How do tax treaties benefit corporations engaged in international business?

Tax treaties primarily benefit corporations engaged in international business by avoiding double taxation on income. When a corporation operates in multiple countries, it might be subject to taxation on its income in each of those jurisdictions. This can significantly increase the overall tax burden, as the same income can be taxed in different countries.

Tax treaties are designed to address this issue by establishing rules for which country gets the right to tax certain types of income. They typically provide mechanisms that allow a corporation to receive credits or exemptions for taxes paid to one jurisdiction when calculating its tax obligation in another. This greatly reduces the risk of double taxation, making it more financially viable for corporations to operate across borders. By doing so, tax treaties encourage foreign investment and international trade, leading to more robust global economic activities.

Additionally, the other options, while they may touch on aspects of corporate operations, do not specifically relate to the fundamental purpose of tax treaties. For instance, promoting local hiring is more about domestic employment policies, and incentives for research and development or lowering operational costs relate to broader business strategies, rather than the specific tax relief provided by treaties.