What determines the impact of tax treaties on international business?

The impact of tax treaties on international business is primarily determined by the prevention of double taxation. Tax treaties are designed to resolve issues related to taxation that can arise when a business operates in more than one country. Without these treaties, businesses could face being taxed on the same income in both their home country and the country where they operate, which could discourage cross-border trade and investment.

By establishing agreements between countries, tax treaties outline how income such as dividends, interest, and royalties will be taxed, ensuring that a business does not suffer the burden of double taxation. This creates a more predictable tax landscape for international business operations, reducing costs and encouraging entities to engage in trade and investment across borders. It fosters an environment where businesses can expand without the fear of excessive taxation, thus enhancing international economic cooperation and growth.

The other options relate to different aspects of international business but do not directly address how tax treaties function to alleviate the burdens of taxation. Shipping costs, trade embargoes, and currency exchange rate regulations involve logistics, economic sanctions, and financial markets, respectively, which are separate from the primary role tax treaties play in minimizing double taxation issues.