International tax treaties as a means of advancing economic goals
International tax treaties have become quite common especially among countries that have decided to come to an agreement to promote trade. These treaties are reached following total evaluation of the benefits that may arise out of the treaties that have been reached. The treaties are common among countries that are in constant trade with each other. Therefore, through reaching upon the treaties, it is quite obvious that there will be more trading activities taking place between the countries that have come to an agreement. This will be through attracting more entrepreneurs into putting more resources to conducting the trade that the different governments are promoting. Following the agreements that are reached to ensure that the different countries abide by the required policies. There are also consequences that are agreed on if a particular country that was put off the treaty fails to abide by the set regulations.
Various benefits are associated with the adoption of these treaties from different perspectives. However, there are numerous benefits that are evident through the countries that adopt and abide by these treaties (Canada-U.S 170). Through these treaties, there will be a growth in the country’s industrial sector since more manufacturers and producers will be working to ensure that they can utilize the opportunity that has been provided. This is evident through the regulations that will have been put to ensure that there are limited taxes to countries that are conducting a certain type of trade. Through this, there will also be a growth in investors since there is a majority of investors who will want to venture into this newly found opportunity. The increase in sales will automatically lead to growth of the different countries that are involved in the trade. Through this, there will be industrial development that will lead to other positive impacts that will be beneficial. It is evident through the numerous countries that have adopted these treaties that they have experienced a considerable growth following the implementation of the different tax treaties.
The economic stand of the countries that choose to benefit from these treaties is quite good. This is due to the growth that they acquire in the process of trading. This is because of the high interests that the get following the numerous sales that they make. This is evident from the high economic advantages that they gain compared to countries that have not adopted any treaties that are likely to promote trade in their region. The growth and advantage that they gain in their economic is due to the high increase in demand for their products. The increase in demand may be out of the low prices that the products being sold have. Low prices in regulations that have been put on taxes to promote trade (Pinto 42). Corporations that are involved in such activities may have a drastic increase in sales due to their favorable prices that may be convenient for the majority of people interested in the products. Following such increase in the trade that the different corporations may be pursuing in countries that have tax treaties, it is likely that there will be a significant growth and benefits. Possibly, there will be an increase in foreign investors. This is because an increase in demand of the different products may lead to the establishment of more industries to ensure that they satisfy the already existing market and any other opportunity that may arise in the different countries. Various benefits are linked with the growth that will be experienced in the different countries economy.
Despite the economic and corporation value that these treaties have, there also exist other values which include benefits to the people’s living standards. It is evident that through these tax treaties, it is likely that there are will be improved living standards. This is through the friendly prices that will be put on the different commodities (Larkins 4). This will help people to afford the different products that have been put to consideration under the tax treaties. The difference in prices is made possible following the bulk importation that is conducted. There is a decrease in the prices since there are very limited taxes that are applied on these goods. Through this, it is possible for the wholesalers and the retailers to cut down on their prices since they also receive the products at relatively fair prices. Through these changes, it is possible for the majority of the population in the countries included in the peace treaties to afford the commodities that they may require. Other benefits include improved living standards. This is due to the affordability of most products. It is evident that there are people who may face challenges in obtaining some products due to their high value (Bacchetta, and Paz Espinosa 276). The high value is attributable to high taxes that are imposed on the different products before they actually find their way to their designated market. Therefore, it is through international treaties that it is possible to improve the populations’ living standards since they can acquire the products that they require.
Despite the numerous benefits that have been associated with the international tax treaties, there are disadvantages that are associated with the treaties (Cartano 480). The disadvantages include drawbacks on the already existing business in the countries that take up the treaties. This is due to the competition that will be promoted through such treaties. This is due to the reduced prices that the imported products will be retailing. The low prices are because there will be certain regulations that will be promoted to cut down on taxes or to eliminate taxation on certain products coming in from different countries. The reduced prices following the regulations that will be implemented will promote too much competition that might not be fair to the already established business. This is because there might be the collapse of business that has been in existence for a very long period.
One should ensure that the promotion of the country’s original product in its market. Through such treaties, there might be the neglecting the country’s industrial sector since there is a possibility that their products popularity might be beaten by the products that are being imported. The competition being experienced will be due to the fair prices of the foreign products against other products from already established brands in the country. Evidently, there ought to be number of social advantages that will be brought about by the international tax treaties that might be implemented by different countries in different regions. This is evident through the advantages that have been associated with the implementation of these treaties (Campbell 40). The social advantages have proven to be quite significant due to positive impacts that the treaties have on the country. This is due to the improvement in the living standards that is made possible through the affordability of products that are considered through the treaties.
In summary, it is true to state that the international tax treaties are essential for countries in different regions that are in constant trade with each other. The implementation of the different tax treaties is relevant in promoting trade. This is evident through the increase in trade that is witnessed in different international countries following the implementation of international tax treaties. It is through the treaties that there is a considerable growth in the number of investors since there is an open market to conduct trade under the policies that have been agreed upon. The economic benefits are also quite significant since growth in trade will result to more consumers. This is following the availability of market that has been established through the treaties that are meant to cut down on taxes. Disadvantages are identifiable that have been associated with the implementation of these treaties. A drawback on the already established business is unavoidable following the implementation of the international treaties. This is brought by competition that is created with the foreign entrepreneurs who will evidently try and take over the available market. This can be made possible through putting lower prices compared to the already established business in a particular country. In conclusion, there is a need to ensure that there are certain limitations to limit the drawback that may be witnessed following the implementation of such treaties.
Bacchetta, Philippe, and Paz Espinosa Maria. "Exchange-of-Information Clauses in International Tax Treaties." International Tax and Public Finance 7.3 (2000): 275-93. ProQuest. Web. 16 Dec. 2014.
Campbell, Dennis. International Taxation of Low-Tax Transactions: High--tax and Low-Tax Jurisdictions. New York, NY: Juris Publishing, Inc, 2011. Print.
Canada-U.S. Tax Treaty: A Practical Interpretation. Toronto, Ontario: CCH Canadian Limited, 2009. Print.
Cartano, David J. Federal and State Taxation of Limited Liability Companies 2009. Cch Inc, 2008. Print.
Larkins, Ernest R. "Tax Treaties and Other International Agreements." The CPA Journal 67.5 (1997): 22-28+. ProQuest. Web. 16 Dec. 2014.
Pinto, Dale. E-commerce and Source-Based Income Taxation. Amsterdam: IBFD Publications, 2003. Print.