A revised protocol of the double taxation avoidance treaty between Bangladesh and Mauritius is set to check the scope of fiscal evasion with respect to taxes on income.
Both the countries signed the protocol on February 5, 2024 and April 9, 2024 by Mauritius and Bangladesh respectively.
With the revised taxing rights on capital gain, technical fees and permanent establishments, the amended protocol would come into effect from July 1, 2025.
The National Board of Revenue (NBR) issued a gazette in this regard on July 9, 2024.
Under the amended protocol, the premises to be used as sales outlets and farm or plantation would be considered as PE to bring under the purview of taxation, said a senior tax official involved with the drafting of the revised protocol.
Though both the countries signed a DTA on 21 December 2009 at Port Louis, tax authorities of the latter have found the necessity to amend its protocol to align with the changes in trade patterns in the states.
In the protocol, the title of the convention has been replaced by the 'Convention between the Government of the Republic of Mauritius and the Government of the People's Republic of Bangladesh for the elimination of double taxation with respect to taxes on income and the prevention of tax evasion and avoidance'.
Earlier, the title of the convention was 'Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income."
In the revised protocol, the definition of 'capital gain' has been upgraded to ensure taxing rights of Bangladesh with greater coverage, the official said.
"Bangladesh would be able to impose a 10 per cent tax on royalties, technical services fees and other income not defined in the protocol," the official said.
Bangladesh has signed DTA with 42 countries so far. Of them, many have been signed 25-30 years ago when the country's economy was wholly dependent on other countries.
Tax officials said that time has come to revise the protocols as per current economic context of Bangladesh having a strong base of apparel and manpower export.
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