SAARC Nations To Implement Multilateral Tax Initiative

by Lorys Charalambous, Tax-News.com, Cyprus

15 July 2005

The seven member countries of the South Asian Association for Regional Cooperation (SAARC) are finalising plans for a Limited Multilateral Tax Treaty which aims to facilitate the avoidance of double taxation and mutual assistance between the member states in tax matters.

One of the primary goals of the initiative, which was agreed by representatives of the national governments in Islamabad in December 2004, is the sharing of tax information within SAARC in an attempt to combat fiscal evasion. The SAARC membership includes Bangladesh, Bhutan, India, The Maldives, Nepal, Pakistan and Sri Lanka.

The agreement also includes double taxation avoidance provisions which give tax exemption to certain groups, including students, teachers, researchers, consultants, technicians and scholars, for a period of two years on a portion of their income.

"This is the first limited DTAA for a region. It would encompass four elements pertaining to students, professors, teachers and research scholars, exchange of information and assistance in collection of taxes," explained an Indian finance ministry official according to the Business Standard.

The official added that:

"In order to enable exchange of information, the SAARC member countries could agree on the setting up of a nodal agency or a central information desk at the SAARC secretariat in Kathmandu."

Established in the early 1980s, the principal objective of SAARC is the acceleration of the process of economic and social development in member states, through collective action in agreed areas of cooperation.

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