Posted by: newlynew March 3, 2010
Sharing an experience
Login in to Rate this Post:     0       ?        

I don't believe the tax treaties are created to lessen your tax burden. They are there to avoid double taxation. We do not pay taxes to Nepali government in the income earned in the US, hence you will probably have nothing to gain by such treaties. My personal experience was this. I used to live in country X and I worked in Country Y for some period. These countries have tax treaty. Country X tax rate was 25% while that in Country Y was 40%. I paid 25% to the the Country X. Then, I was charged the difference 15% by Country Y. This may be an oversimplified scenario or my naive understanding of it. But you end up paying the taxes equal to higher of the rate among the countries to which you owe taxes, provided they all have a tax treaty. Lack of such treaty can subject you to double taxation.


http://en.wikipedia.org/wiki/Tax_treaty

Read Full Discussion Thread for this article