A DBAA simply reduces double taxation when there is a transnational revenue stream and guarantees tax neutrality. The agreement between trading countries contains specific guidelines on how income generated in one country and transferred to another must be taxed by the source and the country residing. This ensures that taxpayers are protected from double taxation and prevents any deterrence that double taxation might otherwise promote in the free movement of international trade, investment and technology transfer between two countries. Depending on the contract (manufacturing processes, etc.) Act 1 (TMPA) is defined as an instrument for which there is an obligation of international law between the Federation and any other country and which includes “conventions,” “acts,” “general acts,” “protocols,” “agreements” and “modi-vivendi,” whether bilateral or multilateral. Therefore, a treaty is a treaty between sovereign states that can be bilateral; Whether it is mandatory or multilateral between two states; more than two states in this case. However, foreign companies residing in countries with which India has a DtA can claim more favourable provisions and rates between the Information Technology Act and the DBAA. The aim of these tax treaties is to develop a fair and equitable system for distributing the right to tax different types of income between countries of origin and “countries of residence”. If contracts are signed with other countries in Nigeria, they do not automatically have the force of law. Section 12 of the 1999 Constitution of the Federal Republic of Nigeria expressly provides that a treaty between Nigeria and another state must enter into force before the legal force of the National Assembly. In the meantime, it is interesting to note that Nigeria`s 13 double taxation conventions are far removed from the number of other developed and developing countries. For example, the United Kingdom currently has TDTs with 131 countries, Canada has 92 TDS and Malaysia has 68 SDRs. The latest statistics have shown that there is a positive correlation between DTT and the level of inflow of foreign direct investment into Nigeria. To make Nigerian growth one of the world`s top 20 economies, it is clear that Nigeria needs to expand its existing DTT network.
Countries enter into agreements/DTT on the basis that this would ultimately benefit both economies. However, this is not always the case, as some countries have apparently benefited more than others from DTT agreements.
