Nepal will soon sign the Double Taxation Avoidance Agreement (DTAA) with Bangladesh.
“We are prepared to go to Dhaka to finalise the draft of the DTAA, but the host country has not yet finalised the dates,” said director general of Inland Revenue Department Tanka Mani Sharma, who will lead the Nepali team to Dhaka.
Though, Kathmandu has tried to finalise the draft and sign the DTAA with Dhaka during the SAARC Finance Ministers’ meet in Dhaka on January 30, the process to finalise the draft has delayed the signing of the agreement which is expected to help boost bilateral trade and exchange information of tax frauds between the two South Asian countries.
The cabinet has mandated Sharma to lead a team to Dhaka as soon as possible to finalise the DTAA draft. “But the Foreign Ministry has not received any dates from the Bangladeshi Finance Ministry,” he said, adding that after the draft is finalised, the signing ceremony could be held either in Dhaka or Kathmandu anytime soon. The DTAA with Bangladesh that was finalised some two years back was delayed due to a couple of issues like whether to accept the SAARC or the OECD model.
Nepal revised the DTAA with India in November 2011 on the basis of the Organisation for Economic Co-operation and Development (OECD) model that is thought to be practical and updated.
The OECD model of DTAA has incorporated the provision of exchange of information on banking and tax evasion which will facilitate effective tax collection and control fiscal evasion.
“Similarly, Kathmandu has received a DTAA draft from Bahrain, and has already exchanged a draft with Oman, according to the joint secretary of the Finance Ministry Shanta Raj Subedi.
“Last year, Nepal forwarded DTAA drafts to Canada and Brazil through the Foreign Ministry and is awaiting their response,” he said, adding that the Inland Revenue Department is also considering the benefits of signing DTAA with Japan, USA and Russia after request from Non-Resident Nepalis to enter into agreements with these countries to attract more investment for hydropower and infrastructure projects.
Nepal has already entered into DTAA with 10 countries including India and China. “The DTAAs with various trading partners will also help the country’s efforts to track and unearth black money,” according to finance secretary Krishnahari Baskota. The Detailed Action Plan of the Finance Ministry has vowed to enter into DTAA with all the SAARC countries to encourage intra-regional investment.