Do Double Taxation Avoidance Agreements Attract Foreign Direct Investment? The Case of Nepal

Countries sign double taxation avoidance agreements (DTAs) to facilitate cross-border investment and capital transfer, thereby promoting overall economic activities.

Given the immense importance that countries place on DTAs to promote economic relations, this research aims to determine the effect of DTAs on foreign direct investment (FDI). The research also briefly assesses the capacity of tax administrations, and the political economy around negotiating and agreeing DTAs. The research takes quantitative and qualitative approaches for the assessment, and focuses on the impact of DTAs on FDI flow in Nepal from 1990 to 2020. The literature examining the relationship between DTAs and FDI shows mixed results.

Summary of ICTD Working Paper 205.