By the very nature of their status as non residents they are likely to be covered by the
laws of at least two countries, one country of which they are residents and second where
such persons are earning income as non residents. It is, therefore, essential to know the
manner in which income earned by them will be taxed whether in the country of their
residence or the country where income is earned.
In fact most of the countries in the world that
have taken to levy tax on income/capital have adopted more or less similar pattern, i.e.
Income Tax is imposed on the person who has derived the income and the tax is levied at
the place where either he has earned it or where he resides.
Due to phenomenal growth in international trade and commerce and increasing interactivity
among the nations, residents of one country extend their sphere of business operations to
other countries where income is earned. It is in the interest of all countries to ensure
that undue tax burden is not cast on persons earning income by taxing them twice, once in
the country of residence and again in the country where the income is derived. At the same
time sufficient precautions are also needed to guard against tax evasion and to facilitate
tax recoveries.
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