Bangladesh negotiator Zaheer Mohammad, member of National Board of Revenue (Income Tax ), will leave Dhaka for the capital of Pakistan tomorrow to attend a two-day spadework meeting starting from December 6.

Once signed, the deal will facilitate intra-regional investment and help expatriates get rid of tax hassles.

The agreement titled 'Limited Multilateral Tax Treaty on Avoidance of Double Taxation' will be one of the four deals South Asian countries will sign in the next South Asian Association for Regional Cooperation (Saarc) summit to be held during January 9-11 in Dhaka.

Saarc countries held groundwork meetings in New Delhi and Kathmandu earlier this year to prepare a draft of the proposed agreement. The unresolved disputes in those two meetings will be settled in Islamabad meeting and a draft will be finalised to place in the 13th Saarc summit in Dhaka for signing.

Some South Asian countries presently have double taxation avoidance treaties on bilateral front. Bangladesh has similar agreements with India, Pakistan and Sri Lanka. A similar agreement is under process with Nepal.

"The bilateral double taxation avoidance deals usually cover 30 to 35 sectors on the basis of relationships with respective countries. But the proposed multilateral level deal will have a narrow coverage. The beneficiaries of the deal will enjoy income tax exemption in the seven Saarc countries if paid in one country," an NBR source said.

If Tata sets up a fertiliser plant in Bangladesh and pays tax here, its export income will get tax exemption in any other Saarc country, he said citing example.

The avoidance deal will cover professors, teachers, researchers, scholars, students, various companies residing or operating in any of the signatory countries. According to the proposed deal, students studying in any Saarc states will enjoy exemption on income tax for three to five years.

The deal in multilateral level is aimed at strengthening trade and economic ties among Saarc states. South Asian nations formed Saarc some 20 years ago but trade continued to remain at an insignificant level. So, primary target of the deal is to give impetus to intra-regional trade for mutual benefit, the source added.

Intra-regional trade in Saarc is only three percent of their total international trade, which is 25 percent in Association of South East Asian Nations (Asean) and over 50 percent in European Union.

Three other agreements expected to be signed in the forthcoming Saarc summit are: Agreement on Mutual Administrative Assistance in Customs Matters, Agreement on Promotion and Protection of Investments, and Agreement on Establishing a Saarc Arbitration Council and Saarc Arbitration Rules.

South Asian countries will enter free trade regime from January 1, 2006 under South Asian Free Trade Area (Safta). Saarc states are signing such trade facilitating agreements to make smooth transition to free trading era, sources said.

Meanwhile, as part of Bangla-desh's preparation for the imminent Saarc summit, the foreign ministry on Tuesday wrote to other ministries and government agencies concerned asking them to send names of their representatives who will represent Bangladesh at Saarc inter-governmental and sub-group meetings on the four draft agreements.