The process of enhancing, increasing, and improving connectivity and bringing the global business together is known as Globalization. In the past many decades, Globalization has increased manifolds. As the utilization of the internet has increased over the years, Globalization has also increased. With the rise of globalization, there has also been a rise of anti and pro-globalization lobbies.
Globalization links almost all the major companies of the world and it has made everything more universal. It impacts the world population alike. An average person has a comparatively lesser knowledge of fair taxes and the taxation system. Globalization is believed to restrict the ability of the respective government in collecting taxes. A major part of Economists from all across the world support Globalization because it increases the income of people and paves a way for a competitive market in the business world.
The Overall Impact of Globalization on Taxation in Countries
Globalization has made it harder for the countries to charge taxes at higher rates as it will cause people and capital to flow out. But one of the benefits of Globalization is that it has resulted in increased trading and the availability of more jobs as it has also increased the availability of more resources.
Some countries have tax havens where some taxes are offered at a comparatively lower rate. There are some countries where double taxation agreements are offered to the people. These taxation agreements promote the globalization of businesses and avert double taxation for businesses.
But there are not just positive impacts of globalization on taxation. There are several negative impacts of globalization on taxation as well. Although it is beneficial to the people involved in businesses and the business organization, these are not as beneficial to the countries in which the businesses are set up. Tax havens are believed to be beneficial but only to the business organization. These tax havens are not quite beneficial for the countries the businesses reside in. Tax havens are responsible for taking the revenues away from the country.
It can be rightly put up that Globalization impacts the taxation system at many levels. Like all the other things, globalization comes with its respective set of disadvantages and advantages. Knowing what globalization is and its respective impacts on the economy and taxation help people in deciding on what side they want to be on. For more blogs like this one, keep following Joe Madrajat blogs.