Lawmakers ratify Agreements on Avoidance of Double Taxation
Lawmakers of The Gambia Tuesday considered and ratified two agreements on the avoidance of double taxation, signed between the Republic of The Gambia, the Republic of the Turkey and the State of Qatar.
Tabling the motion before the House, Hon. Abdou Kolley, the minister of Finance and Economic Affairs said that the payment of the taxes by individuals and corporations is a key legal obligation in most countries of the world. In the discharge of that duty, he noted, individuals and corporations face many challenges if they operate to earn income in a country other than their country of origin, as they may be required by law to pay taxes on the same income in both territories.
According to him, such environments may not be conducive to the promotion of foreign direct investment as the cost of doing business becomes onerous.
“To avoid income and capital being taxed twice or more, thereby becoming a disincentive to investments, countries resort to the conclusion of agreements on the avoidance of double taxation with each other; in other words, agreements on the elimination of tax by two or more jurisdictions on the same declared income (in the case of income tax), assets (in the case of capital taxes) or financial transactions (in the case of Value Added Tax). In this case, persons and corporations must declare all incomes, capital and assets received or owned in a country and pay all taxes that are due in that country only. Without such agreements, individuals or corporations’ incomes are taxed twice, in the host country and in country of origin”, he stated.
In the globalised world, Minister Kolley noted, it is common for corporations to open businesses in many countries around the world. He went on to say that with agreements on avoidance of double taxation, investors have a degree of certainty as to how their investments would be taxed. Also, he explained, most of these agreements are based on internationally agreed tax norms applicable to cross-border incomes.
‘‘Finally, these agreements help in mutual sharing information which helps to ensure legal and fiscal certainty. By entering into such agreements, The Gambia signals its intention to play accepted international tax rules, which helps boosts their chances of attracting Foreign Direct Investments, bring in much needed foreign exchange and improve the country’s balance of payments position,” the Finance minster told the Assembly.
Minister Kolley revealed that agreements on the avoidance taxation treaties are naturally signed between key trading partners and/or new trade partners. He said members would recall that in recent years significant steps have been taken to strengthen the economic and trade ties between The Gambia and both the Republic of Turkey and State of Qatar.
Agreement with the Republic of Turkey
“Following several exchange visits by the officials of our two countries, we have noticed some improvements in terms of trade and investments between The Gambia and Turkey in recent years. By the end of 2012, the volume of trade between us was estimated at USD$6m, with the bulk of Turkish export to The Gambia being largely dominated by agricultural products,” Minister Kolley explained.
This agreement, he disclosed, was signed during the official visit of His Excellency the President of the Republic of The Gambia to the Republic of Turkey on the 11th February, 2013 and has the potential to boost this trade and investment relation, and would explore other opportunities in other relevant areas of the economy as well.
Agreement with the Republic of Qatar
According to the minister, the State of Qatar has over the years become one of the key emerging nations in the Middle East with investments spreading across many countries and sectors. It is one of the richest countries per capita with large corporations capable of huge investments in the tourism and energy sectors as well as other areas of the economy.
‘‘With our growing ties with this emerging nation, the Agreement, signed on 8th March 2012 would signal The Gambia’s intent to cement economic ties with Qataris after several trade promotion missions that were undertaken in the country,” he affirmed.
The minister said it is their fervent belief that with these agreements in place, businesses in both Turkey and Qatar would be able to explore and take advantage of huge investment opportunities that The Gambia has to offer.
Contributing to the motion, Hon. Fabakary Tombong Jatta, NAM for Serrekunda East, thanked the minister for tabling before them these very two important motions that relate to very good economies partners: Turkey and Qatar. He emphasised that all what the motion seek to do is to have agreements for the avoidance of double taxation and the prevention of physical evasion with respect to taxes on income. In this global world, he noted, economies are mostly driven by trade and they are aware that more trading institutions have businesses at various places in various corners on the globe.
According to him, looking through the agreements which are similar and common, they are detailed enough to clear all doubts on the possible interpretation of terms used in the agreement.
Hon. Lamin Jadama, NAM for Niamina West said that these agreements are very straight forward and very clear and non-controversial, noting that they would not do justice to it without lending their support.
Taxation, he indicated, is very vital when it comes to income of nations in particular and generally when it comes to all endeavours geared towards economic advancement. “Taxation if not managed carefully it would also become a killer of the goose that lay the golden eggs, in the sense that it can discourage investment, it can even kill development enterprises etc,” Jadama remarked.
He therefore thanked the Government of The Gambia and the relevant ministries, the leadership, the technicians etc for being proactive in view of this very important issue on taxation.