The interrogation is based on the idea that bilateral double taxation conventions may be dispensed with. In other words, such conventions are not necessary to resolve the international tax problems that normally fall within their purview. However, this premise assumes that it is possible to ascertain why such conventions exist and what they are intended to do.

Therefore, the following purposes of double taxation conventions are stated, expressly, to serve:

• A major goal of bilateral tax treaties is to remove impediments to international trade and investment by reducing the threat of double taxation that can occur when both Contracting States impose tax on the same income. This goal is advanced in four distinct ways:
  1. A bilateral tax treaty generally increases the extent to which exporters residing in one Contracting State can engage in trading activity in the other Contracting State without attracting tax liability in that latter State.
  2. When a resident of a Contracting State does engage in a sufficient activity in the other Contracting State for that State to have the right to tax, the treaty establishes certain guidelines on how that income is to be taxed.
  3. A bilateral tax treaty provides a dispute resolution mechanism that the Contracting States may invoke to relieve double taxation in particular circumstances not dealt with explicitly under the treaty.
  4. Where income or gains remain taxable in both Contracting States, the State of residence of the taxpayer will relieve the double taxation by either allowing a credit for the tax paid in the other State or by exempting the income or gain from its own tax.
• The scope of a bilateral tax treaty typically is not limited to commercial and business activities. Treaties may remove tax impediments to scientific, educational, cultural, artistic, and athletic interchanges. Additionally, they may address issues related to pension plans, Social Security benefits, and even stipends for scholars.
• The fundamental principle is that treaties should apply to ensure that income is taxed once and only once, thus eliminating double taxation. In addition, most tax treaties also focus on preventing tax evasion and avoidance. The objective is to ensure that double non-taxation does not occur.
• One ancillary objective is the elimination of discrimination against foreign nationals and non-residents. A treaty ensures that residents of one Contracting State who carry on business in the other State are treated the same as residents of that State.
• Another ancillary objective is to facilitate administrative cooperation between the Contracting States. This includes exchange of information, assistance in tax collection, and dispute resolution.

Despite these benefits, there are challenges associated with double taxation treaties. Some of these include:

• Immediate revenue costs.
• Limitations on certain domestic tax laws.
• Risk of treaty shopping and abuse.
• Risk of double non-taxation.

There are alternatives to having double taxation treaties. These alternatives include:

• The grant of unilateral relief where appropriate.
• Multilateral tax conventions.
• Dealing with taxation through multilateral trade and investment treaties.
• Harmonisation of tax law.
• Introduction of a universal model tax law.