英语论文网

hniques used for apportioning income to domestic and foreign origin. Due to increasing intricacies of tax systems and the array of taxes levied, it has become more and more difficult to make provision for a fully efficient easement from international double taxation through the unilateral approach [12] .

The wrapping up of bilateral tax treaties for the avoidance double taxation came into view since 1960s as an outstanding characteristic of inter-State economic relations. As of fact, double tax conventions are now the recognized ways for States to be in one accord at the international level on the decision of double taxation predicaments that arise in imposing personal and corporate income taxes on cross-border activities of their people and nationals. Every convention is a negotiation between the domestic laws of contracting States that are parties to the convention. These negotiation and compromises undertaken by the States have come to take paradigm forms. The OECD Model treaty has been the back bone for practically all tax treaties between developed countries. It was initially published in a draft form in 1963 and finally published as the OECD Model Double Taxation Convention on Income and on Capital in 1977. [13] However, most double tax conventions are quiet about how contracting States will proffer efficacy to them. This is left as an issue for the domestic (constitutional) law of each state.

Bilateral tax treaties resolves many double taxation problems by reconciling the differences in various types of income and their geographical source, ascertaining a widespread method of determining how certain incomes shall be classified and taxed, and either assigning exclusive tax jurisdiction over certain items of income to one of the treaty countries or dividing the tax revenue between the two countries when neither is willing to forego its claim entirely. Tax treaties, thus authorizes a degree of mutual space that is not possible under the much less supple statutory methods applied to businesses with countries in general [14] .

Bilateral treaties have been debated upon in the light of varying, financial, social and other policies which are vital to the parties involved. The wrapping up of a treaty between two developed countries is facilitated by them been in almost similar levels of development, so that the reciprocal flows of trade, investment and hence the respective gain or loss of revenue to the parties from reducing taxes would be relatively equal in size.

Most countries have entered into bilateral agreements with respect to taxes. A clear example is the UK/USA Double Taxation Agreement. This treaty like many others tries to eliminate double taxation of income for UK and US inhabitants, it also protects the inhabitants form fiscal discrimination, it provides them with forgone conclusion about the tax treatment of income and gains and to prevent tax evasion and avoidance. The treaty also guarantees that benefits go to those UK and US residents that are due and entitled to it. This treaty is firmly founded on the OECD Model Tax Convention [15]

It is a known fact that the reduction of double taxation, elimination of tax evasion and encouraging cross-border trade efficiency are some of the basis for entering into treaties. [16] It is generally accepted that tax treaties improve certainty for tax payers and tax administration in their international dealings.