Bangla-US agreement on double taxation avoidance on the cards
Nazmul Ahsan
Bangladesh and the US are on the verge of signing an agreement on avoidance of double taxation as top officials are likely to initial documents in Washington later this month. The initialed documents will however need approval by the Bangladesh cabinet and US Senate before a final agreement is made. Sources in the National Board of Revenue (NBR) believe the formal signing of the agreement may take maximum three to four months. Bangladesh officials led by NBR Chairman Dr Shoaib Ahmad leave Dhaka tomorrow for Washington for this purpose. Dr Ahmad and a representative from US Treasury Department are to initial the agreement on July 25. Meanwhile, both the sides agreed on different clauses of the proposed agreement relating to income tax provisions. The proposed agreement will provide individuals, companies and industrial establishments of both the countries with tax rebate facilities. Earlier, the documents for such an agreement between the two countries were initialed in 1981, 1990 and 2001 but final agreement could not be signed amidst differences of opinions on some issues, sources said. According to the earlier initialed agreement in 2001, both the countries agreed to give 50 per cent tax discount to each other over normal tax on the earnings from carrying goods by ships of any of the two countries. But later the US requested Bangladesh to fix the discount at 30 per cent instead of the earlier decided 50 per cent and Bangladesh agreed to it, sources said. According to the Ministry of Shipping no Bangladeshi vessels currently go to US ports. But American vessels carry goods to the Chittagong Port. Under the major clauses of the agreement, annual earnings of any student up to 5,000 US dollars, coming from grants or services, will be tax-free for two years. This will benefit Bangladesh as a considerable number of Bangladeshi students study in the US, officials said. Americans paying tax in Bangladesh will not be asked by the American tax department for paying tax against the income generated in the country, according to another clause of the proposed agreement. Similar provision will also be applicable for the Bangladeshis paying tax in the US. However, income generated from an immovable property of any establishment set up in any of the two countries has been excluded from the tax discount facility. Officials in Dhaka hope the US investment in Bangladesh would increase substantially when the final agreement is signed. Bangladesh so far signed avoidance of double taxation agreements with 20 countries.
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