international tax-law
Can a government tax foreign activity that does not involve its citizens or residents?
<p>Say a law is passed in the United States that purports to tax the Canadian government on its income, or to tax a Canadian citizen for activity in Canada.</p>
<p>That is: regardless of current tax arrangements, the US law applies American tax rates to everyone in Canada on top of what they already pay.</p>
<p>Would Canada be legally required to cooperate? Is there some unwritten rule that governments can only tax their own territory, or is it just sort of assumed Canada would resist and fight back despite US law requiring them to pay?</p>

<blockquote>
<p>Would Canada be legally required to cooperate?</p>
</blockquote>
<p>Under the US law yes. Under the Canada law no.</p>
<blockquote>
<p>Is there some unwritten rule that governments can only tax their own territory, or is it just sort of assumed Canada would resist and fight back despite US law requiring them to pay?</p>
</blockquote>
<p>Countries are <a href="https://en.m.wikipedia.org/wiki/Sovereign_state" rel="nofollow noreferrer">sovereign states</a> which means that, ultimately, they do not have to abide each other's laws. Where they do, they do it merely for practial/political reasons.</p>
<p>In the unlikely event the US passes that kind of law and attempts to enforce it on Canada, that would be breach of sovereignty and may cause a declaration of war.</p>
