Non-discrimination

Non-Discrimination in Taxation is a principle in international tax treaties that ensures foreign taxpayers are treated fairly and equally, just like local taxpayers.

Key Points:

1. Equality in Taxation: Foreign individuals or companies should pay the same taxes, enjoy the same deductions, and receive the same benefits as domestic taxpayers in similar situations.
2. Scope: Applies to individuals and businesses, covering income, wealth, and property taxation. It takes into account residency, source of income, and business operations.
3. Purpose: Prevents unfair treatment based on nationality or foreign status, encourages cross-border trade and investment, and promotes fairness between treaty countries.

Example:

An Indian citizen working in Germany earns the same income as a German citizen. Under a tax treaty with a non-discrimination clause, Germany cannot tax the Indian citizen more heavily than the German citizen. Similarly, all applicable deductions and exemptions must be applied equally.