On 12 March 2024, the Netherlands State Secretary for Tax Affairs Van Rij and Minister Abdul Hassan Mahmood Ali of Bangladesh signed a new bilateral tax treaty in Dhaka. This income tax treaty aims to avoid double taxation and further Dutch and Bangladeshi economic interests. The Netherlands considers Bangladesh a vital trading partner and hopes to provide more support for its development through this new tax treaty. The Netherlands adopted a new policy on tax treaties in 2020. Bangladesh became the first low-income developing country with which the Netherlands has since concluded a new treaty giving the source state the right to tax gross payments for technical services.

Greater tax rights

Under this new treaty, Bangladesh will be given greater taxing rights.  This means Bangladesh is entitled to levy a 10% tax on payments made from Bangladesh to a Dutch service provider for technical services provided in Bangladesh. More source taxation rights are also granted by expanding the provision of permanent establishments in the treaty. This makes it more likely that an enterprise based in one country will have a taxable presence in another country, such as when providing services or carrying on insurance activities. In accordance with the tax treaty, the source state may tax capital gains from the alienation of shares and comparable interests in businesses consisting of real estate.

Preventing tax avoidance

The treaty also includes arrangements for preventing tax avoidance. These and other provisions in the treaty mean that it satisfy the minimum standards of the OECD/G20 Base Erosion and Profit Shifting Project to combat tax avoidance. This treaty requires signing and ratification before it goes into effect. The treaty will undergo an initial review by the Netherland Council of State before being presented to parliament for approval within four months of signing. When it goes into effect, this new treaty will replace the 1993 tax treaty between the two nations.

On 1 March 2024, the Dutch Council of Ministers approved the signing of a new income tax treaty with Bangladesh.