The International Law; The Taxation

Banistan could adopt the American regularisation that a corporation is resident where it is incorporated which appears to be in East Banistan. The rationale for this rule is that a corporation owes its commitment to the State under the law of which it is formed.

The United Kingdom and about British Commonwealth nations reject the place of incorporation as the primary determinant of residence on the grounds that such a rule is subject to manipulation. A corporation with its chief(prenominal) activities in Country X could avoid its taxationing legal power by incorporating elsewhere. Alternatively, East Banistan could claim Corp. as its residence because its headquarter and registered office argon in that respect, an approach which many Continental European and Latin American nations follow. The weakness of this approach is that is formalistic and does non reflect the realities of Corp.'s decision-making locus.

1.4 Under the British/Commonwealth rule, residence of a corporation is primarily determined by where its central

management and irresponsible power in fact exists, which is often but not necessarily the State in which its Board of Directors meets. See De Beers fused Mines, Limited v. Howe (Surveyor of Taxes (1905-06 5 TC 198 (KB Div, CA, HL). In this case, Ukraine could made a good case that Corp. is its resident since that is where major business decisions are made and strategic plans are implemented. East Banistan could make a similar if l

Albrecht, R. (1952). The taxation of aliens under international law. 21 British Year Book of international Law.

De Beers Consolidated Mines Ltd. v.

Howe (Surveyor of

paid by that country." (Model 13, materials, p. 13). Under this theory, the United States could tax the entire profit from the sale of computer software products there through UDI and other agents.

2.1 All nations seek to tax income whose reservoir is within

According to Maruca (2001, March), the proposed regulations follow closely the source of income rules of Secs. 863(d) and (3) under which, he says, "the source of income is determined generally with reference to the residence of the taxpayer." Therefore, "income from distance . . . activity is U.S. source if derived by a U.S. person and conflicting source if derived by a non-U.S. person" and "similarly, international communication theory income of a U.S. source and 50-percent foreign source" and "international communication theory income of a non-U.S. person is 100-percent foreign source," except to the extent it is referable to a U.S. locale of the foreign person.

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