Foundations of Taxation Law

International taxation is a broad concept that covers the taxation of transactions with jurisdictional links to more than one country. These transactions, sometimes referred to as ‘cross-border transactions’, pose particular challenges and problems for taxpayers and taxation authorities. For instance, there is the obvious potential for double taxation to arise (ie the same income being taxed in more than one jurisdiction). The potential also exists for income to be diverted and sheltered in low-tax jurisdictions (ie tax havens), which raises concerns about tax evasion and tax avoidance. It is important to realise that as taxation is a sovereign right, there is no general overarching body of international law that deals with the taxation of cross-border transactions. In other words, there is no ‘supernational’ taxation law. Instead, each country must develop its own set of rules to deal with cross-border transactions and any jurisdictional conflicts that may arise. In order to protect their revenue bases, it is natural for countries to want to adopt broad-based international taxation rules to ensure that they collect as much tax as possible.