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DTAA Meaning

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June 7, 2021

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3 mins read

DOUBLE TAXATION AVOIDANCE AGREEMENT or DTAA MEANING

DTAA Meaning – Tax treaties , which are also called Double Tax Avoidance Agreements, or DTAAs,  are agreements between two or more sovereign countries. The intention behind such agreement is to avoid   double taxation for various forms of income which may be derived by residents of there states by arriving at an understanding as to how their residents will be taxed in respect of cross border transactions. DTAA may cover a range of taxes, including income taxes, inheritance taxes,  or other taxes

A Tax Treaty, is intended to avoid double taxation in respect of various income which may be derived by resident of one country, when doing business with others in another country.  Depending on the trade relations/ interaction between two countries, there may be a need of Entering into an agreement in respect of certain specified income. DTAA’s, depending on the income in respect of which agreement has been entered into, can be of two types : –

  • Limited DTAAs , which cover taxation of certain types of incomes and certain specific areas such as taxing of income from shipping, air transport, inheritance, etc. For Example, Indian DTAA with Pakistan is limited to income derived from International Air Transport and is therefore a Limited DTAA.
  • Comprehensive DTAAs are DTAA’s which cover provisions relating to all types of incomes covered by any model convention, and may also cover wealth tax, gift tax, sur tax, etc. For example ,Indian DTAA with Australia, Canada, Germany, Mauritius, Singapore, UAE, the UK and US are Comprehensive DTAAs.

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Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.

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