《THE TAXATION OF INCOME FOREIGN INVESTMENTS》

INTRODUCTION1

CHAPTER ONE:Jurisdiction to Tax5

1.0 The National Perspective5

1.1 Nationality5

1.2 Residence7

1.2.1 Individual Residence7

（a） Possession of a Home7

（b） Possession of a Permanent Place of Abode8

（c） Physical Presence10

1.2.2 Corporate Residence12

（a） Place of Incorporation and Registration13

（b） Place Where the Business is Carried on14

（c） Place Where the Central Management and Control is Exercised15

1.3 Source of Income19

1.3.1 Income from Employment19

1.3.2 Income from Trading and Professional Activity20

1.3.3 Interest, Dividends, Rents and Royalties21

1.4 The International Dimension in the Exercise of Tax Jurisdiction21

1.4.1 Extraterritoriality of Tax Jurisdiction21

1.4.2 International Double Taxation23

CHAPTER TWO:Allocation of Multi-jurisdictional Income25

2.0 Finding the Formula25

2.1 Treaty Allocation of Income26

2.1.1 The Historical Background26

（a） The League of Nations Models26

（b） The OECD Model28

（c） The British Colonial Model29

（d） Alternative Regional Models31

（e） The US Model Income Tax Treaty33

（f） The UN Model Convention33

2.2 The Significance of the OECD and UN Model35

2.2.1 Taxation of Profits from Enterprises with Business Operations Abroad38

2.2.2 The Taxation of Interest, Royalties and Dividends40

（a） Internst40

（b） Royalties42

（c） Dividends43

2.2.3 Shipping and Air Transpofi Profits44

CHAPTER THREE:Taxing Foreign Investment Income in Developing Countries45

3.1 Forms of Foreign Investment46

3.1.1 The Subsidiary Company46

3.1.2 Foreign Branch or Agency46

3.1.3 Joint Ventures47

3.1.4 Service Contracts47

3.1.5 Others47

3.2. Tax Incentives for Foreign Investment48

3.2.1 Treaty Relief from Double Taxation48

3.2.2 Tax Treaties by Five Developing Countries50

（a） Treaties Following the OECD Model50

（b） Treaties Following the UN Model51

（c） Treaty Position on the Taxation of Income from Dividends, Interest, and Royalty Income53

3.3 Treaties with Developing Countries: An Overview55

3.4 The Incentive Factor58

3.4.1 Blanket Incentives58

（a） Tax Holidays59

（b） Exemption from Import and Excise Duties59

（c） Exemption from Withholding Taxes60

3.4.2 Investment Allowances60

（a） General Exemption60

（b） Re-investment Allowances62

（c） Allowances for Export Trade63

3.4.3 Special Arrangements with Tax-payers63

3.5 Unilateral Relief from DoubleTaxation70

3.6 Non-tax Incentives72

3.6.1 Legal Protection of Foreign Investments72

3.6.2 Access to Foreign Currency75

3.6.3 Patent and Trademark Protection75

3.6.4 Access to Local Credit Facilities76

3.7 Do incentives Influence Investment?76

CHAPTER FOUR:Enforcement and Administration79

4.1 Foreign Investors Compliance with Host Country’s Tax Laws79

4.1.1 Transfer Pricing80

4.1.2 Non-continuity of Activity82

4.1.3 State Agreements Constraining the Taxation Authority89

4.1.4 Misrepresentation of Information91

CHAPTER FIVE:CONCLUSION93

Appendix Ⅰ Tax Treaty Comparison Chart99

Appendix Ⅱ Company Responses to Incentives - Tanzania105

Appendix Ⅲ Company Responses to Incentives - PNG111

Appendix Ⅳ Memorandum of Understanding Tanzania/Japan115

Appendix Ⅴ Tax Exemption Order121

BIBLIOGRAPHY123

SUBJECT INDEX133