Saturday, May 04, 2024
Bangladesh and the Netherlands signed a new agreement to avoid double taxation and prevent revenue evasion.
Finance Minister Abul Hassan Mahmood Ali and Netherlands' Minister for Tax Affairs and the Tax Administration Marnix van Rij signed the agreement on behalf of their respective nations at the Ministry of Finance in Dhaka.
According to the Finance Ministry, an agreement between Bangladesh and the Netherlands for the avoidance of double taxation and prevention of revenue evasion was first signed on July 13, 1993, about 30 years ago.
In the meantime, there have been various changes in the international norms related to the avoidance of double taxation and the prevention of revenue evasion, such as the OECD model or the UN model.
Besides, Bangladesh is also passing through the graduation period in terms of belonging to least developed to developing countries.
The new agreement has 33 articles. Among them, changes have been made in some important articles to widen the scope of taxation, while some new articles have been added for derivation from new areas.
The main features of the agreement said that the new agreement amends the existing provisions to provide tax-free benefits only to state-owned enterprises while in the Technical Service Fees, incorporation of the new article added will ensure collection of tax at a maximum rate of 10 per cent on service and bill payment against services.
The new treaty has included a provision that capital gains on transfer of shares are taxable in Bangladesh. As a result, it will be possible to collect tax from the capital gains earned in the source country as Bangladesh.
Any income not covered by any article of existing treaty which provides for taxation in the country of which the taxpayer is a resident. In order to protect the interests of Bangladesh, the new agreement has been amended to impose taxation in the country where such income is generated.
In case of Assistance in tax collection, an article has been newly added for assistance in collection of tax claims.
In this case, both the contracting states should cooperate with each other in revenue collection.
Bilateral trade and investment partnership relations between Bangladesh and the Netherlands are very strong. Bangladesh is one of the 15 partner countries of the Netherlands.
On the other hand, the Netherlands is Bangladesh's ninth largest exporting partner country in the fiscal year 2022-2023 with an export value of more than $2,000 million.
Exports from Bangladesh to Netherlands include knitwear, ovens, garments, lobsters, shoes, textiles, leather goods, and bicycles.
On the other hand, Bangladesh imported more than $300 million worth of goods from the Netherlands in the fiscal year 2022-2023, including capital machinery, vegetables, prepared food ingredients, live animals (animals and birds), minerals, chemicals, pharmaceuticals, organic chemicals, plastics and rubber.
The Netherlands ranks fourth in terms of Foreign Direct Investment (FDI) in Bangladesh. In the 2019 -2020 fiscal year, the Netherlands has invested more than $2560 million in Bangladesh.
Investments in the Netherlands are increasing in the fields of energy, trade, leather sector, leather goods, and cement.
The Finance Ministry said this initiative has been taken to amend the double tax avoidance agreements with various countries to remove the inconsistencies and to uphold the interests of Bangladesh. Against his backdrop, Bangladesh and the Netherlands have moved to sign the new agreement.
Senior Secretary and chairman of National Board of Revenue Abu Hena Md Rahmatul Munim, Finance Secretary Md Khaeruzzaman Majumdar, and Charge d'Affaires of Netherlands Sonja Kuip were present at the signing ceremony.
