Title

Worldwide or territorial approach for individual income tax : which is more prevalent?

Document Type

Journal article

Source Publication

Journal of Modern Accounting and Auditing

Publication Date

4-2017

Volume

13

Issue

4

First Page

137

Last Page

151

Publisher

David Publishing Co., Inc.

Keywords

individual income tax, global individual income tax, worldwide/territorial income approach

Abstract

For individuals who are contemplating relocating, how their income will be taxed might be an important factor when deciding whether or not to take up residence in another country. Two income approaches are commonly used around the globe. Worldwide income approach (also known as a global tax system) taxes income from whatever source derived. Territorial income approach taxes only income earned within the country’s borders. Using information collected from PricewaterhouseCoopers’ website1 that provides information on tax systems used in countries around the world, this paper examines which countries apply worldwide or global income approach and which employ territorial approach to determine the legitimate source of taxable income. The research focuses on countries within: (1) Americas; (2) Asia/Pacific Basin; (3) Europe; and (4) Africa/Middle and Near East. Based on the information collected and presented in this paper, the worldwide approach is much more prevalent (104 countries) than the territorial approach (30 countries). This paper also investigates any specific rules that a particular country has in relation to income to be taxed and residency versus non-residency status of the taxpayers. There appears to be an abundant spectrum of rules relating to residency and domicile for tax purposes among the countries.

DOI

10.17265/1548-6583/2017.04.001

Print ISSN

15486583

E-ISSN

19359683

Publisher Statement

Coryright © 2017 David Publishing Company. Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Language

English

Recommended Citation

Shum, C., Fay, J., & Lui, G. (2017). Worldwide or territorial approach for individual income tax: Which is more prevalent? Journal of Modern Accounting and Auditing, 13(4), 137-151. doi: 10.17265/1548-6583/2017.04.001

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