Double taxation can have several harmful effects on international trade and investment. Two of the most significant effects are:

1. Negative Impact on Cross-Border Investments:
   • Double taxation discourages foreign direct investment (FDI) as businesses and individuals are subjected to tax in both the country of source and the country of residence. This leads to reduced profits and makes cross-border investments less attractive, ultimately limiting the flow of capital and technology between countries.
2. Inhibition of International Trade:
   • The imposition of double taxation creates tax barriers that hinder the free exchange of goods and services between countries. When businesses are taxed twice on the same income, it increases the cost of doing business internationally, reducing the competitiveness of companies engaged in international trade and slowing down economic growth.

In conclusion, double taxation reduces international investments and impedes the growth of cross-border trade, creating unfavorable conditions for global economic cooperation.