Double taxation treaties: What investment policymakers need to know

13 Feb 2024

UNCTAD has released a guide on double taxation treaties and their implications for investment. The guide explains what investment policymakers need to know about the different design options for DTTs.

Double taxation arises where comparable taxes are imposed in two or more jurisdictions on the same taxpayer in respect of the same income or capital and for identical periods. The obstacles it presents can hamper investment. To avoid this, jurisdictions with significant ongoing cross-border trade and investment may opt to conclude a double taxation treaty (DTT). Given the material impact that DTTs can have on investment, it is important that investment policymakers understand the main features of DTTs and are able to engage in debates related to different design options.

The guide identifies the most important provisions of DTTs and sets out the investment implications of old-generation and reformed drafting options. It focuses on:

  • Preamble
  • Scope of DTTs
  • Permanent establishments
  • Allocation rules
  • Methods for elimination of double taxation
  • Anti-abuse provisions
  • Non-discrimination
  • Dispute resolution
  • Exchange of information

This guide also aims to stimulate interaction between investment and tax policymakers. Both policy communities share broader common objectives: promoting investment, raising revenue and mobilizing resources for sustainable development. As tax- and investment-related measures are governed on the international plane by separate but interacting networks of treaties, each community needs to understand the basic principles that underlie both types of agreements.

The DTT guide for investment policymakers and the related investment treaty guide for tax policymakers published by UNCTAD in 2021 are intended to help develop a common understanding of the terms and concepts in both types of treaties. They thereby provide the basis for an intensified dialogue between the two communities.

Download the guide on double taxation treaties