KATHMANDU, Nov 28: The government has stepped up preparation to sign a pact on Double Tax Avoidance Agreement (DTAA) with Malaysia, Singapore and England in the current fiscal year.
The DTAA is a tax treaty between two countries that avoids double taxation on the income earned by a person in another country. The DTAA ensures that investors, employees and students can deduct the tax amount they paid in one country while settling their tax in another country.
According to the Inland Revenue Department (IRD), Nepal has so far conducted two round talks each with Malaysia and the United Kingdom to sign the agreement. Similarly, the talk with the Singapore government is also in progress, reads the annual report of the IRD.
As of now, Nepal has signed the DTAA with 11 countries including Norway, India, China, Pakistan, Sri Lanka, Qatar, South Korea, Mauritius, Thailand, Austria and Bangladesh. Nepal signed its first DTAA with Norway in 1996. The country shared its agreement with Bangladesh in March, 2019.
In the absence of the DTAA, a person who aims to do a business in a foreign country is liable to pay tax in both countries—the country where income is earned and the country to which the company belongs to. Signing the DTAA is also expected to attract foreign investment from the investors of the concerned countries.