Nepal, B'desh talks fail to settle DTAA issues

The bilateral talks of tax official from Nepal and Bangladesh failed to finalize the text of Double Taxation Avoidance Agreement (DTAA) after the latter did not agree to incorporate a clause that would allow the tax authority of a country to collect revenue on behalf of the other when requested.
“It is not that Bangladeshi officials differed over the principle and spirit of this provision. Still they could not go for it because Bangladesh´s policy does not allow them to collect revenue on behalf of other country,” said Tanka Mani Sharma, director general of Inland Revenue Department (IRD), who led the Nepali team.
Despite the difference on the provision, Sharma said the two sides have managed to finalize most of the portion of the DTAA text. “We will sit for another meeting soon to resolve the issue,” Sharma told Republica.
The next meeting, however, would be held only after Bangladesh decides on how it could address the provision that Nepal has pushed since 2001.
Nepal has been pushing for the inclusion of the provision mainly as it would enable both the tax authorities to recoup the revenue at any time and from either country even if the investors and traders managed to dodge the revenue officials or shut down the operations without clearing tax dues in a country.
Nepal has been looking forward to signing DTAA with Bangladesh since 1998. The two sides had held first negotiations in 1998 and then in 2001. However, two sides had maintained a complete silence on the agreement for more than a decade.
“The latest consultation held in Dhaka last week has resumed the bilateral talks after a gap of more than a decade,” said Sharma, expressing the hope that the two sides would be able to settle their difference and finalize the pact at the earliest.
The talks on DTAA had got a fresh start mainly after the government this year committed to celebrate 2012/13 as Nepal Investment Year and placed huge importance on singing the agreement with about half a dozen countries in a bid to convince and attract foreign investors.
Officials said the government plans to sign DTAA with Bangladesh at the earliest. As the pact frees investors and traders from the need of paying taxes in both the countries, the government believes signing of the DTAA could prove instrumental in realizing substantial investment and increasing trade with the second largest trading partner of South Asia.
As of 2010/11, Nepal received just Rs 520 million of investment from Bangladesh, according to statistics of Department of Industry (DoI). Presently, there are 26 Bangladeshi joint ventures operating in Nepal and they are providing jobs to 4,166 people.
Moreover, Bangladesh is one of the few countries with which Nepal has trade surplus. According to the Trade and Export Promotion Centre (TEPC), Nepal exported goods worth Rs 2.57 billion to Bangladesh and imported goods worth Rs 1.50 billion, posting just over 1 billion in trade surplus in 2011/12.