Application of Double Taxation Agreements and its Impact on Budget Revenues

Today there are 84 double taxation agreements that were signed by Russia with other countries. One of the factors that forces countries to enter into international tax agreements is double taxation, which make taxpayers avoid taxes. In addition, double taxation negatively affects the flow of foreign investment into the country and the development of international trade. Thus, double taxation agreements resolve issues directly related to budget revenues. Moreover, double taxation treaties may limit the domestic legislation of the country in matters of the distribution of tax rights. The objective of this paper is twofold: to analyze the application of double taxation treaties and to explore their impact on budget revenues. To accomplish this purpose, was used the Model Conventions of United Nations (UN) and the Organization for Economic Co-operation and Development (OECD) which have different allocation of taxing rights among countries. Tax and Budget Code items were used to analyze which budget receives taxes (federal, regional or local). In the practical part of this paper was made a comparison between articles of double taxation agreements and The Budget Code in order to identify how the tax rule is allocated in accordance with Russian and international legislation. As a result, cases, when double taxation agreements limit Russian legislation, were identified. The work also presents recommendations for optimizing the process of collecting taxes.