Understanding exemptions to the source basis of tax

Tax systems begin by taxing transactions and assets located in their own jurisdiction. This is known as the source basis. However, under this basis certain transactions and assets can be excluded from the scope of tax if they are connected to persons who are not themselves connected with the jurisdiction. For instance, the UK does not tax the following UK sited transactions and assets: • Income paid to non-UK residents gross (such as bank or eurobond interest and social security pensions) or subject to a tax credit (such as dividends) or withholding tax (such as loan interest) is not s...