DTAA in offing with Bangladesh, Malaysia

KATHMANDU, OCT 25 -
 
The government has said that the work on signing double taxation avoidance agreement (DTAA) with Bangladesh and Malaysia was on the final stage and that it has also sent a DTAA draft to the US, Brazil, Canada, Japan and Russia.

Amid concerns raised by the Non-Resident Nepali Association (NRNA) that double tax has been a big hurdle to investment in Nepal, Finance Minister Shankar Prasad Koirala asked the Nepali diaspora to suggest the government on such prospective countries that Nepal needs to sign the DTAA.

“Concerns from the NRNA reflect their growing interest for investment,” said Koirala, at an interaction with the NRNA on Thursday. The DTAA is essentially bilateral agreements signed between two countries to avoid taxation of income in both the countries or avoiding double taxation of same income.

The DTAA is considered crucial to gain the confidence of foreign investors as it allows investors with businesses in Nepal not to pay the equivalent tax to their home country. The treaty particularly benefits the NRNs. “The DTAA has become a major hurdle for potential investors,” said Ram Chandra Kharel, a US-based NRN. “The signing of the DTAA will open the floodgates of investment from US-based NRNs,” he said. However, officials at the ministry said that it was an uphill task to sign the treaty with the developed nations as they are not keen to sign such an agreement with Nepal.

Finance Secretary Shanta Raj Subedi said that Nepal has long been awaiting the response from Canada, US, and Brazil for its proposal to sign the DTAA. He, however, said that Bahrain has proposed Nepal for the DTAA.

The government has prioritised signing the DTAA with the countries Nepal has close economic ties with. Nepal has already signed the DTAA with 10 countries—India, China, Qatar, Norway, South Korea, Sri Lanka, Thailand, Pakistan, Mauritius and Austria. The DTAA with India was amended on November 28 last year replacing the previous one signed in 1987.

Meanwhile, Minister Koirala has asked the NRNA to announce some of the project it has been planning in the near future under its investment. Koirala said that the government is developing special economic zones in different part of the country, urging the diaspora community for investments.

“If Nepal want to be the most competitive country in the region, we must remove hurdles to economic growth and investment,” Koirala said. “For this, we are planning for reforms on a number of laws and policies  to make Nepal more investor frienly.” A number of bureaucratic and procedural hurdles have been removed through the introduction of online system and we are making more progress to improve on traditional working styles, Koirala added.

Speaking on the occasion, Nepal Rastra Bank Governor Yuba Raj Khatiwada said that the central bank was open and supportive to the NRNA if they wish to bring in international banks under a joint venture model.

Beside business and finance sector, the service sector like health and education in Nepal are the emerging areas of investment for the NRNs, Khatiwada said. As organic agro products have been attracting the investor interest, the government

can declare certain organic districts for commercial production if the NRNs feel they can do something in this sector, he said.

Source: The Kathmandu Post