A competent authority agreement is a formal arrangement between tax authorities of different countries that outlines how to resolve issues related to double taxation and the application of international tax treaties. This agreement helps ensure that taxpayers do not face conflicting tax obligations in multiple jurisdictions and promotes cooperation between countries on tax matters, particularly in the context of advance pricing agreements (APAs). Such agreements play a critical role in facilitating cross-border trade and investment by providing clarity and predictability in tax treatment.
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