Double Taxation

What is Double Taxation?

Double taxation is the levying of tax by two or more jurisdictions on the same declared income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes). This double liability is often mitigated by tax treaties between countries.
What is Double Tax Avoidance Agreement (DTAA)?
  • DTAA also referred as Tax Treaty is a bilateral economic agreement between two nations that aims to avoid or eliminate double taxation of the same income in two countries.
  • DTAA provides that business profits will be taxable in the source country if the activities of an enterprise constitute a permanent establishment (PE).
Benefits of such agreements:
  • Deals with the black money menace.
  • Provides solutions to avoid double taxation of same income.
  • The agreements generally provide for other matters of common interest of the two countries such as exchange of information, mutual assistance procedure for resolution of disputes and for mutual assistance in effecting recovery of taxes.
  • It will provide tax stability to the residents of both the countries and will facilitate mutual economic.



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