Purpose of the Agreement
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Prevent Double Taxation: The agreement ensures that taxpayers are not taxed twice on the same income in both countries.
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Prevent Fiscal Evasion: It aims to curb tax evasion and promote transparency in tax matters.
Key Provisions
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Resident Status: Defines the criteria for determining the resident status of an individual or entity in each country, to ensure proper taxation.
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Taxing Rights: Specifies the taxing rights of each country concerning different types of income, such as business profits, personal services, dividends, interest, royalties, and capital gains.
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Relief Methods: Provides mechanisms for providing relief from double taxation, typically through tax credits or exemptions.
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Exchange of Information: Establishes a framework for the exchange of information between the tax authorities of both countries to combat tax evasion.
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Non-Discrimination: Ensures that nationals and businesses of one country are not subjected to discriminatory taxation in the other country.
Benefits for Taxpayers
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Tax Credits: Taxpayers can claim tax credits in their resident country for taxes paid in the source country, reducing the overall tax burden.
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Clarity and Certainty: The agreement provides clear guidelines on the tax treatment of various income types, reducing ambiguity and potential disputes.
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Reduced Withholding Taxes: Reduced rates of withholding taxes on cross-border payments, such as dividends, interest, and royalties, which can benefit businesses and investors.
Implementation and Compliance
Taxpayers must comply with the provisions of the DTAA and may need to provide relevant documentation to claim benefits under the agreement. This includes filing appropriate forms and declarations with their tax returns.
For more detailed information, you can refer to the or the .
