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India, Nepal sign revised taxation pact
- India and Nepal on Sunday signed a revised Double Taxation Avoidance Agreement (DTAA), with the aim of encouraging Indian investment in Nepal, preventing fiscal evasion, and easing procedures for stakeholders with commercial interests in both countries.
- The treaty, based on modern taxation principles and in line with the current international environment, will replace the agreement on double taxation avoidance signed in 1987.
- The DTAA includes provisions for “exchange of information, assistance in collection of taxes between tax authorities and anti-abuse provisions.”
- since tax rates were lower in Nepal, investors who had paid taxes in India would not have to do so in Nepal and those who paid taxes in Nepal would only have to pay the differential amount back in India.
- The pact comes soon after the two countries signed the Bilateral Investment Promotion and Protection Agreement (BIPPA) during Dr. Bhattarai's visit to India last month.
- India accounts for more than 45 per cent of foreign direct investment in Nepal, while two-thirds of Nepal's trade is with India.
