4bii do not directly deal with this.

Aside from that, and in genuine feedback for the OP, the entirety of section 4 imposes a gross oversimplification of a double taxation treaty on all member states. There are many missed nuances, for example if company A is established in member state X, company B is in member state Y, company B engages A to do a project which means that for, say, one month a team of A's employees will relocate to Y to complete the project. This says that Y gets the tax on their income for the one month. I do not believe that this is good policy.

Another nuance missed is where is the location of a service performed? EG a journalist based in X writes for a newspaper in Y but entirely from their base in X. They might never go in. But the newspaper is only published in Y.

[Desmosthenes and Burke]

On the proposal itself: the author would be advised to consider strongly Banana's assertion that the proposal at current treats the topic overly simplistically.

[Barfleur]

OOC: It is not unreasonable IMO to treat equivalent taxation for (1) people who reside in a nation full time and take advantage of local services and (2) people who reside abroad full time and do not, as unfair. Discriminatory? Perhaps; you could make the argument that the practical effect of such a double taxation regime is that expats/immigrants/dual citizens have to pay more than similarly situated people who live in their sole country of citizenship.