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United Nations Handbook on Selected Issues in Administration of Double Tax Treaties for Developing Countries

image of United Nations Handbook on Selected Issues in Administration of Double Tax Treaties for Developing Countries

Double tax treaties play a key role in the context of international taxation, by reducing or eliminating double taxation over cross-border income, thus encouraging international investment and global economic growth, and by enhancing cooperation among tax administrations, especially in tackling international tax evasion and avoidance. This publication, which is designed especially for developing countries, aims at providing practical guidance to effectively implement double tax treaties and, in particular, those drawing upon the United Nations Model Double Taxation Convention between Developed and Developing Countries. Primary audiences are officials of national tax authorities and other tax professionals dealing with international taxation matters, the general public, media and universities.

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Taxation of non-residents

This chapter considers the issues faced by developing countries where a person, who is not resident for tax purposes in a State (a non-resident) under the domestic law of that State (the source State), has activities either in, or with residents of, the source State, which attract tax liability under the tax law of that State, and is a resident of another State with which the source State has a bilateral tax treaty. For these purposes, only taxes on income addressed in tax treaties1 will be considered. The issues arising in these circumstances include determining if the non-resident is entitled to benefits under the treaty and, if so, how these benefits are delivered, whether by refunding to the non-resident amounts paid or withheld in excess of the treaty-mandated amounts, or by reducing amounts paid or withheld to reflect reduced rates of tax provided under the treaty. A further issue, unrelated to the collection of tax from non-residents, arises out of the mutual obligations contained in most, if not all, tax treaties on each contracting State to provide to the other State information relevant to the administration of the tax system of that State and, in some cases, to provide assistance in the collection of taxes.

English

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