Purchases under the tax treaty are widespread and go well beyond the original goal of avoiding double taxation, which is to tax income twice in two states because of different tax rules. Countries can use a “performance limitation” (LOB) to avoid such abuses. According to Section 91, the Indian government may exempt a person from double taxation, regardless of whether or not there is an agreement between India and another country concerned on the prevention of double taxation. The 1985 income tax agreement between the two countries will cease to enter into force after the provisions of the new treaty come into force. The contract between Thailand and the United States has a LOB clause that applies a two-way test – active behaviour and ownership – to ascertain whether contractual privileges should be granted to a resident of the other state party. As the above points show, international tax planning plays an important role in building a strong relationship between countries. In order to avoid this double taxation, several countries enter into specific contracts, called agreements to avoid double taxation, to protect their individuals and businesses from paying double taxes and to help boost their incomes and the economies of countries as a whole. It is essentially a bilateral agreement between two countries. The main objective was to promote and promote economic exchanges and investment between two countries by avoiding double taxation. The agreement between the Government of the Republic of India and the Government of the Kingdom of Thailand to avoid double taxation and prevent income tax evasion has been ratified and ratification instruments exchanged in accordance with Article 28 of the Convention of 13 March 1986. However, most of the tax treaties in which Thailand participates do not contain a LOB provision. Even the new pact with Singapore calls for the abolition of the LOB clause at the end of this year, which will encourage more people to use Singapore with low taxes to buy contracts. If a LOB clause exists, it will deny contractual privileges, unless foreign investors transfer profits from Thailand and first pay taxes in their home country — to prove that there is indeed double taxation.

One of these countries is Thailand. On 22 March 1985, the Indian government reached an agreement with the Kingdom of Thailand on double taxation of income prevention and the prevention of tax evasion. There is no doubt that this tax agreement has brought India and Thailand closer together. To deal with this type of tax planning, the new treaty allows Thailand to apply national laws to tax benefits when the main assets of the target company are directly or indirectly made up of real estate established in Thailand.