KATHMANDU, Nov 20: Indian Finance Minister Pranab Mukherjee will visit Nepal on November 27 and sign the new Double Taxation Avoidance Agreement (DTAA), an accord which will enable Indian investors and traders enjoy tax credit in India once they pay taxes in Nepal.
"It will be a daylong visit. Mukherjee will arrive in the morning and leave in the afternoon after signing the DTAA,” said a source.
Once signed, the agreement will supercede similar Treaty on Avoidance of Double Taxation and the Prevention of Fiscal Evasion in Respect to Taxes on Income that the two countries signed in 1987.
The new DTAA between the two neighbors has embodied modern principles for creating a better investment environment and reducing the cost of doing business. Hence, it is believed to boost investors´ confidence, thereby helping Nepal attract more investment from the southern neighbor.
Nepal had actually expected the DTAA to be signed during the visit of Prime Minister Baburam Bhattarai to India last month.
However, as India wanted to add one more clause to the draft DTAA that the Nepal cabinet had endorsed, the two sides failed to finalize its texts till the last minute.
“We have sorted out the differences on the text of Article 30 of the agreement -- the sole factor that affected its signing in October. The cabinet this week endorsed the revised texts as well,” said the source.
India has long been persuading Nepal for the revision of the agreement, mainly as growing electronic and new forms of transaction and payment channels in recent years called for the inclusion of new measures to prevent tax evasion, among others.
Though Nepal responded to the call positively and the two sides finalized the new accord almost a year ago, it could not be sealed so far because India wanted it to be signed along with Bilateral Investment Protection and Promotion Agreement (BIPPA). BIPPA, however, was signed during the PM´s visit in October.
Published on 2011-11-20 03:30:57