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. IRS Publication 901

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

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

    The opportunity given to mutual fund shareholders to exchange ...
  4. Certificate Of Origin - CO

    A document declaring in which country a commodity or good was ...
  5. Call Privilege

    The provision in a bond indenture that gives the bond issuer ...
  6. Lisbon Treaty

    The Lisbon Treaty updated regulations for the European Union, ...
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. Taxes

    Understanding Taxation Of Foreign Investments

    Technically, any gains from foreign investments owned by an American citizen are subject to tax by the company's home country as well as the IRS. However, the Foreign Tax Credit enables you to ...
  3. Managing Wealth

    Advantages & Disadvantages Of Dual Citizenship

    When does it make sense to be a citizen of the United States and somewhere else? Here are the positives and negatives of a dual citizenship.
  4. Personal Finance

    State Laws Dictate Division Of Joint Property

    In breakup, divorce or death, community or common law will determine how property is divided.
  5. 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.
  6. Taxes

    Countries With The Highest And Lowest Taxes

    If you think your taxes are high, you may be surprised. Discover the countries with the highest and lowest taxes.
  7. Insights

    Ever Wanted to Own International Stocks? Here's How

    Tips and strategies for users to trade in different exchanges around the world.
  8. Taxes

    Tax-Efficient Strategies For International Clients

    In a globalized world, international clients seek to diversify holdings by accessing U.S. markets. Creative strategies will help optimize tax positioning.
  9. 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.
RELATED FAQS
  1. What does it mean when a country has little activity in its capital account?

    Know what a country's capital account represents and understand what the implications are if a country has little activity ... Read Answer >>
  2. 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