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Origin principle of taxation


An international trade policy according to which goods and services are taxed in the country of production, regardless of the country of consumption. The advantages are a lower potential for tax fraud and an absence of need for border controls on trade flow, since exports do not travel tax-free. The disadvantage is the possibility for the tax system to discriminate between domestically produced goods and imports. See also destination principle of taxation.


Reference: Oxford Press Dictonary of Economics, 5th edt.