The Ingenious Double Taxation Avoidance Agreement Between Bangladesh and UAE

As a law enthusiast, the topic of double taxation avoidance agreements always piques my interest. The recent agreement between Bangladesh and the United Arab Emirates (UAE) is particularly fascinating, given the economic relations between the two countries and the potential impact on individuals and businesses operating in both jurisdictions.

Understanding Basics

A double taxation avoidance agreement (DTAA) is a treaty signed between two countries to prevent taxpayers from being taxed on the same income twice. In the case of Bangladesh and the UAE, the agreement aims to eliminate the double taxation of income earned by residents of one country in the other country.

Key Provisions of the Agreement

The DTAA between Bangladesh and the UAE covers various types of income, including business profits, dividends, interest, and royalties. It also provides for the resolution of disputes and exchange of information between the two countries to ensure compliance with the agreement.

Benefits Taxpayers

Individuals and businesses operating in both Bangladesh and the UAE stand to benefit significantly from this agreement. For example, a Bangladeshi company conducting business in the UAE will now have clarity on the tax treatment of its profits in the UAE, thereby avoiding double taxation. Similarly, UAE residents earning income in Bangladesh will also enjoy the same benefits.

Case Study: Impact on Cross-Border Investments

Let`s consider a hypothetical case where a UAE-based investor holds shares in a Bangladeshi company. Under the DTAA, the investor`s dividends from the Bangladeshi company will be subject to reduced withholding tax rates, providing a competitive edge for foreign investments in Bangladesh.

Scenario	Without DTAA	With DTAA
Dividend Withholding Tax in Bangladesh	20%	10%

The double taxation avoidance agreement between Bangladesh and the UAE is a testament to the growing international cooperation in tax matters. This development not only fosters a more conducive environment for cross-border trade and investment but also demonstrates a shared commitment to fair and equitable taxation.

As a law enthusiast, I am thrilled to witness such progressive steps in international tax law and eagerly anticipate the positive impact of this agreement on the economic ties between Bangladesh and the UAE.

Double Taxation Avoidance Agreement

This agreement is made and entered into on this [Date] between the Government of the People`s Republic of Bangladesh and the Government of the United Arab Emirates (UAE).

Article 1: Scope Agreement

The Contracting States shall provide assistance to each other in the collection of taxes and will endeavour to avoid double taxation of income and gains.

Article 2: Taxes Covered

Taxes Agreement shall apply taxes income gains imposed Contracting States.

Article 3: Definitions

For the purposes of this Agreement, unless the context otherwise requires, the term “Contracting State” means Bangladesh or UAE, as the context requires.

Article 4: Residence

For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of their domicile, residence, place of management, or any other criterion of a similar nature.

Article 5: Permanent Establishment

The term “permanent establishment” includes a place of management, a branch, an office, a factory, a workshop, and a mine, an oil or gas well, a quarry, or any other place of extraction of natural resources.

Article 6: Income Immovable Property

Income derived by a resident of a Contracting State from immovable property may be taxed in that State.

Article 7: Business Profits

The profits of a resident of a Contracting State may be taxed in the other Contracting State, but only if the resident carries on business in that other State through a permanent establishment situated therein.

Article 8: Shipping, Inland Waterways, Air Transport

Profits derived by a resident of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

Article 9: Associated Enterprises

Where an enterprise of a Contracting State participates directly or indirectly in the management, control, or capital of an enterprise of the other Contracting State, and the two enterprises are, in their commercial or financial relations, not dealing with each other at arm`s length, any profits that would have accrued to one of the enterprises but for those conditions, may be included in the profits of that enterprise and taxed accordingly.

Article 10: Dividends

Dividends paid company resident Contracting State resident Contracting State may taxed State.

Article 11: Interest

Interest arising Contracting State paid resident Contracting State may taxed State.

Article 12: Royalties

Royalties arising Contracting State paid resident Contracting State may taxed State.

Article 13: Capital Gains

Gains derived by a resident of a Contracting State from the alienation of immovable property may be taxed in that State.

Article 14: Independent Personal Services

Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character may be taxed in that State.

Article 15: Dependent Personal Services

Salaries, wages, and other similar remuneration derived by a resident of a Contracting State in respect of an employment may be taxed in that State.

Article 16: Directors` Fees

Directors` fees similar payments derived resident Contracting State their capacity member board directors company resident Contracting State may taxed State.

Article 17: Entertainers Athletes

Income derived by public entertainers and athletes from their personal activities may be taxed in the Contracting State where these activities are exercised.

Article 18: Pensions

Pensions and other similar remuneration paid to a resident of a Contracting State may be taxed in that State.

Article 19: Government Service

Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State, subdivision, or authority may be taxed in that State.

Article 20: Students Trainees

Payments received by a resident of a Contracting State as an individual for the purpose of their education or training may be taxed in that State.

Article 21: Other Income

Income specifically dealt foregoing Articles Agreement may taxed Contracting State recipient resident.

Article 22: Method Elimination Double Taxation

The elimination of double taxation shall be accomplished by allowing a deduction from the tax on the income of that resident, an exemption from that tax, or any other method.

Article 23: Mutual Agreement Procedure

The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement.

Article 24: Exchange Information

The Contracting States shall exchange information necessary for carrying out the provisions of this Agreement or for the prevention of tax fraud or evasion.

Article 25: Diplomatic Agents Consular Officers

Nothing in this Agreement shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements.

Article 26: Entry Force

This Agreement shall enter into force on the date of the later of the notifications and shall thereupon have effect:

For taxes withheld source	in respect amounts paid credited first day January next following date Agreement enters force.
For other taxes	for year assessment beginning first day January next following date Agreement enters force.

Article 27: Termination

This Agreement shall remain in force indefinitely, but any of the Contracting States may, at any time after five years from the date of its entry into force, terminate the Agreement by giving a written notice of termination through diplomatic channels.

In witness whereof, the undersigned, duly authorized, have signed this Agreement.

Done in duplicate at [Place] on this [Date], in the English language, both texts being equally authentic.

Demystifying the Double Taxation Avoidance Agreement

Question	Answer
1. What is the Double Taxation Avoidance Agreement (DTAA) between Bangladesh and UAE?	The Double Taxation Avoidance Agreement (DTAA) between Bangladesh and UAE is a bilateral agreement aimed at preventing the taxation of the same income in both countries. It provides clarity on the taxing rights of each country and ensures that taxpayers do not face double taxation on their income.
2. How does the DTAA impact individuals and businesses operating between Bangladesh and UAE?	The DTAA provides relief to individuals and businesses by allowing them to claim tax credits or exemptions for taxes paid in the other country. This helps in promoting cross-border trade and investment by reducing the tax burden on taxpayers.
3. What types income covered DTAA?	The DTAA covers various types of income including salary, dividends, interest, royalties, and capital gains. It provides specific rules for the taxation of each type of income to avoid double taxation.
4. How does the DTAA impact the residency status of individuals?	The DTAA contains provisions for determining the residency status of individuals who may be tax residents of both Bangladesh and UAE. It provides criteria for resolving residency conflicts and determining the country of residence for tax purposes.
5. Can individuals and businesses benefit from the DTAA if they do not have a permanent establishment in either country?	Yes, the DTAA provides relief to individuals and businesses even if they do not have a permanent establishment in either country. It ensures that income derived from cross-border activities is not subject to double taxation.
6. Are there any specific provisions in the DTAA for the avoidance of double taxation on capital gains?	Yes, the DTAA contains provisions for the taxation of capital gains, including rules for the taxation of gains from the sale of immovable property and shares. It aims to prevent double taxation on capital gains arising in Bangladesh and UAE.
7. How does the DTAA impact the withholding tax rates on cross-border payments?	The DTAA provides reduced withholding tax rates on cross-border payments such as dividends, interest, and royalties. This benefits taxpayers by reducing the tax burden on such payments and promoting cross-border transactions.
8. Are there any anti-abuse provisions in the DTAA to prevent treaty shopping?	Yes, the DTAA includes anti-abuse provisions to prevent treaty shopping and misuse of the agreement for tax avoidance purposes. It aims to ensure that the benefits of the agreement are enjoyed by genuine taxpayers with legitimate business activities.
9. Can taxpayers seek relief under the Mutual Agreement Procedure (MAP) in case of disputes arising from the DTAA?	Yes, taxpayers can seek relief under the Mutual Agreement Procedure (MAP) to resolve disputes related to the interpretation and application of the DTAA. This provides a mechanism for resolving tax disputes between Bangladesh and UAE through mutual agreement between the competent authorities of both countries.
10. What are the compliance requirements for individuals and businesses claiming benefits under the DTAA?	Individuals and businesses seeking benefits under the DTAA are required to comply with the terms and conditions of the agreement. This may include obtaining tax residency certificates, providing relevant documentation, and meeting other procedural requirements to avail the benefits of the DTAA.