The subject of the research is the current state of double taxation, the causes of its occurrence and the ways to eliminate it. Double or multiple taxation has always existed, both within one state and between countries. Nowadays, scientists and practitioners are searching for the ways to eliminate it, since it has a negative impact on the general welfare of the economy. The authors note that the term “double taxation” means the simultaneous taxation of an object by the same tax payments in different states for a tax period. The article states that the main reasons for double and multiple taxation are imperfect norms of tax legislation, such as: taxation of the same income at the same time in different states for the tax period; application of different principles of taxation. It is reasonable to avoid double taxation in every possible way, since it entails adverse consequences, such as: an increase in the tax burden of the payer, an increase in tax offenses, and a reduction in the number of foreign investors. The paper demonstrates that nowadays different countries apply various methods for avoiding double, multiple taxation, including deduction, offset, tax exemption and others. According to the results of the study, the following relevant conclusions are made: elimination of double or multiple taxation by applying various methods will lead in the future to the attraction of foreign investment, increased tax potential, reduction of tax violations, that is, to the economic development of all countries.
Keywords: Tax relationsmultiple taxationtax policyinternational agreements
The issue of multiple taxation has a rather long history, although it gained the greatest relevance in the 20th century.
In current Russian practice, double taxation is one of the most pressing
The legislation of the Russian Federation does not contain a unified definition of double taxation, despite the fact that this concept is used, in particular, in the Tax Code of the Russian Federation when it comes to agreements on the avoidance of double taxation (for example, Articles 214, 269 of the Tax Code of the Russian Federation), as well as its individual articles.
We share the opinion of most specialists that
The subject of this study is the concepts and causes of double, multiple taxation in Russian and international practice, as well as the vectors for their elimination.
Purpose of the Study
The purpose of this
Various general scientific methods
In the issue of double taxation, a large role is played by taxpayer status: resident or non-resident.
The most rational way to prevent the payment of the same tax payments at the same time in different states is the conclusion of double taxation avoidance agreements, according to which a tax or fee should be
Among the varieties of double taxation external and internal varieties
Modern international double taxation
It is important to consider that
According to the Russian Tax Code “Taxes and fees cannot be discriminatory and apply differently based on social, racial, national, religious and other similar criteria. It is not allowed to set differentiated rates of taxes and fees, tax benefits depending on the form of ownership, citizenship of individuals or the place of origin of capital” (Article 3, Clause 2 of the Russian Tax Code). It is obvious that the existence of double taxation is clearly contrary to this provision of the tax legislation.
In this regard, the injustice of multiple taxation forces the payer to evade payment of taxes and fees. The budgets of the budget system of the Russian Federation as a result of this receive a significantly lesser amount of financial resources. The state must develop mechanisms to prevent deviant tax behavior (that is, rejection of generally established norms) and the ways to combat it, which could have been avoided if there had been no multiple taxation.
The root cause of double, multiple taxation is the
A generally accepted rule is the rule of international double taxation, according to which the collection of taxes and fees is
When tax resident of one state pays taxes in another state, the procedure for payment should be regulated by the legislation of these two countries. Moreover, each state has the right to charge taxes in accordance with its tax legislation for foreign persons.
It is important to consider that the amount of tax payments to be accounted for in the state where the person receives income cannot exceed the amount of taxes paid by the person abroad, calculated in accordance with the tax laws of the states. If this situation
A serious flaw in the Russian tax legislation regarding double taxation
Meanwhile, in international treaties agreed by countries, the rights of all
Of course, double, multiple taxation adversely affects the general state of the economy, since it prevents the development of mutual economic cooperation between states, as well as foreign investment.
Thus, having studied the theoretical material on the causes of double taxation, it is advisable to draw the following main conclusions:
Inconsistent and contradictory tax laws, both within the country and between countries, are the main reason for double taxation;
the application of different principles of taxation in interacting states generates double taxation (the principle of residency in one country, the principle of territoriality, in another);
taxation of the same income at the same time in different states leads to double taxation.
In order to eliminate the facts of double taxation that has arisen between the countries, first, it is reasonable to coordinate international tax relations and secure them with an international agreement, which is valid along with legislation within the state.
Prevention of double taxation will undoubtedly contribute to the subsequent economic development of all countries participating in this process. It is fair to clarify that favorable business conditions attract foreign investors and, thereby, the income base of countries grows. In addition, the elimination of double, multiple taxation will reduce the number of tax offenses (Fan et al., 2019).
The issues of double, multiple taxation and its overcoming is now one of the most important
The use of effective methods to eliminate double, multiple taxation, their optimization is the goal of researchers and lawmakers.
In order to eliminate double, multiple taxation, the state can find a solution to this problem unilaterally. As previously noted, there are special articles in the tax legislation (norms) devoted to the elimination of double taxation, which provide for such methods of overcoming double, multiple taxation as offset, deduction, exemption or other tax preferences. It is important to note the method of overcoming double and multiple taxation, according to which the legislation provides for the conclusion of tax agreements (conventions) between countries on the avoidance of double taxation. These agreements are recognized as a way of distributing jurisdiction between different countries, since they deal with such mechanisms of eliminating double and multiple taxation as a tax credit (in the form of set-off, deduction), tax exemption, tax benefits.
Knowing the procedure for avoiding double, multiple taxation makes it possible to carry out tax planning and develop a business (Aguzarova & Aguzarova, 2018).
It is important to take into account that elimination is achieved either through the use of internal special legislation, which provides for the adjustment of tax obligations, or by drawing up and concluding international agreements (treaties), where each country has the right to the highest priority taxation of certain types of income (Marius, 2012). Thus, it is proposed to
The problem of double and multiple taxation has always been relevant, both in Russian and international tax practice, since it has a direct impact on the general economic condition of countries.
Tax legislation does not provide a single definition of the category of “double taxation”, even though it is mentioned. Let us define the concept of “double taxation”, which is understood as the simultaneous taxation of an object by the same tax payments in different states.
We have noted that injustice and discrimination in terms of double, multiple taxation forces the payer to avoid paying taxes and fees. As a result, the budgets of the budget system of the Russian Federation do not receive the proper amount of financial resources.
The main reasons contributing to the occurrence of double and multiple taxation in Russian and international practice include: imperfect tax laws of countries (in different countries, objects of taxation are regulated differently by tax legislation, articles are interpreted ambiguously and multidirectionally); the lack of clear provisions on the offsetting of certain types of taxes paid by residents of the Russian Federation in another country (for example, a resident of the Russian Federation paid tax in another country, which does not exist in the Russian system of taxes and fees); the application of different principles of taxation in interacting states (in one based on the principle of residency, in the other based on the principle of territoriality); taxation of the same income by tax payments simultaneously in different countries.
The economic literature mentions various methods of eliminating double, multiple taxation. However, the most effective of them is the prevention of payment of the same tax payments at the same time in different states, which should be enshrined in international agreements. Moreover, the Tax Code provides for the following methods of overcoming double and multiple taxation: deduction, offset, tax exemption and others. The elimination of double, multiple taxation will lead in the future to attracting foreign investment, increasing tax potential, and reducing tax violations, thus, to attracting foreign investment, increasing tax potential, and reducing tax violations the economic development of all countries.
- Aguzarova, L. A., & Aguzarova, F. S. (2018). Planning of Tax Payments as a Factor of Economic Growth. Europ. Res. Studies J., 21(S2), 195–206.
- Alexeev, A., Good, D. H., & Krutilla, K. (2016). Environmental Taxation and the Double Dividend in Decentralized Jurisdictions. Ecolog. Econ., 122, 90–100.
- Fan, Y., Li, H., & Zhu, Q. (2019). Tax Burden Reduction and Tax Cuts in China’s Vat Reform. J. of Tax Reform, 5(1), 23–41.
- Kang, M. (2019). Pareto-Improving Tax Policies Under Hyperbolic Discounting. Int. Tax and Public Finance, 26, 618–660.
- Lednev, Yu. (2019). Conflict of Interest in the Implementation of International Treaties on Avoidance of Double Taxation in Russia. J. of foreign legislat. and comparat. law, 2(75), 49–54.
- Marius, E. R. (2012). International Double Taxation. Procedia – Soc. and Behavioral Sci., 62, 403–407.
- Nazneen, A., & Wei, X. (2013). End of double taxation: Is the policy better when announced? J. of Policy Model., 35(6), 928–942.
- Pinskaya, M. R., Milogolov, N. S., & Malis, N. I. (2015). Rules of Taxation of Controlled Foreign Companies: a Comparative Study. Asian Soc. Sci., 11(3), 274–281.
- Sergeyev, S. V. (2019). History of Development of Legal Regulation of Taxation of Foreign Organizations in Russia. Bull. of the Univer. named after O.E. Kutafin (MSA), 7(59), 131–140.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
About this article
31 October 2020
Print ISBN (optional)
Sociolinguistics, linguistics, semantics, discourse analysis, translation, interpretation
Cite this article as:
Larisa, A. A., Fatima, S. A., & Madina, T. A. (2020). Double Taxation: Concept, Causes And Procedure For Elimination. In D. K. Bataev (Ed.), Social and Cultural Transformations in the Context of Modern Globalism» Dedicated to the 80th Anniversary of Turkayev Hassan Vakhitovich, vol 92. European Proceedings of Social and Behavioural Sciences (pp. 1290-1295). European Publisher. https://doi.org/10.15405/epsbs.2020.10.05.170