India, Nepal to ink double taxation avoidance pact

Kathmandu: India and Nepal will sign the key Double Taxation Avoidance Agreement (DTAA) during the day-long visit of Finance Minister Pranab Mukherjee here tomorrow, a move which will help create better investment climate for Indian businesses in this country.

Foreign Secretary Ranjan Mathai, who arrived here today to prepare ground for Mukherjee`s visit, said the Finance Minister and his Nepalese counterpart Barsha Man Pun will ink the pact tomorrow. "India has an abiding interest in the peace, stability and prosperity of Nepal, and this motivates our wish to expand the cooperation between our two nations," he told reporters at the Tribhuvan International Airport upon his arrival here.

DTAA, which embodies modern trade principles, will enable Indian investors and traders to enjoy tax relaxation in India once they pay taxes in Nepal.

During Nepalese Prime Minister Baburam Bhattarai`s recent visit to India, the two countries had signed BIPPA (Bilateral Investment Promotion and Protection Agreement) to attract more Indian investment in Nepal.

The two sides were supposed to sign DTAA during Bhattarai`s India visit, but it was postponed due to some technical reasons.

The agreement will boost the confidence of the investors and help Nepal attract more investment from India, according to experts.

Nepal government has sorted out differences on the text of some of the articles of the agreement, making it at par with that of India. The Nepalese Cabinet some days back endorsed the revised texts of the agreement.

Mathai said that he would meet Nepal`s Chief Secretary Madhav Ghimire and review progress in the implementation of the bilateral agenda agreed upon during the visit of Bhattarai to India and discuss ways to expand and strengthen cooperation.

Prime Minister Manmohan Singh and Bhattarai had met again in Maldives on the sidelines of the 17th SAARC Summit earlier this month and had instructed their officials to take forward the agenda of bilateral cooperation.

Mukharjee, who will arrive here tomorrow, will call on President Ram Baran Yadav and Prime Minister Bhattarai, and also hold talks with other senior political leaders before wrapping up his brief visit.

His visit is being seen as significant as it is taking place at a time when the Nepalese government and opposition parties are engaged in parleys to extend the term of the Constituent Assembly that will end on November 30.