A double taxation agreement contains provisions under which the country of residence must eliminate double taxation when the same income is being taxed by two countries. Usually, these kinds of agreements reduce withholding tax rates. Our withholding tax rate on dividends, interest and royalties, as set out in the Income Tax Act, is 25%. In our treaties, this rate is reduced bilaterally, based on payment, to 5%, 10% or 15%. There is also a provision for settling cases of double taxation that cannot be resolved through consultations between the two tax authorities. That's it in a nutshell.
Generally speaking, double taxation agreements reduce the taxes one country imposes on the other country's investors or taxpayers.