What Is Double Taxation Agreement

Fortunately, however, most countries have double taxation treaties. These treaties generally allow you to avoid double taxation: the following information describes the most common rules of the double taxation convention in accordance with the OECD Model Convention; Please check the tax treaty details that are relevant to your situation. Countries can reduce or avoid double taxation by granting either a tax exemption (ME) on income from foreign sources or a foreign tax credit (FTC) for taxes on foreign income. For example, a person who is a resident of the UK but has rental income from a property in another country will likely have to pay taxes on rental income in the UK and that other country. This is a common situation for migrants who have come to the UK to work, to find their way around. However, you should keep in mind that in practice, the transfer base avoids double taxation if you reside in the UK with foreign income and profits abroad. Example of a double taxation treaty benefit: Suppose that interest on NRI bank deposits results in a 30% tax deduction at source in India. Since India has signed double taxation treaties with several countries, taxes can only be deducted at 10-15% instead of 30%. If you live in one EU country and work in another, the tax rules applicable to your income depend on national laws and double taxation treaties between those two countries – and the rules can differ significantly from those that determine which country is responsible for social security matters. The method of double taxation relief depends on your exact situation, the type of income and the specific wording of the agreement between the countries concerned.

The double taxation agreement between India and Singapore currently provides for taxation based on the residence of capital gains from shares of a company. The third protocol amends the agreement with effect from 1 April 2017 by providing for withholding tax on capital gains from the transfer of shares in a company. This will reduce income losses, avoid double non-taxation and streamline investment flows. .