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Tax Views: Enforcement of tax law in foreign courts | Vern Krishna

Thursday, April 20, 2017 @ 9:46 AM | By Vern Krishna

As multinational corporations increasingly engage in international trade, there is a risk that they may exploit the tax laws of countries to reduce their domestic taxes. Absent specific bilateral tax treaties permitting extraterritorial enforcement, however, a country cannot engage foreign courts, either directly or indirectly, to enforce domestic revenue collection. Revenue laws, be they income tax, sales tax, or import duties, reflect a sovereign’s political will, and create property rights that affect taxpayers’ relationships with their sovereign.

It is well accepted law that sovereign states will...