Tax Treaty

外汇网2021-06-19 14:32:10 61

A bilateral agreement made by two countries to resolve issues involving double taxation of passive and active income. Tax treaties generally determine the amount of tax that a country can apply to a taxpayer's income and wealth. Tax haven countries are the only countries that typically do not enter into tax treaties.

One of the most important aspects of a tax treaty is the policy on withholding taxes, which determines how much tax is levied on income (interest and pidends) from securities owned by a non-resident. For example, if a tax treaty between country A and country B determined that their bilateral withholding tax on pidends is 10%, then country A will tax pidend payments that are going to country B at a rate of 10% and vice versa.

标签：