The Saarc countries have finalised the drafts of two agreements to be signed in the upcoming summit providing for a regional customs cooperation to check import duty evasion and forgery, and allowing exchange scholars to cam tax-free upto$3,000ayear.

One of the documents, the draft Multilateral Double Taxation Avoidance Agreement covering 14 areas, was finalised in Islamabad last week. National Board of Revenue (NBR) Member AS Jahir Muhammad initialled the draft on behalf of Bangladesh.

The seven South Asian countries

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gave shape to the Agreement on Mutual Administrative Assistance in Customs Matters simultaneously in New Delhi, in which NBR Additional Commissioner Saiful Islam represented Dhaka.

The 13th Summit of South Asian Association of Regional Cooperation (Saarc) on January 9-11, 2005 in Dhaka are expected to adopt the agreements, which are likely to be put into effect from January2006.

The member countries will review the treaties from time to time and make necessary amendments.

"The accord to avoid double taxation will also let exchange teachers, researchers, scholars and students enjoy tax exemption for the first two years. And the customs cooperation will reduce tax evasion by importers through false declarations and under-valuation," said NBR Chairman Khaeruzzaman Chowdhury.

He thinks, "The agreements will help boost intra-regional trade and investment significantly."

Experts said the new treaties would make new ways for intraSaarc exchange of tax policies.

Sources said during the drafting process a proposal was raised to allow visa-nee regional movement for officials involved with the agreements. But no decision has been taken on this matter, they added, noting this is something that has to be discussed and decided at a higher level.

CUSTOMS CO-OPERATION

Under the customs co-operation system, the seven South Asian nations will exchange specific information on imports and pieces of evidence to cross check information handed in by importers.

"If customs officials of a member country suspect under-invoicing or other frauds, they will seek cooperation from the customs office of the source country. The source country may, if necessary, provide

them with evidence," explained an NBR source.

However a proposal to provide for joint customs investigations was dropped from the co-operation system considering its political sensitivity, the source said.

NO DOUBLETAXATION

"The existing bilateral double taxation avoidance deals usually cover 30 to 35 sectors on the basis of relationships between the countries concerned. But the proposed multilateral treaty will have a narrower coverage. The beneficiaries of the deal will enjoy tax exemption in the other Saarc countries if they pay it in any one of them," an NBR source explained.

Businessmen and investors will be the major segment of direct beneficiaries of the taxation deal.

It however will penalise any citizen of a Saarc nation who avoids tax payment in another Saarc country and leaves. His due tax will be collected from his home country and sent to the source nation.

The treaty is aimed at strengthening the trade and economic ties among the Saarc members giving impetus to intra-regional trade for mutual benefits, the NBR source said.

Intra-regional trade in Saajc is only 3 percent of their total international trade, which is 25 percent in the Association of South East Asian Nations (Asean) and over 50 percent in the European Union.

'The Saarc Summit is expected to sign two more agreements — one on 'promotion and protection of investments’ and the other on 'establishing a Saarc arbitration council and SaArc arbitration rules'.

The South Asian countries will enter a free trade regime from January 1, 2006 under the South Asian Free Trade Area (Safta). They are currently signing trade facilitation deals to make a smooth transition into the free-trade gear, sources said.