DEFINITION of 'National Treatment'

A concept of international law that declares if a state provides certain rights and privileges to its own citizens, it also should provide equivalent rights and privileges to foreigners who are currently in the country. This concept of equality can be found in bilateral tax treaties and also in most World Trade Organization agreements.

BREAKING DOWN 'National Treatment'

For example, if country A provides special tax breaks for its fledgling pharmaceutical industry, all pharmaceutical companies that have operations in country A will be entitled to the tax breaks, regardless of whether the company is domestic or foreign.

In some situations, national treatment may not be such a great thing. For instance, suppose that a state has a law that allows it to expropriate property. Under national treatment, a foreign firm would technically still be subject to the expropriation law. However, depending on the country, other laws may exists that could limit national treatment to only the upside benefits.

RELATED TERMS
  1. Tax Treaty

    A bilateral agreement made by two countries to resolve issues ...
  2. IRS Publication 901

    A document published by the Internal Revenue Service (IRS) that ...
  3. IRS Publication 597

    A document published by the Internal Revenue Service (IRS) that ...
  4. Exchange Privilege

    The opportunity given to mutual fund shareholders to exchange ...
  5. Bilateral Tax Agreement

    An arrangement between two jurisdictions that mitigates the problem ...
  6. Call Privilege

    The provision in a bond indenture that gives the bond issuer ...
Related Articles
  1. Managing Wealth

    What Taxes Do I Owe On Retirement Accounts Abroad?

    If you're a U.S. retiree, but previously worked abroad, here's what you need to know about taxes on foreign pensions and retirement accounts.
  2. Investing

    How Property Rights Affect Economies

    Property rights are laws governments create that enable investors to control, benefit from, and transfer property.
  3. Managing Wealth

    Advantages & Disadvantages Of Dual Citizenship

    When does it make sense to be a citizen of the U.S. and somewhere else? Here are the plusses and negatives of a dual citizenship.
  4. Retirement

    Things to Consider Before Retiring Abroad

    While moving abroad can stretch your retirement dollars, it can also make handling finances harder.
  5. Personal Finance

    State Laws Dictate Division Of Joint Property

    In breakup, divorce or death, community or common law will determine how property is divided.
  6. Personal Finance

    Financial Planning Issues for Foreign Nationals in U.S.

    There are a host of issues that foreign nationals face in the U.S. regarding taxation, credit and estate planning. Here are a few things to keep in mind.
  7. Taxes

    The Impact Of U.S. Corporate Taxation On Investment Decisions And CFC Transfer Pricing

    To avoid taxation, businesses do careful tax planning, taking into consideration more than one country's taxation system.
  8. Retirement

    Going Back to China to Retire: A How-to Guide

    If your family comes from China, it may seem natural to think of retiring there, but it could be difficult to do so unless you know the rules.
  9. Investing

    Financial Concepts

    Diversification? Optimal portfolio theory? Read this tutorial and these and other financial concepts will be made clear.
  10. Retirement

    5 Developed Countries That Welcome Expats

    Investigate these expat havens if you seek a developed country with low barriers for getting a permanent resident visa – sometimes even citizenship.
RELATED FAQS
  1. Can the government tax your capital gains from other countries?

    Learn more about how capital gains earned in foreign countries are treated by the IRS. Discover examples of special tax situations ... Read Answer >>
  2. What are the tax incentives or disincentives to vertical integration?

    Merging companies through vertical integration can provide companies in the United States with a marginally advantageous ... Read Answer >>
  3. What does the law say about non-U.S. citizens buying stocks of U.S. companies? Are ...

    The law is very fuzzy on the matter of who may own U.S. securities and for what purpose. The U.S. follows the common law ... Read Answer >>
Trading Center