2. This Convention also applies to all identical or substantially similar taxes levied by one of the contracting parties after the date of the signing of this Convention, in addition to the taxes covered in paragraph 1 or in your place. The competent authorities of the contracting states inform each other of any substantial changes to their respective tax laws. Therefore, these DBAs appear to be an interaction between two separate tax regimes, each from different countries, aimed at reducing the effects of double taxation. Bangladesh should take the initiative to conclude more and more such agreements with other countries in order to further promote foreign direct investment and individual engagement. Income Tax Act 1961: Communication of Section 90: Convention on Double Taxation between India and Bangladesh That is why this type of double taxation of the same income has serious consequences for the future of international trade and international investment. The negotiating and investment decision of a foreign investor depends heavily on tax issues, including tax classes, tax leave and the ability to avoid double taxation. In this period of globalization, such double taxation is not acceptable, as it is considered one of the main obstacles to the development of international economic relations. The agreement between the Government of the Republic of India and the Government of the People`s Republic of Bangladesh to avoid double taxation and the prevention of income tax evasion came into force on 27 May 1992 following the exchange of the ratification instruments covered by Article 31, paragraph 1, of that Convention.
1. For the purposes of this agreement, “resident of a contracting state” means any person subject to state law because of his place of residence, place of residence, place of management or any other similar test. Although the terms of all contracts are not entirely identical, they are generally either to avoid double taxation altogether or to apply reduced rates. It therefore appears that the DTAA clearly promotes the free movement of international trade and international investment, while providing benefits to each contracting country. It increases the transparency of income tax collection in both countries and their rational distribution. In general, double taxation can occur if the same income is taxed at both the company and personal levels. Companies are separate legal entities from their shareholders, from which companies and individuals pay taxes on their annual income. In the case of international trade, these revenues can be taxed in the country where they are collected and then reintroduced if they are repatriated to the company`s country of origin.