Question

The overriding purpose of tax treaties is to:

a. create 'tax havens'
b. minimize tax liability of multinational corporations
c. require business taxpayers to file returns in all countries in which they operate
d. eliminate the 'double taxation' that a taxpayer would face if his or her income were subject to tax in both countries

Answer 1

The primary goal of tax treaties is to prevent double taxation of income across countries, thereby facilitating international trade and investment.

Step-by-step explanation:

The overriding purpose of tax treaties is to eliminate the 'double taxation' that a taxpayer would face if his or her income were subject to tax in both countries. Tax treaties are designed to facilitate cross-border trade and investment by preventing the same income from being taxed by two different jurisdictions. This is in contrast to creating 'tax havens', minimizing tax liability for multinational companies at the expense of countries' revenue, or requiring businesses to file taxes in all operating countries without considering the overlap that could lead to double taxation.