US-Bangladesh Tax Treaty Enters Into Force

by Leroy Baker, Tax-News.com, New York

11 August 2006

A new income tax treaty between the United States and Bangladesh which aims to reduce tax barriers to cross-border investment has now come into force.

The Treasury Department announced Tuesday that Deputy Treasury Secretary Robert M. Kimmitt and Finance Minister of the People's Republic of Bangladesh Md. Saifur Rahman exchanged instruments of ratification for the US-Bangladesh Income Tax Convention on August 7, 2006. This exchange of instruments brings the tax treaty into force.

The United States and Bangladesh signed the tax treaty at a ceremony in Dhaka, Bangladesh on September 27, 2004. The United States Senate gave advice and consent to ratification of the protocol on March 31, 2006.

At the exchange, Deputy Secretary Kimmitt stated: "Treasury is pleased to bring this agreement into force on behalf of the United States, as it will help to reduce tax barriers to cross-border investment as well as stimulate new investment and development – all critical components to long-term US economic strength and sustainability."

With the entry into force of the protocol on August 7, 2006, the protocol generally will be effective for taxable periods beginning on or after January 1, 2007.

The provisions of the protocol relating to withholding taxes will be effective for amounts paid or credited on or after October 1, 2006.

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