tax treaty

Meaning

1. 1nouncountable

   A formal agreement between two or more countries that decides how income and other taxes are handled for people and companies operating across their borders.

   Grammar: Countable: you can say 'a tax treaty', 'two tax treaties', or 'the tax treaty between the US and Canada'.

   Patterns

   • a tax treaty between A and B
   • sign/negotiate a tax treaty
   • under a tax treaty

   The company avoided paying tax twice because a tax treaty between the two countries protected it.

   Many countries sign tax treaties to make international business easier.

   Under the tax treaty, foreign students do not pay tax on their scholarships.

Word forms

Common combinations

sign a tax treaty

The two governments signed a tax treaty last year.

a tax treaty between countries

A tax treaty between the US and Mexico reduces paperwork for exporters.

under a tax treaty

Under the tax treaty, pension payments are taxed only in the home country.

negotiate a tax treaty

Officials are negotiating a new tax treaty with Japan.

Synonyms and how they differ

tax agreement

A broader term that can refer to any arrangement about taxes, not necessarily a formal treaty between countries.

double taxation treaty

A more specific term for a tax treaty whose main purpose is to prevent the same income being taxed in two countries.

Word family

tax noun

Money that you must pay to the government.

treaty noun

A formal written agreement between countries.

Commonly confused: tax treaty or tax evasion?

Practice

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