Question

Taxation

As part of financial planning for an organization, we necessarily take account of taxation and its potential impact on returns and other considerations. Please discuss the special problem created by double taxation of cross-border investment and how this problem has been addressed.

Answer 1

Double taxation is the imposition of taxes in two countries on the same taxpayer in respect of the same income. Double taxation has harmful effects on the cross-border investments. There are Bilateral tax treaties to address these issues of double taxation.

Addressing the problem of double taxation in Bilateral tax treaties

• Provisions are set for the prevention of tax avoidance and fiscal evasion
• Some articles address the conflict of taxing jurisdiction in double taxation problem
• There are articles to provide double taxation relief to the persons.
• Articles addressing other miscellaneous matters related to double taxation
• There are articles to deal with the scope and application of the tax treaty