A double taxation treaty:

Question

Quizplus · Accepted Answer

A double taxation treaty is an agreement between two countries to avoid double taxation of income or gains arising in one country and paid to residents of another country. These treaties typically provide for either an exemption or a credit of taxes paid in one country against taxes owed in the other. Option A is not correct as it suggests that both standard domestic tax and special tax are imposed on foreign investors. Option B is not correct as it suggests that foreign investors are taxed at double the rate of domestic investors. Option D is not correct as it suggests that all returns are exempt from taxation, which is not the case.

A Double Taxation Treaty