I. Inter-State tax agreements
An important reason for international double taxation is the conflict of tax jurisdiction among countries. It is a common practice for governments to actively limit their tax jurisdiction to a certain extent by signing tax treaties to avoid international double taxation. At present, the United Nations Model Agreement for the Avoidance of Double Taxation between Developed and Developing Countries formulated by the United Nations Expert Group is the most influential tax model agreement in the world. Countries can conclude tax treaties under the guidance of this model according to their actual conditions.
Second, the tax exemption law
The tax exemption law, also known as the exemption law, refers to the method that the resident country gives up exercising the resident tax jurisdiction and, under certain conditions, exempts the transnational income obtained by its resident taxpayers from abroad and pays taxes to the source country. Tax exemption law includes complete tax exemption law and progressive tax exemption law, that is, the country of residence waives the right to tax transnational income in whole or with reservations.
Third, the credit method.
Credit law is a country that exercises residents' jurisdiction. When taxing the income of its residents abroad, it allows taxpayers to deduct the tax paid at the source from the domestic tax payable. Credit law is divided into full credit law and limit credit law.
Unlike the tax exemption law, the credit law recognizes the priority of the tax jurisdiction of the source country, while insisting on the tax jurisdiction of its residents.