Double Taxation Treaty, Interpretations of Double Taxation Treaties Research Papers (original) (raw)

The article is about the relationship of a physical person with a sovereign
political and legal entity through its participation in public financial relations arising from the mobilization, distribution and use of centralized reserves. Definitions of public law categories of fiscal sovereignty and tax jurisdiction were given. Yes, fiscal sovereignty is a potential opportunity for a sovereign formation to generate tax relations, create public funds and allocate them to certain areas of state and social development. At the same time the tax jurisdiction is the actual realization of the state
fiscal sovereignty regarding the establishment, modification and termination of the relevant legal relations within the sovereign territory of the state and persons connected with the state by financial and legal ties. The levels of tax jurisdiction of sovereign entities are analyzed. Particular attention is paid to the legal status of the taxpayer, its nature
and the principles on which it is built. The influence of economic theories of taxation on changes in the legal status of the taxpayer is studied. The principle of citizenship – the political and legal ties between a person and the state and the principle of residence – the financial and legal ties of a person with tax jurisdiction is analysed. The reasons and stages of the transformation of the political-legal connection in the financial-legal connection are studied.
The sovereignty of a state is a public law category, which broadly defines the exclusive right of the state, as a special political legal entity, for independent internal and external activities. Therefore, the internal and external forms of the state sovereignty are the adoption of norms of the national legislation and participation in international relations. The essence of the sovereignty is the sovereign right of the state to extend its power to all relations occurring in the state and to create new ones by the adoption of normative legal acts.
However, such sovereign right is limited by the territory and the people. Henceforth, we have such legal categories as "territorial" and "extraterritorial" jurisdictions of the state in the public legal conceptual system. In the former case, the state authority extends to the entire internationally recognized territory of the state, in the latter case - to individuals and legal entities with legally defined relationships with the state. That is to say, the territorial jurisdiction is absolute - the state has the right to use all the means to have an influence on relationships within its sovereign territory. Extraterritorial jurisdiction of the state is limited by the influence of personal jurisdiction of other states on individuals and legal entities. The exclusive right of the state to establish and collect taxes also works in two ways: on the territory of the state and on the persons. In the first case, depending on the territorial arrangement, the state on its territory determines one or more tax jurisdictions. In the second case, the state defines personal tax jurisdictions over individuals and legal entities. It is precisely the influence of the two extraterritorial jurisdictions of the two countries which is determined by the degree of political or financial legal connection of individuals with a certain state.
The political legal relation between the individual and the state is characterized on the one hand by constitutional rights, freedoms and their protection by the state, on the other
hand by duties before the state, regardless of the individual’s residence. The external manifestation of such a relationship is the citizenship of the individual. Financial legal relations among individuals in the second half of the nineteenth century emerged from the political and legal relations and were characterized by the property nature of the relations between the individuals with a certain tax jurisdiction. The external manifestation of such a relationship is the residence of a person. The evolution of this relations between individuals with a tax jurisdiction has more than one hundred years in development. The scientific rationale of the need for such a link enabled to build the modern financial mechanism for mobilizing funds into centralized reserves.
In the modern world, the financial and legal relationship of an individual is connected more to a state with a certain tax jurisdiction. Various political and legal societal formations have created four types of tax jurisdictions: interstate, state, local and tax jurisdictions with a special status. Each of them provides a mobilization function to the corresponding budget levels. Questions of the financial and legal relationship of an individual taxpayer are inextricably linked to its tax law status because of the presence of the main element - the liability to pay tax. Tax liability is the starting point through which the degree of financial and legal connection of an individual with a certain tax jurisdiction is determined. Financial and legal ties require research, first of all, because of its main constituent elements - the state, tax jurisdictions, individuals and legal norms, which combine these elements into a single mechanism of relations.
Considering the above-mentioned,
the following conclusions can be
drawn. At present social development the state is the main bearer of the sovereignty of the people, an integral part of which is the fiscal sovereignty, that is, the exclusive competence of the highest state authorities to mobilize, distribute and use the state’s financial resources to guarantee its existence and create the proper conditions for the development for the society. In order to mobilize funds to public reserves, the state generates tax relations within its territory and persons permanently staying in this territory, i. e. distributes fiscal jurisdiction. Given the different fiscal jurisdiction exists at different
legal forms of sovereign entities, levels – interstate, state, regional,
special economic zones etc. At the same time, individuals who have tax liabilities mainly from objects
of property rights, which they receive either from the territory of a certain tax jurisdiction or
in the case of close connection with a certain tax
jurisdiction. From a retrospective point of view, in states with a continental law, the legal status of taxpayers was in continuous development in connection with the influence of scientific theories, constitutional rights and responsibilities, intergovernmental relations and economic integration. For the society of the past century, citizenship and duty to pay taxes were inseparable concepts, since the former provided for a latter, and the latter could not exist without the former. The relation between constitutional rights and responsibilities determined the legal status of a citizen. The citizenship principle defined the citizens as taxpayers. Foreign citizens paid tax, from the sources which are on the state’s territory only, because the “state protection” for which taxes should be paid were used only by citizens of the state, and the same protection was used by tax objects, the source of which was the territory of the state. This political and legal ties between a person and a state was not limited solely to the duty to pay taxes, it also included other duties, such as military or labor, in the event of the introduction of martial law. At the present stage of development, states do not limit the effect of tax jurisdiction only to their own territory and citizens.
In contrast to
citizenship – the political and legal ties of an individual with the state, in the modern world tax relations are based on the principle of residence – the financial and legal ties of an individual with a certain tax jurisdiction. According to the principle of residence, taxpayers from all sources of income are recognized residents, that is, all-natural persons who have a permanent residence or who can be recognized as residents by other relevant criteria. Only taxpayers whose source of origin is the tax jurisdiction is recognized non-residents, that is, all persons who do not fall under the definition of residents.
Thus, the financial ties of a person with tax jurisdiction is the degree
of economic attachment of a person to a certain level of tax jurisdiction of a sovereign entity with feedback in the form of a public benefit that is characterized by an appropriate amount of tax duties before him, and derivatives from and, at
the same time, the limit of dividing the tax jurisdiction of two different sovereign entities.