A DBA (double taxation agreement) may require that the tax be levied by the country of residence and that it be exempted in the country where it is created. In other cases, the resident may pay a withholding tax on the country where the income was collected and the taxpayer receives a compensatory tax credit in the country of residence to take into account the fact that the tax has already been paid. In the first case, the taxpayer (abroad) would declare himself non-resident. In both cases, the DBA may provide for the two tax authorities to exchange information on these returns. Because of this communication between countries, they also have a better view of individuals and businesses trying to evade or evade tax. [4] The second model of the tax treaty is officially known as the UNITED Nations Convention on Double Taxation between developed and developing countries. The United Nations is an international organization committed to strengthening political and economic cooperation between its member countries. A treaty that follows the UN model gives favourable tax rights to the country of foreign investment. In general, this favourable tax system benefits developing countries that receive foreign investment. The model untable convention refers significantly to the OECD model convention. Second, the United States authorizes a foreign tax credit that allows foreign countries to pay income tax with U.S. income tax due to foreign income that is not covered by that exclusion. The foreign tax credit is not allowed for the tax paid on activity income, which is excluded by the rules described above (i.e.

not a double immersion). [17] The EM method requires the country of origin to collect tax on income from foreign sources and transfer it to the country in which it was created. [Citation required] Fiscal sovereignty extends only to the national border. When countries rely on territorial principles as described above, [where?] they generally depend on the EM method to reduce double taxation.