For example, in Australia, a foreign company is taxable if i) Australian tax residents control the company’s voting power; or ii) Its “central management and control” is in Australia.
Other jurisdictions have similar laws.
You have to check tax treaties between the US and the other country to see how it goes. Usually when there is tax treaty, there is no double taxation.
For corporations fixed place of business is important legal concept in OECD couturiers. Significant digital presence is a new emerging concept.
See the permanent establishment article of...nearly every tax treaty based on the US or OECD model tax treaties.
I always wondered about this and how it affects startups. In particular, YC requires that all the companies it funds be registered as US entities. How do these companies manage double taxation ?
They need to file at least the following:
1) US federal corporate income tax
2) Deleware state franchise tax
3) Australian income tax
Probably more. If you want to stay fully legal and compliant, it's just what you have to do.
Also, I have read that some services like 2checkout offer "name of record" where they seems to pay taxes on behalf of a company globally. But I haven't seen any other company offering that, so I'm not sure if it it's standard or not...
That being said, for SaaS, it is still currently generally the prevailing rule that sales/VAT/GST/whatever compliance isn't required in the customer's country unless you have a physical nexus to that country (i.e., office, employee, etc.)
However, the US tech dominance has resulted in many countries proposing or even adopting rules that would subject SaaS transactions to VAT/GST/whatever compliance regardless of the location of the vendor. Most intl tax experts agree that this will become the standard within a decade, though there is substantial disagreement as to how soon within the next decade the transition will occur.