Tax treaties generally cover a wide range of taxable items, including dividends, interests, royalties and capital gains. The provisions can vary highly across treaties between different countries. Although very few tax treaties are alike, most of them include the following:

1. Define which taxes are covered, who is resident and who is eligible for benefits.
2. Reduce the amount of tax withheld from interest, dividends and royalties paid by a resident of one country to the resident of the other country.
3. Limitation of taxes on business income of a resident of the other country to that income from a permanent establishment in the first country. If a business is a resident of one country and is considered to have a permanent establishment (i.e. a fixed place of business including an office, branch, etc.) in another country, then it is generally subject to tax in the other country.
4. Provide an exemption of certain types of organizations or individuals. This generally includes charities and pension trusts.
5. Provide procedures for enforcement of the treaty and how to resolve disputes.

In addition to avoiding double taxation, countries often enter to into tax treaties in an effort to reduce tax evasion and promote cross-border business and trading.