Tax discrimination against non-residents of a country

Active prejudice towards taxable non-residents
Preferential treatment towards residents against non-residents regarding taxes

Nature

Countries may introduce special taxes which are theoretically applicable to both resident and non-resident enterprises but which in practice impinge almost exclusively on the profits of the non-resident. Examples are: special taxes on profits when dividends are not paid within the country; special taxes on profits when a certain proportion of shares are not owned by residents; special tax on that part of the profits remitted out of the country; denial to non-resident companies of any rebate of tax on profits.

Background

Tax discrimination against non-residents emerged as a significant global concern in the early 20th century, as cross-border migration and international investment increased. The problem gained prominence with the rise of double taxation disputes, prompting the League of Nations to address it in the 1920s. Subsequent decades saw the OECD and United Nations develop model tax conventions, reflecting growing international recognition of the need to prevent discriminatory tax practices targeting non-resident individuals and entities.

Claim

Tax discrimination against non-residents is a grave injustice that undermines the principles of fairness and equality. By imposing harsher tax burdens or denying benefits to non-residents, countries exploit individuals who contribute to their economies. This practice not only discourages global mobility and investment but also fosters resentment and division. Addressing tax discrimination is essential to uphold human rights, promote international cooperation, and ensure a just global economic system.