The choice of jurisdiction to which taxpayers, individuals, and business representatives resort may be based on several principles. According to Weinreich (2016), they include selecting jurisdictions with minimum tax audit requirements and an opportunity to choose tax rates for the totality of taxes. In other words, the possibility of giving preferences to a particular jurisdiction meets the requirements and capabilities of specific taxpayers and largely corresponds to the volume of income. However, in the global economy and, in particular, in conditions of a large share of goods purchased and sold outside the country via the Internet, multijurisdictional tax planning is an inevitable consequence of securing assets. The experience of purchasing retail goods online proves that international income tax issues are acute for many interested parties. Suppliers of various products are ready to look for new ways to reduce mandatory payments since, in the modern trading environment, remote interaction is not an objective reason for lifting tax obligations. As a result, ordering goods overseas and in other states has become more complex due to sellers’ fears of costs and the search for alternative ways to save money.
The situation is aggravated by the fact that in 2018, the corresponding decree was issued on the mandatory taxation of goods even without the physical presence of the seller (South Dakota v. Wayfair, Inc., 2018). Multijurisdictional tax planning has become an integral part of all financial matters in the trading industry. The previously existing legislation on duty-free sales of goods from outside states was repealed. As a result, all interested parties, including business owners and individuals, were forced to take into account new circumstances to minimize tax risks and avoid the threat of increased payments.
References
South Dakota v. Wayfair, Inc., 585 U.S. (2018).
Weinreich, D. (2016). Thinking big when funding is local: Assessing the potential of local option transportation funding in a multi-jurisdictional context. Public Works Management & Policy, 21(2), 101-127.