Sunday, November 27, 2011

India, Nepal ink Double Taxation Avoidance Agreement

India and Nepal have signed a revised Double Taxation Avoidance Agreement (DTAA), which will facilitate exchange of information on banking between the two countries and help prevent tax evasion. 
The revised tax treaty was signed by Finance Minister Pranab Mukherjee and his Nepalese counterpart Barshaman Pun in Kathmandu on Sunday.

It will replace an earlier agreement signed between the two countries in 1987. The agreement is also likely to boost confidence of investors and help Nepal attract more investment from India.

India is the biggest source of foreign investments in Nepal, as also its largest trading partner.

However, Nepal accounts for only 0.44 per cent of India’s total trade.

The bilateral trade between the two nations has increased from US Dollar 1.98 billion in 2009-10 to around US Dollar 2.70 billion in 2010-11, registering an increase of 37 per cent.

Indian firms are the biggest investors in Nepal accounting for about 47.5 per cent of total approved foreign direst investment.

Till date India has signed DTAA with 81 countries and Tax Information Exchange Agreements (TIEAs) with five jurisdictions. It has concluded negotiations with 17 jurisdictions for signing of TIEA.

Of the 81 DTAAs, 75 do not have specific paragraph for exchange of banking information. All these 75 DTAAs have been picked up for renegotiation. Renegotiations have been completed in 22 cases.

India had already signed a revised tax agreement with Switzerland. Under this pact, both the cou

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