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1. Background

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.
  
  

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