Dhaka has initiated a move to sign a bilateral agreement with Male on avoidance of double taxation, prevention of tax evasion and profit shifting to boost trade and investment between Bangladesh and Maldives.
Officials of the National Board of Revenue said that the proposed agreement would help Bangladeshi professionals, particularly doctors and nurses, working in Maldives as there would be no tax on income of professionals who stay for short terms.
They said that the NBR and Maldives Inland Revenue Authority had already completed the first round of negotiations for a Double Taxation Avoidance Agreement in July in Male, the capital of Maldives.
Representatives of NBR and MIRA have reached consensus on most of the issues of the draft agreement in the discussion.
The second round of negotiations will be held soon in Dhaka to finalise the draft of the agreement, initially proposed by Male, they said.
Officials said Dhaka has proposed to tax on income of individual for his or her independent personal service if he or she stays more than 90 days in a year in the country of stay while Maldives has proposed to keep the duration of stay within 60 days.
Double Taxation Avoidance Agreement is a tax treaty, either bilateral or multilateral, which boosts cooperation in the areas of trade and investment between countries.
Under the DTAA, double taxation of income generated from inter-country business transaction is eliminated along with providing some tax relief to investors, professionals and individuals.
There are also mechanisms under the agreement to prevent tax evasion and capital flight.
Currently, Bangladesh has such agreements with 33 countries including Belgium, Canada, China, Denmark, France, Germany, India, Indonesia, Italy, Japan, KSA, Kuwait, Malaysia, Myanmar, Netherlands, Norway, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Sweden, Switzerland, Thailand, Turkey, United Arab Emirates, United Kingdom, USA and Vietnam.
A high official of the revenue board said that DTAA with Maldives would help Bangladeshi professionals working in that country immensely as the agreement, if signed, would eliminate tax on short-term professionals.
Currently, a good number of Bangladeshi professionals including doctors and nurses are working in Maldives, he said.
He said that investors of two countries would also be benefited as such agreement will reduce the rate of tax on interest and dividends.
Tax rate on royalties and technical service fees will also be lower, he added.
There will also be provisions for preventing profit shifting, offshore benefit and misuse of transfer pricing by any company from any third country, he added.
Residents or companies of third countries will not be able to enjoy the benefit, even indirectly, of the treaty, he said.
Both the countries will also exchange information and extend mutual collaboration in collection of taxes and prevention of tax evasion and avoidance.
Until now, there is personal income tax on employees in Maldives as the country taxes only on business profit.
Maldives, however, imposed remittance tax at the rate of 3 per cent since October 2016 on foreigners employed in the country.
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