Enhancing the effectiveness of double taxation treaties to assist international investment and trade: the ASEAN experience- lessons for Vietnam

Abstract

In international trade, the coexistence of multiple tax systems among countries generally results in the imposition of tax on a single income in two different countries, which, accordingly, may be detrimental to the development of international trade and investment as well as creating incentives for violations of tax obligations. To settle this issue, these countries may enter into a “double taxation treaty”, under which the scope of taxation rights is evidently delimited among the participating parties. According to Braun and Zagler (2014), though the tendency of signing tax treaties between developed countries and developing ones becomes increasingly common, economic benefits to the latter seem insignificant. This article seeks to clarify the experience in the enforcement of the double taxation treaties of ASEAN countries, thereby drawing lessons for Vietnam towards maximizing tax treaties’ benefits for international investment and trade development.