The territorial approach, also referred to as the source approach to tax policy, levies taxes on the income earned by firms that are incorporated in the host country, regardless of where the income was earned (domestically or abroad).

Question

Quizplus · Accepted Answer

The territorial approach to tax policy taxes only the income earned within the country's borders, not on worldwide income. The description given aligns more closely with the worldwide approach, where income is taxed regardless of where it was earned.

The Territorial Approach, Also Referred to as the Source Approach