The destination principle is a concept of
international taxation
International taxation is the study or determination of tax on a person or business subject to the tax laws of different countries, or the international aspects of an individual country's tax laws as the case may be. Governments usually limit th ...
which allows for
value added taxes
A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...
to be retained by the country where the taxed product is being sold.
They are collected on
imports
An import is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade.
In international trade, the importation and exportation of goods are limited ...
and rebated on
exports
An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an ...
.
This principle is also applied to the
Goods and Services Tax of several countries like
India
India, officially the Republic of India ( Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the ...
.
Origin versus destination principle
According to
Alan V. Deardorff at the
University of Michigan
, mottoeng = "Arts, Knowledge, Truth"
, former_names = Catholepistemiad, or University of Michigania (1817–1821)
, budget = $10.3 billion (2021)
, endowment = $17 billion (2021)As o ...
,
Ann Arbor
Anne, alternatively spelled Ann, is a form of the Latin female given name Anna. This in turn is a representation of the Hebrew Hannah, which means 'favour' or 'grace'. Related names include Annie.
Anne is sometimes used as a male name in the ...
, the origin principle, in contrast to the destination principle in international taxation is the principle "that value added taxes be kept only by the country where production takes place". Under the origin principle, value added taxes are not collected on imports and not rebated on exports.
In contrast, the destination principle, which allows for
value added taxes
A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...
to be retained by the country where the taxed product is being sold.
References
International taxation
{{Tax-stub