Reciprocity principle

The give-and-take principle is fundamental in international taxation and tax treaties, emphasizing reciprocity and mutual benefit between countries. It ensures that nations cooperate by granting equivalent tax reliefs or benefits to prevent double taxation and promote fair treatment of taxpayers engaged in cross-border activities. Under this principle, a country may allow its residents to claim relief for foreign taxes paid if the other country provides similar concessions under its domestic laws or bilateral tax agreements. This approach fosters international cooperation, equity, and balance in tax administration.

Example: If Country A allows tax credits for income earned in Country B, and Country B reciprocates by granting similar relief to its residents for income taxed in Country A, both nations uphold the give-and-take principle, avoiding double taxation and encouraging cross-border investment.