Tax treaty
A tax treaty is like a rulebook that two or more countries agree to follow when it comes to taxes. Just like how you might have rules at home or at school, like "always clean up after yourself" or "share your toys," countries have rules for how they tax things like money, goods, or services.
When two countries decide to make a tax treaty, they usually do it to make things easier for people and businesses that have to pay taxes in both countries. The treaty will say things like:
- Which country gets to tax certain kinds of income or property
- How much tax each country gets to take
- What kinds of taxes count (like income tax or sales tax)
- How long someone can be in another country before they have to pay taxes there
By having these rules, people and businesses can usually avoid paying too much tax, or paying tax in both countries for the same thing. It helps make sure that the rules are fair for everyone, and makes it easier to keep track of things when it comes to taxes.
When two countries decide to make a tax treaty, they usually do it to make things easier for people and businesses that have to pay taxes in both countries. The treaty will say things like:
- Which country gets to tax certain kinds of income or property
- How much tax each country gets to take
- What kinds of taxes count (like income tax or sales tax)
- How long someone can be in another country before they have to pay taxes there
By having these rules, people and businesses can usually avoid paying too much tax, or paying tax in both countries for the same thing. It helps make sure that the rules are fair for everyone, and makes it easier to keep track of things when it comes to taxes.