THE INTERNATIONAL MECHANISM OF TAXATION

Abstract

Now international trade of each country is broadening, intensifying investment and is drawing more attention to development of external marketing.

Tax law regulation is used in the concerned country under the specific relation. An original source of international tax regulation includes international laws of tax regulation, in other words contracts made between two and more countries. Taxpayers who earn income in two or more countries face the problem of dual taxation. That is, income earned in one country may be taxed a second time in an-other country. Double taxation is the payment of taxes on one source of income to two different states. The problems presented by double taxation-as well as other problems that arise from tax incentives, tax avoidance, and tax evasion-can be dealt with unilaterally or through the of reciprocal tax treaties. While a few commentators have suggested that these problems can best be dealt with unilaterally, most authorities hold that they can be better handled in treaties. It is now the practice in virtually all countries to provide relief from double taxation either unilaterally or through a bilateral or multilateral treaty. Relief may take the form of an exemption, a credit, or a deduction.

OCED Model Convention for the Avoidance of Double Taxation with Respect to Taxes on Income and Capital is model tax treaty promulgated by the Organization for Economic Cooperation and Development.

Now Mongolia has contracts with 36 countries concerning not allocating double income tax, preventing avoiding paying tax, and 31 contracts concerning about exchanging confirmation international countries are complying with effectively.