1.1. What is a tax convention?
1.1.1. Purpose of a tax convention
The primary purpose of tax conventions is to eliminate double taxation and to prevent fiscal evasion. A tax convention will also serve, in effect, to allocate tax revenues on transactions taking place between residents of signatory countries. To these ends, a tax convention may resolve some common disputes and provide rules determining:
the country in which a taxpayer is resident;
the treatment given to specific types of income;
the allowable rates of withholding tax
on specific types of cross-border payments; and
the manner in which issues of taxation not in accordance with a tax convention are to be resolved.