Tax Treaty

A tax treaty is a bilateral (two-party) agreement made by two countries to resolve issues involving double taxation of passive and active income of each of their respective citizens. Income tax treaties generally determine the amount of tax that a country can apply to a taxpayer's income, capital, estate, or wealth.  An income tax treaty is also called a Double Tax Agreement (DTA).
Some countries are seen as being tax havens. Generally, a tax haven is a country or a place with low or no corporate taxes that allow foreign investors to set up businesses there. Tax havens typically do not enter into tax treaties.