Double Taxation Agreement (DTA)
A Double Taxation Agreement (DTA) is a treaty between two or more countries that aims to prevent the same income from being taxed in multiple jurisdictions.
The primary purpose of a DTA is to eliminate or reduce the tax burden on individuals and businesses who earn income in multiple countries, thereby fostering international trade and investment. DTAs typically allocate taxing rights over various types of income—such as dividends, interest, and royalties—between the countries involved.
For example, if a company based in Country A earns income from investments in Country B, a DTA may allow the company to pay taxes only in Country A or reduce the tax rate applicable in Country B, thus preventing double taxation of that income.
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