Double taxation means a repeated collection of funds from the same object. This procedure is most often encountered by non-residents of the country: they must pay the tax both at the place of registration and at the place of their actual residence. Sometimes it happens within one state (for example, when an entrepreneur receives income in the form of dividends).
Cases of double taxation
Such economic procedure may occur in the following cases:
1. Taxes paid by people staying abroad. In order to avoid this, you can use the positions of international treaties. According to them, one party may charge a tax.
2. The taxpayer pays the amount through a mixed order, meaning in different places.
3. Taxes are imposed only on certain business activities. That is, the tax will be levied from all profits twice: from incomes and from dividends.
To protect their citizens from double taxation, a number of countries sign partnership agreement with other states. According to such agreement, a person is fully or partially exempt from paying tax in one of the countries. It optimizes and stimulates business activity.