International Income Tax

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Question 1. The source method of tax collection generally involves the primary right of a country a business is using as its main location of trading to tax this business according to its income. This is a general international state practice, which is also anchored in double taxation agreements. The source system means that income is taxed in the country where the income originates, regardless of factors such as physical or legal residence of the person or entity receiving the income. The source system is based on the fact that the business or entity receiving the income is making use of the source country's resources. Additionally, such a system also implicates fair competition between taxpayers among various jurisdictions. Income from lotteries, gambling, personal injury awards, gifts, and capital gains are not characterized as source incomes in a country, which means that such earnings are not subjected to this type of income tax. Another interesting point is that source system countries have extended their taxation scope by considering certain types of income that do not have a true "source" as sourced within their jurisdictions, such as dividends. These are then also deemed taxable by the countries involved. The source-based method differs from the residence method of taxation in that a country considers a person who has earned income within its borders as subject to taxes payable to the authority of that country. The residence system, on the other hand,
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