Final answer:
In international tax settings, when income tax liability is based on the geographic source of the income, this is known as the Source rule. The Source rule allows a country to tax income generated within its jurisdiction, contrasting the Residence rule, which is based on taxpayer's residency.
Step-by-step explanation:
In the international tax setting, when nexus is determined based on the geographic source of the income, that is known as a. Source rule. The Source rule is a principle in international taxation that determines the right of a country to tax income based on where it was generated rather than where the taxpayer resides. This is in contrast with the Residence rule, which taxes individuals and entities on their global income based on their residence status in a country. The Apportionment rule refers to how income is divided among states for tax purposes, and Nexus rule is a broader concept that defines the connection a business has with a state, often used to determine tax liability in a domestic context.
Regarding the background international law concepts, treaties and international agreements are indeed sources of international law, and international law fundamentally rests on the principle of state sovereignty, which respects the legal independence of each state within the international system.