Mutual Recognition of Tax Treaties

Mutual recognition of tax treaties means that countries agree to acknowledge and respect each other's tax rules to avoid double taxation and prevent disputes. If a person or business pays taxes in one country according to its treaty agreements, the other country recognizes those payments, reducing the chance of being taxed twice on the same income. This cooperation simplifies cross-border taxation, fosters international trade, and ensures fair treatment by respecting each country's tax laws while working together.