International Taxation: Issues and Solutions of Cross-Border Stock Options Under the Laws of the U.S. & Australia for Purposes of Reforms of Thailand Tax Laws

The widespread use of stock options as a part of renumeration schemes has become an intricate concern of taxation, particularly, in cross-border employment that weighs greatly on the effect of tax laws to minimize taxes. The different approach of taxation between a developed country and a developing country would be detrimental due to the conflict of taxation between source of income and resident countries. Among countries, incomparable rules of domestic laws and tax treaties raise questions of international taxation on causes and results from double taxation and double nontaxation. Explicitly, the ambivalence of laws may comprehend a dearth of specific rules of taxation for the cross-border options under domestic laws and tax treaties, including tax timing, characterization, and the appointment of income. First, this research covers perspectives of employees and employers on stock options concerning consequences of the unclear rule of taxation on cross-border options that radically impacts national governments rather than individuals. Then, the examination of laws on the options is the purpose of this research that presents issues or problems of taxation on the options. Then, the analysis of treatments of taxation will concentrate on the comparative tax provisions under domestic and international levels among given countries: the United States, Australia, and the Kingdom of Thailand. In fact, the defective tax provisions could be divided on their disparate treatments into sub-categories that affect not only taxpayers but also tax authorities. Although the complication of the options on either the options schemes or the laws would result in exorbitant cost to all parties, this blind spot may become a loophole of taxation as an advantage to taxpayers but a detriment to tax authorities. Finally, the reform of taxation on the options is necessary to deal with issues of domestic and international taxation, especially for Thailand, where the change must begin with the reform of domestic laws before the negotiation of tax treaties. In view of traditional approaches under the source and resident rules, the discourse of international taxation on cross-border options suggests the problem of interpretation in term of employment or services, where employees in one country may fulfill the work without physical presence in other countries. Accordingly, authorities should consider the participation approach in the reform of domestic tax laws and tax treaties to create tax fairness between source and resident countries