Types Of Double Taxation Avoidance Agreement


1. Eliminate double taxation, reduce the tax costs of ”global” companies. The Double Tax Avoidance Agreement (DBAA) is a tax agreement signed between two or more countries to help taxpayers avoid double taxes on the same income. A DTAA is applicable in cases where a person is established in one nation but earns income in another nation. Double taxation is the collection of taxes by two or more jurisdictions on the same income (in the case of income taxes), assets (in case of capital taxes) or financial transactions (in the case of revenue taxes). Double taxation agreements (also known as double taxation agreements or ”DBAA”) are negotiated under international law and are governed by the principles of the Hague Convention. The revised Convention on the Prevention of Double Taxation between India and Cyprus, signed on 18 November 2016, provides for a tax on capital gains from the disposal of shares instead of a home-related tax under the Convention on the Prevention of Double Taxation, signed in 1994. However, a grandfather clause is provided for investments made before April 1, 2017 and for which capital gains continue to be taxed in the country where the taxpayer is based. It also provides assistance between the two countries for the collection of taxes and updates the provisions on the exchange of information to recognized international standards. Various factors, such as political and social stability, an educated population, a sophisticated public health and justice system, but above all corporate taxation, make the Netherlands a very attractive country where they do business. The Netherlands applies corporation tax at a rate of 25%. Resident taxpayers are taxed on their global income.

Non-resident taxpayers are taxed on their income from Dutch sources. In the Netherlands, there are two types of double taxation relief. Economic double taxation relief is available for the proceeds of significant equity stakes in the participation. Resident taxpayers receiving foreign income receive legal aid in the event of double taxation. In both cases, there is a combined system that makes a difference in active and passive income. [13] Yes. As a hub for international investment and as a training for large numbers of emigrants, India understood the importance of DBAA and actively followed this issue. For example, our country has 85 such active agreements. Apart from these separate international conventions, the Income Tax Act itself provides for an exemption from double taxation. This is dealt with in sections 90 and 91.

In the event of a conflict, the provisions of the DBAA are binding. The intention of an agreement on double tax evasion is to make a country an attractive investment objective by facilitating double taxation. This form of relief is granted by exempting income from income collected in a foreign country or by granting credits to the extent that taxes have been paid abroad.