Kathmandu, June 28

The Cabinet meeting today has provided consent to sign the Double Taxation Avoidance Agreement (DTAA) with Bangladesh.

Nepal and Bangladesh had finalised the DTAA draft in January of 2015 after several rounds of negotiations. However, the agreement signing date was pushed back as the devastating earthquake struck Nepal on April 25, 2015, followed by political developments — constitution promulgation and elections in Nepal.

According to Shishir Kumar Dhungana, revenue secretary at the Ministry of Finance, Nepal and Bangladesh will sign the DTAA as per the convenience of both the countries as the Cabinet has okayed the draft prepared through negotiations between the concerned government authorities of both sides.

Investors, students and employees stand to benefit from this agreement because they can deduct the tax amount that they pay in one country in another country.

Bangladeshi investors, who have invested in hydropower, banks and other service sectors in Nepal, can deduct the tax amount that they filed in Nepal while repatriating the dividend to Bangladesh after the agreement is signed. Likewise, citizens of both countries will not be liable to pay any other tax in both the countries after showing the verified documents of tax clearance where they are working, either in Bangladesh or in Nepal, as per the revenue secretary.

“Even as Nepal has banned investment abroad, Nepali students and employees will benefit from the DTAA.”

Nepal and Bangladesh had finalised the DTAA draft after holding four rounds of negotiations in Kathmandu and Dhaka, respectively.

Both the countries started doing the homework on DTAA in 1998, and after a first round of meeting with Bangladeshi authorities, Nepal had proposed signing the deal at that time. The second and third rounds of meetings, to negotiate on the draft proposed by Nepal, were held in Dhaka of Bangladesh in 2001 and 2012, respectively.

Nepal has proposed the DTAA based on the OECD (Organisation for Economic Co-operation and Development) model. However, due to some reservations put forth by Bangladesh, the negotiation was concluded only on January 29, 2015, in Nepal.

Nepal has already signed DTAA with 10 other countries.

Other signatories

• People Republic of China
• India
• Mauritius
• Sri Lanka
• Pakistan
• Republic of Korea
• Thailand
• Austria
• Norway
• Qatar