Judicial Review: Leave to Challenge Bill of Demand for Sales Tax- WMBS v Ketua Pengarah Kastam & Ano
Generally, double taxation occurs when residents of two given countries engage in international or cross-border business transactions. This is because the country in which the source of income arises normally has the right to tax that income. However, if the income is remitted to another country, it may be subject to tax again in that other country and, hence, double taxation occurs.
In order to minimise or eliminate double taxation of the same income, countries enter into double taxation agreements (DTAs). This is achieved mainly by the granting of double tax relief by the country of residence. A DTA is crucial as it makes the country attractive for international trade and investment. A DTA would also promote certainty as there are specific rules for applying taxes on international income.
By default, most Malaysian DTAs follow the Organisation for Economic Co-operation and Development (OECD) model treaty with some modifications. In interpreting the DTAs, our courts have recognised the value of the OECD Commentary as an extrinsic aid to interpretation in cases such as Ketua Pengarah Hasil Dalam Negeri v Thomson Reuters Global Recources  10 MLJ 1.