What is Tax Treaty for Offshore Companies?

[mneilson]

Most of the offshore destinations are tax heavens or low tax paying regions. How tax treaty would be beneficial for reducing further tax burdens of offshore companies?

 

[richardm1964]

Tax treaty may be defined as bilateral agreement between two or more foreign countries to prevent double taxation on goods and services. The taxes levied twice on the same income, profit, capital gain, inheritance or other item can be called as double taxation. In some countries they are also known as "Double Taxation Agreements", "Double Tax Treaties" or simply "Taxation Treaty". In fact these are Double Taxation Avoidance Treaties which is meant to avoid tax being levied twice.