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Taxation of non-residents’ capital gainsThe reason for this inconsistency is not well articulated. Adding to this,there are substantive disagreements — often between developing anddeveloped countries — about what types of non-capital-gain incomeshould be taxable in a country other than the resident country of therecipient of the income. 6 Both of these factors — divergent views aboutwhere non-capital-gain income should be taxed, and inconsistenciesin observing the equivalence between income and gain (and thereforebetween the sources of income and gain) — have led to widely divergentpractices in the capital gains taxation of non-residents.The first challenge facing developing countries in designing policiesin this area, therefore, may be the apparent absence of an “internationalnorm,” or confusing accounts of what such a norm consists of. Thepresent chapter will offer some basic insights into understanding thedivergent practices. It argues that there are sound conceptual justificationsfor taxing non-residents on capital gains in general, and that thereare no compelling reasons for assuming that such taxation should belimited to immovable property. 7 Instead, the legitimacy of such a taxmay depend more on its specific design — for example, its treatment oflosses, and its ability to avoid arbitrary and multiple taxation of the sameeconomic gain — than on the basic idea of its imposition. 86This could be a debate either about whether a source country shouldhave a taxing right, or about what the source of the income is in the first place.7In this respect, the arguments of the present chapter go beyondsome recent discussions of the taxation of capital gains that are intendedto emphasize the interests of developing countries. See United Nations,Economic and Social Council, Committee of Experts on InternationalCooperation in Tax Matters, “Article 13 (Capital Gains): the practicalimplications of paragraph 4,” (2014), available at http://www.un.org/esa/ffd/wp-content/uploads/2014/10/10STM_CRP13_CapitalGains.pdf (hereinafter“Committee of Experts Paper”); International Monetary Fund (IMF),“Spillovers in International Corporate Taxation,” (2014) Policy Paper, availableat http://www.imf.org/external/np/pp/eng/2014/050914.pdf (hereinafter“IMF Spillovers Report”); and Richard Krever, “Tax Treaties and the Taxationof Non-Residents’ Capital Gains,” in Arthur J. Cockfield, ed., Globalizationand its Tax Discontents: Tax Policy and International Investments (Toronto:University of Toronto Press, 2010), 212-238.8Unfortunately, both the United Nations and OECD Model Conventions(and many existing discussions purporting to give guidance to developingcountries) tend to be brief, or even silent, on these design issues.109