"In addition to allocating the taxing rights and elimination of double taxation, there are various other important considerations while entering…

(b) In addition to allocating the taxing rights and elimination of double taxation, there are various other important considerations while entering into a tax treaty, as mentioned below: Ensuring non-discrimination between residents and non-residents Resolution of disputes arising on account of different interpretation of tax treaty by the treaty partner. Providing assistance in the collection of the fair and legitimate share of tax. Further, in addition to above, there are some other principles which must be considered by countries in their tax system - (i) Equity and fairness: Same income earned by different taxpayers must be taxed at the same rate regardless of the source of income. (ii) Neutrality and efficiency: Neutrality factor provides that economic processes should not be affected by external factors such as taxation. Neutrality is two-fold. (a) Capital export neutrality and (b) Capital import neutrality (CIN). Capital export neutrality (CEN) provides that business decision must not be affected by tax factors between the country of residence and the target country; whereas CIN provides that the level of tax imposed on non-residents as well as the residents must be similar. (iii) Promotion of mutual economic relation, trade and investment: In some cases, it is observed that avoidance of double taxation is not the only objective. The other objective may be to give impetus to a country's overall economic growth and development.