Territorial Tax System
/ˌtɛrɪˈtɔːriəl tæks ˈsɪstəm/
Definitions
- (n.) A tax framework in which a country taxes income earned within its borders, exempting foreign-source income from domestic taxation.
Under a territorial tax system, a corporation pays tax only on profits generated domestically.
Forms
- territorial tax system
- territorial tax systems
Related terms
See also
Commentary
Territorial tax systems are often contrasted with worldwide tax systems; careful drafting is required to define source rules and avoid double taxation or unintended exemptions.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.