This document provides an overview of the key provisions contained in Double Taxation Avoidance Agreements (DTAAs). It discusses the typical structure and categories covered in DTAAs such as scope, definitions, taxation of various types of income, methods to eliminate double taxation, and final provisions. For each article, it summarizes the United Nations (UN) Model Convention approach and provides some commentary on issues or differences compared to other models or in Indian DTAAs. The document analyzes important articles related to the taxation of business profits, dividends, interest, royalties, capital gains, independent and dependent personal services.
This document provides an overview of a presentation on double taxation treaties (DTCs) or double tax avoidance treaties. It discusses the types of treaties, the purpose and objectives of DTCs, the legal status of treaties and model tax conventions, the structure of tax treaties based on the OECD model, how tax treaties interact with domestic tax laws, the distributive rules for allocating taxing rights between source and resident states, and the application and interpretation of tax treaty provisions. Key articles of the OECD model relating to the allocation of taxing rights are also summarized.
This document discusses double taxation avoidance agreements between countries. It begins with an introduction that defines double taxation as the taxation of the same income by two or more countries. Double taxation creates barriers to international trade and investment. To reduce this, countries enter into double taxation avoidance agreements that coordinate tax jurisdictions and relieve double taxation.
The document then examines the concepts around double taxation avoidance agreements in more detail. It notes that the need for such agreements arises from conflicting tax rules and definitions in different countries. The agreements benefit citizens and help facilitate international economic relations by preventing double taxation. They can provide unilateral or bilateral/reciprocal relief from double taxation.
Double taxation avoidance agreement between india and canadarhejkrhfkBaivabiNayak
The document discusses the Double Taxation Avoidance Agreement (DTAA) between India and Canada. Some key points:
- The DTAA was signed in 1985 and came into effect in 1997 to help taxpayers avoid double taxation on the same income earned in both countries.
- It applies to taxes on income and capital imposed by India and Canada. This includes taxes on things like profits, dividends, interest, royalties.
- The DTAA defines terms like residence, permanent establishment, and outlines how different types of income like business profits, shipping/air transport income, capital gains, pensions are taxed under the agreement.
- The overall aim is to help residents of both countries avoid being tax
Double taxation occurs when the same income is taxed by both the country where it originates (source country) and the country of the taxpayer's residence (residence country). To reduce barriers to international trade, countries often negotiate double taxation avoidance agreements (DTAAs) which allocate taxing rights between the two countries. India has entered into over 60 such agreements. DTAAs aim to eliminate double taxation through methods like exemption (one country does not tax) or tax credit (residence country provides credit for taxes paid in source country). They define terms like permanent establishment that determine when business income can be taxed in the source country. DTAAs and limitations of benefits clauses help prevent treaty shopping where third parties get benefits not
This document discusses tax treaties between countries. [1] It provides an example of how a company could face double taxation by selling goods in a foreign country without a tax treaty. [2] Tax treaties aim to avoid double taxation by allocating taxing rights between countries, enhancing trade, preventing tax evasion, and allowing information exchange. [3] The document then discusses key concepts in tax treaties like permanent establishment and residency.
Double Taxation Avoidance Agreement (DTAA) is a bilateral treaty between two countries to avoid double taxation of income earned by taxpayers of one country from sources in another country. DTAA divides taxing rights between the source and residence country to avoid double taxation. It provides relief to taxpayers through exemption and tax credit methods. India follows the OECD model convention for DTAA and has signed 88 agreements including with major trading partner China. DTAA promotes free flow of trade and investment by providing tax certainty and reducing tax burdens on multinational operations.
A close look into double taxation avoidance agreements with india some releva...Alexander Decker
This document provides an overview and analysis of double taxation avoidance agreements (DTAAs) between India and other countries. It discusses how DTAAs aim to eliminate double taxation that can occur when the same income is taxed in both the country of residence and country of source. The summary analyzes key aspects of India's network of DTAAs, including how they allocate taxing rights between countries and mitigate barriers to international trade and investment. DTAAs play an important role in coordinating international tax systems and preventing double taxation.
Double Taxation Avoidance Agreements (DTAAs) are agreements between countries to mitigate double taxation, where the same income is taxed by two countries. India has comprehensive DTAAs with 88 countries, specifying tax rates and jurisdiction for different types of income earned abroad. Sections 90 and 91 of India's Income Tax Act provide tax relief for income taxed abroad for countries with and without a DTAA with India. Many foreign investors in Indian stock markets operate through Mauritius due to its favorable tax treaty with India, which does not tax capital gains made on selling Indian company shares.
This document provides an overview of a presentation on double taxation treaties (DTCs) or double tax avoidance treaties. It discusses the types of treaties, the purpose and objectives of DTCs, the legal status of treaties and model tax conventions, the structure of tax treaties based on the OECD model, how tax treaties interact with domestic tax laws, the distributive rules for allocating taxing rights between source and resident states, and the application and interpretation of tax treaty provisions. Key articles of the OECD model relating to the allocation of taxing rights are also summarized.
This document discusses double taxation avoidance agreements between countries. It begins with an introduction that defines double taxation as the taxation of the same income by two or more countries. Double taxation creates barriers to international trade and investment. To reduce this, countries enter into double taxation avoidance agreements that coordinate tax jurisdictions and relieve double taxation.
The document then examines the concepts around double taxation avoidance agreements in more detail. It notes that the need for such agreements arises from conflicting tax rules and definitions in different countries. The agreements benefit citizens and help facilitate international economic relations by preventing double taxation. They can provide unilateral or bilateral/reciprocal relief from double taxation.
Double taxation avoidance agreement between india and canadarhejkrhfkBaivabiNayak
The document discusses the Double Taxation Avoidance Agreement (DTAA) between India and Canada. Some key points:
- The DTAA was signed in 1985 and came into effect in 1997 to help taxpayers avoid double taxation on the same income earned in both countries.
- It applies to taxes on income and capital imposed by India and Canada. This includes taxes on things like profits, dividends, interest, royalties.
- The DTAA defines terms like residence, permanent establishment, and outlines how different types of income like business profits, shipping/air transport income, capital gains, pensions are taxed under the agreement.
- The overall aim is to help residents of both countries avoid being tax
Double taxation occurs when the same income is taxed by both the country where it originates (source country) and the country of the taxpayer's residence (residence country). To reduce barriers to international trade, countries often negotiate double taxation avoidance agreements (DTAAs) which allocate taxing rights between the two countries. India has entered into over 60 such agreements. DTAAs aim to eliminate double taxation through methods like exemption (one country does not tax) or tax credit (residence country provides credit for taxes paid in source country). They define terms like permanent establishment that determine when business income can be taxed in the source country. DTAAs and limitations of benefits clauses help prevent treaty shopping where third parties get benefits not
This document discusses tax treaties between countries. [1] It provides an example of how a company could face double taxation by selling goods in a foreign country without a tax treaty. [2] Tax treaties aim to avoid double taxation by allocating taxing rights between countries, enhancing trade, preventing tax evasion, and allowing information exchange. [3] The document then discusses key concepts in tax treaties like permanent establishment and residency.
Double Taxation Avoidance Agreement (DTAA) is a bilateral treaty between two countries to avoid double taxation of income earned by taxpayers of one country from sources in another country. DTAA divides taxing rights between the source and residence country to avoid double taxation. It provides relief to taxpayers through exemption and tax credit methods. India follows the OECD model convention for DTAA and has signed 88 agreements including with major trading partner China. DTAA promotes free flow of trade and investment by providing tax certainty and reducing tax burdens on multinational operations.
A close look into double taxation avoidance agreements with india some releva...Alexander Decker
This document provides an overview and analysis of double taxation avoidance agreements (DTAAs) between India and other countries. It discusses how DTAAs aim to eliminate double taxation that can occur when the same income is taxed in both the country of residence and country of source. The summary analyzes key aspects of India's network of DTAAs, including how they allocate taxing rights between countries and mitigate barriers to international trade and investment. DTAAs play an important role in coordinating international tax systems and preventing double taxation.
Double Taxation Avoidance Agreements (DTAAs) are agreements between countries to mitigate double taxation, where the same income is taxed by two countries. India has comprehensive DTAAs with 88 countries, specifying tax rates and jurisdiction for different types of income earned abroad. Sections 90 and 91 of India's Income Tax Act provide tax relief for income taxed abroad for countries with and without a DTAA with India. Many foreign investors in Indian stock markets operate through Mauritius due to its favorable tax treaty with India, which does not tax capital gains made on selling Indian company shares.
Non-resident Indians can avoid double taxation by using Double Taxation Avoidance Agreements (DTAAs) between India and other countries. DTAAs provide relief from double taxation through exemption, deduction, or credit methods. To use a DTAA, an individual must submit documents like a tax residency certificate and PAN to claim exemptions or credits. Key steps include checking the applicable DTAA, submitting required documents, and considering details like applicable tax rates and ensuring PAN is updated with banks.
1) The document discusses double taxation avoidance agreements (DTAAs) between India and other countries.
2) DTAAs aim to avoid double taxation that may occur when the same income is taxed in both the country of residence and the country of source.
3) India has 84 DTAAs currently with other countries based on either the OECD or UN model conventions. The DTAAs provide relief from double taxation and clarify taxing rights between the two countries.
The basics about international treaties designed to prevent fiscal evasion, avoid double taxation and more recently to demonstrate compliance with global standards on transparency and the exchange of confidential taxpayer information. Commonly referred to as 'double taxation agreements' there are over 2,000 of this bilateral agreements in existence. www.franhendy.com ; @franhendy; www.facebook.com/franhendy
Anti-Treaty Shopping: A Comparative Analysis of the U.S. and OECD Model Tax C...Akunobera
The presentation highlights the key approaches taken by the U.S. and the OECD to combat treaty shopping techniques and highlights key differences between those approaches.
The document provides a summary of key articles in the OECD Model Convention on Double Taxation Agreements (DTAA). It outlines 30 articles that cover aspects such as persons covered, taxes covered, definitions, residential status, permanent establishment, taxation of various types of income including business profits, dividends, interest, royalties, capital gains, employment income and pensions. The articles also address exchange of information, assistance in tax collection and territorial extension of the DTAA.
Basics of Double Taxation Avoidance AgreementsGagan Singh
Double taxation avoidance agreements (DTAAs) are bilateral agreements between countries to avoid double taxation of the same income in both countries. DTAAs allocate taxing rights between the source and residence country and provide relief from double taxation through exemption or tax credit methods. For example, interest earned by a non-resident Indian in their non-resident ordinary bank account in India may be taxed at a reduced rate according to the DTAA between India and the NRI's country of residence rather than the default 30.9% withholding tax rate. India currently has over 80 DTAAs to avoid double taxation.
- Double taxation occurs when the same income is taxed twice, such as income being taxed in both the country where it was earned and the country of the taxpayer's residence.
- Double Taxation Avoidance Agreements (DTAAs) are designed to protect taxpayers from double taxation and encourage international trade and investment. However, these agreements can also be abused through practices like treaty shopping.
- Treaty shopping occurs when a resident of a third country seeks to obtain benefits from a DTAA between two other countries by establishing a company or entity in one of those countries. This allows the taxpayer to access favorable tax rates.
DOMESTIC TAXATION V/S INTERNATIONAL TAXATIONSundar B N
Domestic taxation involves taxes imposed within a country on residents and transactions, while international taxation covers cross-border transactions between associated enterprises in different countries. The key difference is that domestic taxation aims to raise revenue domestically, while international taxation seeks to manage interactions between national tax systems. Double taxation can occur internationally when the same income is taxed in multiple countries, but double taxation avoidance agreements (DTAAS) are designed to reduce this and encourage cross-border trade and investment by clarifying tax treatment and allowing foreign tax credits.
Relevance of double taxation avoidance agreement and its impactAmudha Mony
This document discusses double taxation avoidance agreements and their impact in India. It begins by defining double taxation as the imposition of two or more taxes on the same income, assets, or financial transactions in different countries. It then outlines the basic rules of source taxation and residence taxation. The document discusses India's double taxation avoidance agreements (DTAAs) with over 85 countries, which agree on tax rates and jurisdiction to avoid double taxation. Sections 90 and 91 of the Indian Income Tax Act provide bilateral and unilateral relief from double taxation. Finally, it briefly outlines the exemption method, credit method, and tax sparing method for eliminating double taxation through these agreements.
This document provides an introduction to international taxation and tax treaties. It begins with definitions of key concepts like globalization and international taxation. It then discusses tax treaties, including their objectives, evolution, models, and structure. The document outlines the prominent articles in tax treaties, including those related to definitions, distributive provisions, and anti-avoidance measures. It also discusses how tax treaties are interpreted and concepts like permanent establishment. Overall, the document aims to introduce fundamental aspects of international taxation and tax treaty frameworks.
The document discusses international taxation issues arising from retrospective amendments made to tax laws. Some key points discussed include:
1. A person who had never deducted taxes on computer software in the past now has to go back and undo those mistakes due to retrospective amendments, even though he was not aware of them previously.
2. There are concerns about the validity of reopening past assessments and the impact on investors' views of India due to continuous litigation arising from retrospective amendments.
3. Definitions related to taxation of indirect transfers of Indian assets and concepts like royalty, software, and satellite transmissions have been expanded and applied retrospectively.
The document discusses international taxation issues arising from retrospective amendments made to tax laws. Some key points discussed include:
1. A person who had never deducted taxes on computer software in the past now has to go back and undo those mistakes due to retrospective amendments, even though he was not aware of them previously.
2. There are concerns about the validity and impact of retrospective amendments, including on reopening of assessments, revision of orders, and rectification.
3. The amendments have widened the tax base by expanding the definition of royalty to include computer software, databases, and satellite transmission retroactively. This could lead to more litigation.
4. Issues around tax residency certificates, general anti-
CONFLICT OF SOURCE AND RESIDENCE PRINCIPLES OF TAXATIONksanu
This document discusses various types of conflicts that can arise in international taxation between the principles of residence and source. Residence/source conflicts occur when the same income is taxed by both the country of residence under residence principles and the country of source under source principles. Source/source conflicts happen when multiple countries claim income was sourced from their territory. Residence/residence conflicts arise when two countries consider a taxpayer resident under their domestic laws. Double tax agreements aim to resolve these conflicts through provisions regarding sole residence or source taxation, or tiebreaker rules to determine sole residency.
This document provides an overview of international taxation concepts. It discusses how residency is a key factor in determining tax jurisdiction, as countries either tax worldwide income for residents or only income from domestic sources for non-residents. There can be conflicts when countries define residency differently, such as based on place of incorporation versus management and control, which can lead to double taxation. Treaties aim to resolve such conflicts but different countries take different approaches in their treaties. The concepts of residency, jurisdiction, and relief from double taxation are important aspects of international tax.
This document discusses the Multilateral Instrument (MLI) Convention, which aims to implement tax treaty related measures from the OECD/G20 BEPS Project to prevent base erosion and profit shifting. The MLI will modify over 3000 bilateral tax treaties. Key features of the MLI include introducing principal purpose tests to prevent tax avoidance, adopting simplified limitation of benefit clauses, expanding definitions of permanent establishment, and improving dispute resolution mechanisms. India has signed the MLI and it will modify India's 93 tax treaties, though the effects on some treaties are unclear as not all countries participated. The MLI provides flexibility for each country to choose which provisions to adopt and will help address treaty shopping and other BEPS issues.
This PPT is mainly on the basics of International Taxation which is confusing for many students and many professionals too nowadays. During this evolving world of multinational culture, International Taxation has gained significant importance of which all the professionals should be aware of.
I have tried to compile the concepts of international taxation in this PPT except the concept of Transfer Pricing which in itself is like a whole book.
I have inserted the core concepts which lead to the emergence of International Taxation in India.
This document discusses tax havens and offshore financial centers (OFCs). It defines tax havens as jurisdictions that use laws and secrecy to help other entities avoid taxes in other jurisdictions. OFCs are defined as jurisdictions that provide disproportionate financial services to non-residents. Key characteristics of tax havens and OFCs are low or no taxes, strong protections on financial privacy, and lack of transparency. Examples of tax havens include Luxembourg, Switzerland, and Delaware. Examples of OFCs include the Bahamas, Bermuda, and Switzerland. OFCs specialize in services like shipping/aircraft registration, insurance, banking, and collective investment vehicles.
Treaty shopping occurs when a person establishes an entity in a country with a favorable tax treaty to gain tax benefits they would not otherwise be entitled to. This is done through "conduit" entities that take advantage of reduced withholding tax rates in the source country, while the economic benefits flow to persons not entitled to the treaty. Direct conduits involve investing through an intermediary country to access a lower tax rate in the source country. Stepping stone conduits erode the source country's tax base through deductible payments to a third country with an exemption regime.
This document provides an overview of double taxation avoidance agreements (DTAAs) or double tax conventions. It discusses the types of tax treaties, the purpose and objectives of DTAAs, their legal status and model tax conventions like the OECD and UN models. It explains the structure and provisions of the OECD model, how tax treaties interact with domestic tax laws, and the distributive rules for allocating taxing rights between source and resident states for different types of income according to the OECD model. Key articles of the OECD model regarding taxation of business profits, dividends, interest, royalties, capital gains and other income are also summarized.
Non-resident Indians can avoid double taxation by using Double Taxation Avoidance Agreements (DTAAs) between India and other countries. DTAAs provide relief from double taxation through exemption, deduction, or credit methods. To use a DTAA, an individual must submit documents like a tax residency certificate and PAN to claim exemptions or credits. Key steps include checking the applicable DTAA, submitting required documents, and considering details like applicable tax rates and ensuring PAN is updated with banks.
1) The document discusses double taxation avoidance agreements (DTAAs) between India and other countries.
2) DTAAs aim to avoid double taxation that may occur when the same income is taxed in both the country of residence and the country of source.
3) India has 84 DTAAs currently with other countries based on either the OECD or UN model conventions. The DTAAs provide relief from double taxation and clarify taxing rights between the two countries.
The basics about international treaties designed to prevent fiscal evasion, avoid double taxation and more recently to demonstrate compliance with global standards on transparency and the exchange of confidential taxpayer information. Commonly referred to as 'double taxation agreements' there are over 2,000 of this bilateral agreements in existence. www.franhendy.com ; @franhendy; www.facebook.com/franhendy
Anti-Treaty Shopping: A Comparative Analysis of the U.S. and OECD Model Tax C...Akunobera
The presentation highlights the key approaches taken by the U.S. and the OECD to combat treaty shopping techniques and highlights key differences between those approaches.
The document provides a summary of key articles in the OECD Model Convention on Double Taxation Agreements (DTAA). It outlines 30 articles that cover aspects such as persons covered, taxes covered, definitions, residential status, permanent establishment, taxation of various types of income including business profits, dividends, interest, royalties, capital gains, employment income and pensions. The articles also address exchange of information, assistance in tax collection and territorial extension of the DTAA.
Basics of Double Taxation Avoidance AgreementsGagan Singh
Double taxation avoidance agreements (DTAAs) are bilateral agreements between countries to avoid double taxation of the same income in both countries. DTAAs allocate taxing rights between the source and residence country and provide relief from double taxation through exemption or tax credit methods. For example, interest earned by a non-resident Indian in their non-resident ordinary bank account in India may be taxed at a reduced rate according to the DTAA between India and the NRI's country of residence rather than the default 30.9% withholding tax rate. India currently has over 80 DTAAs to avoid double taxation.
- Double taxation occurs when the same income is taxed twice, such as income being taxed in both the country where it was earned and the country of the taxpayer's residence.
- Double Taxation Avoidance Agreements (DTAAs) are designed to protect taxpayers from double taxation and encourage international trade and investment. However, these agreements can also be abused through practices like treaty shopping.
- Treaty shopping occurs when a resident of a third country seeks to obtain benefits from a DTAA between two other countries by establishing a company or entity in one of those countries. This allows the taxpayer to access favorable tax rates.
DOMESTIC TAXATION V/S INTERNATIONAL TAXATIONSundar B N
Domestic taxation involves taxes imposed within a country on residents and transactions, while international taxation covers cross-border transactions between associated enterprises in different countries. The key difference is that domestic taxation aims to raise revenue domestically, while international taxation seeks to manage interactions between national tax systems. Double taxation can occur internationally when the same income is taxed in multiple countries, but double taxation avoidance agreements (DTAAS) are designed to reduce this and encourage cross-border trade and investment by clarifying tax treatment and allowing foreign tax credits.
Relevance of double taxation avoidance agreement and its impactAmudha Mony
This document discusses double taxation avoidance agreements and their impact in India. It begins by defining double taxation as the imposition of two or more taxes on the same income, assets, or financial transactions in different countries. It then outlines the basic rules of source taxation and residence taxation. The document discusses India's double taxation avoidance agreements (DTAAs) with over 85 countries, which agree on tax rates and jurisdiction to avoid double taxation. Sections 90 and 91 of the Indian Income Tax Act provide bilateral and unilateral relief from double taxation. Finally, it briefly outlines the exemption method, credit method, and tax sparing method for eliminating double taxation through these agreements.
This document provides an introduction to international taxation and tax treaties. It begins with definitions of key concepts like globalization and international taxation. It then discusses tax treaties, including their objectives, evolution, models, and structure. The document outlines the prominent articles in tax treaties, including those related to definitions, distributive provisions, and anti-avoidance measures. It also discusses how tax treaties are interpreted and concepts like permanent establishment. Overall, the document aims to introduce fundamental aspects of international taxation and tax treaty frameworks.
The document discusses international taxation issues arising from retrospective amendments made to tax laws. Some key points discussed include:
1. A person who had never deducted taxes on computer software in the past now has to go back and undo those mistakes due to retrospective amendments, even though he was not aware of them previously.
2. There are concerns about the validity of reopening past assessments and the impact on investors' views of India due to continuous litigation arising from retrospective amendments.
3. Definitions related to taxation of indirect transfers of Indian assets and concepts like royalty, software, and satellite transmissions have been expanded and applied retrospectively.
The document discusses international taxation issues arising from retrospective amendments made to tax laws. Some key points discussed include:
1. A person who had never deducted taxes on computer software in the past now has to go back and undo those mistakes due to retrospective amendments, even though he was not aware of them previously.
2. There are concerns about the validity and impact of retrospective amendments, including on reopening of assessments, revision of orders, and rectification.
3. The amendments have widened the tax base by expanding the definition of royalty to include computer software, databases, and satellite transmission retroactively. This could lead to more litigation.
4. Issues around tax residency certificates, general anti-
CONFLICT OF SOURCE AND RESIDENCE PRINCIPLES OF TAXATIONksanu
This document discusses various types of conflicts that can arise in international taxation between the principles of residence and source. Residence/source conflicts occur when the same income is taxed by both the country of residence under residence principles and the country of source under source principles. Source/source conflicts happen when multiple countries claim income was sourced from their territory. Residence/residence conflicts arise when two countries consider a taxpayer resident under their domestic laws. Double tax agreements aim to resolve these conflicts through provisions regarding sole residence or source taxation, or tiebreaker rules to determine sole residency.
This document provides an overview of international taxation concepts. It discusses how residency is a key factor in determining tax jurisdiction, as countries either tax worldwide income for residents or only income from domestic sources for non-residents. There can be conflicts when countries define residency differently, such as based on place of incorporation versus management and control, which can lead to double taxation. Treaties aim to resolve such conflicts but different countries take different approaches in their treaties. The concepts of residency, jurisdiction, and relief from double taxation are important aspects of international tax.
This document discusses the Multilateral Instrument (MLI) Convention, which aims to implement tax treaty related measures from the OECD/G20 BEPS Project to prevent base erosion and profit shifting. The MLI will modify over 3000 bilateral tax treaties. Key features of the MLI include introducing principal purpose tests to prevent tax avoidance, adopting simplified limitation of benefit clauses, expanding definitions of permanent establishment, and improving dispute resolution mechanisms. India has signed the MLI and it will modify India's 93 tax treaties, though the effects on some treaties are unclear as not all countries participated. The MLI provides flexibility for each country to choose which provisions to adopt and will help address treaty shopping and other BEPS issues.
This PPT is mainly on the basics of International Taxation which is confusing for many students and many professionals too nowadays. During this evolving world of multinational culture, International Taxation has gained significant importance of which all the professionals should be aware of.
I have tried to compile the concepts of international taxation in this PPT except the concept of Transfer Pricing which in itself is like a whole book.
I have inserted the core concepts which lead to the emergence of International Taxation in India.
This document discusses tax havens and offshore financial centers (OFCs). It defines tax havens as jurisdictions that use laws and secrecy to help other entities avoid taxes in other jurisdictions. OFCs are defined as jurisdictions that provide disproportionate financial services to non-residents. Key characteristics of tax havens and OFCs are low or no taxes, strong protections on financial privacy, and lack of transparency. Examples of tax havens include Luxembourg, Switzerland, and Delaware. Examples of OFCs include the Bahamas, Bermuda, and Switzerland. OFCs specialize in services like shipping/aircraft registration, insurance, banking, and collective investment vehicles.
Treaty shopping occurs when a person establishes an entity in a country with a favorable tax treaty to gain tax benefits they would not otherwise be entitled to. This is done through "conduit" entities that take advantage of reduced withholding tax rates in the source country, while the economic benefits flow to persons not entitled to the treaty. Direct conduits involve investing through an intermediary country to access a lower tax rate in the source country. Stepping stone conduits erode the source country's tax base through deductible payments to a third country with an exemption regime.
This document provides an overview of double taxation avoidance agreements (DTAAs) or double tax conventions. It discusses the types of tax treaties, the purpose and objectives of DTAAs, their legal status and model tax conventions like the OECD and UN models. It explains the structure and provisions of the OECD model, how tax treaties interact with domestic tax laws, and the distributive rules for allocating taxing rights between source and resident states for different types of income according to the OECD model. Key articles of the OECD model regarding taxation of business profits, dividends, interest, royalties, capital gains and other income are also summarized.
VIETNAM – LATEST GUIDE TO CONTRACT MANUFACTURING AND TOLLING AGREEMENTSDr. Oliver Massmann
1) Under Vietnamese law, drop shipping is considered an alternative form of import and is not subject to tax exemptions or reductions. There are no special regulations for drop shipping supplies. Capital equipment imported as fixed assets may be exempt from import taxes if they meet certain conditions.
2) While ownership of inventory, capital equipment, or acting as a purchasing agent could potentially create risks of a permanent establishment, establishing a representative office could help avoid this.
3) Tax incentives are available for certain encouraged investments based on location, business lines, employment levels, and export percentages. Operating as a cost plus contract manufacturer does not preclude incentives.
ICAI Diploma in Intl Taxation Articles 1- 4 Presentation 09.06.2018P P Shah & Associates
This document summarizes a presentation on Articles 1-4 of the UN Model Tax Convention. It discusses key aspects of Article 1 such as the persons covered under tax treaties, including residents of contracting states and exceptions. It also discusses the purpose of Article 1 and issues around taxation of partnerships and collective investment vehicles. Furthermore, it covers anti-abuse rules and measures in tax treaties to prevent improper use, such as beneficial ownership rules and force of attraction principles. Specific cases are also mentioned relating to the application and interpretation of Article 1.
NAVI MUMBAI BRANCH OF WIRC OF ICAI
ICAI Intensive Course on International Taxation
Presentation on Understanding tax treaties & credit for double tax including underlying tax credit
The document provides an overview of the taxation of income from international shipping and air transport operations for non-residents under the Indian Income Tax Act of 1961 and India's tax treaties. It summarizes key provisions of Article 8 of the UN and OECD Model Tax Conventions regarding the taxation of profits from international transport activities. It also outlines the definitions, connecting factors, and taxing rights over shipping and air transport income for non-residents as per the Indian tax law and India's various double taxation treaties.
This document summarizes a presentation on controlled foreign corporations (CFC) and the CFC rules and regulations. It discusses the concept and rationale of CFC rules, which are introduced to prevent tax deferral by taxpayers on foreign source income. It provides examples to illustrate tax deferral and outlines the CFC rules and regulations in countries like the US and India, including the types of income covered, exemptions, and compliance requirements.
The document summarizes key aspects of the proposed Unshell Directive (ATAD3) and discusses its interaction with Bilateral Investment Treaties (BITs). The Unshell Directive aims to define "substance" criteria for companies and deny certain tax benefits to those deemed lacking substance. It may take effect starting in 2024 and retroactively apply as of 2022. This retroactivity could violate BITs and be grounds for arbitration disputes. The directive also intends to deny companies failing its substance tests access to double tax treaties and protections under BITs. However, retroactively removing existing BITs rights through an EU directive is arguably unacceptable under international law.
This document discusses the taxation of partnerships under domestic laws and tax treaties. It defines partnerships and the different types, and addresses how partnerships are classified and taxed in different countries. It also examines issues that can arise with conflicting classifications of partnerships between countries, such as double taxation or non-taxation. The document outlines relevant articles in the OECD and UN models related to determining whether partnerships are entitled to tax treaty benefits.
The document discusses the concept of permanent establishment (PE) under tax treaties and domestic law. It provides definitions and key elements of different types of PEs, including fixed place PE, construction/installation PE, and service PE. It also discusses exceptions and exclusions from PE status. Specifically, it notes that a PE requires a fixed place of business through which the business is wholly or partly carried out, and examines requirements like reasonable degree of permanence and control or right of use over the place. It analyzes different articles and provisions across OECD, UN, and US models relating to various PE types.
Taxation of Royalty - By CA Parul Aggarwalparul mittal
In Post BEPS era and with unprecedented technological advancement, the characterization of royalty payments and its subsequent taxation has gained paramount importance. With this, the tax structures have also undergone sea change. This presentation discusses the treaty interpretation through analysis of various case laws relating to characterization and taxability of royalty payment.
BCAS - DTAA Study Course - Presentation on Article 8 on International Shippin...P P Shah & Associates
This document provides an overview of the taxation of income from international shipping and air transport operations for non-residents under the Indian Income Tax Act of 1961 and double taxation avoidance treaties. It defines key terms, explains the scope of income that may be taxed in India, and compares provisions of the OECD and UN model tax treaties. Specifically, it outlines rules for taxation in the country of an enterprise's place of effective management and provisions regarding the taxation of profits from international shipping and air transport operations under India's tax treaty with Singapore.
Recent Tax Developments in India - DTC 2013 & APA updatesEY
The document summarizes recent tax developments in India related to the Direct Taxes Code (DTC) 2013 and Advanced Pricing Agreements (APA). For DTC 2013, it provides an overview of the key changes compared to the existing Income Tax Act, including lower corporate tax rates, a branch profit tax, expanded source rules, and controlled foreign company rules. For APA, it briefly discusses the process and updates but does not provide details.
The document summarizes the legal framework and procedures for setting up an Export Oriented Unit (EOU) in India according to the country's Foreign Trade Policy. Key points include:
- EOUs are eligible for various exemptions from customs duties, excise duties, and direct/indirect taxes to facilitate exports.
- Setting up an EOU involves obtaining a Letter of Intent from the Development Commissioner by submitting an application with documents like project report and locational clearances.
- Upon receiving the Letter of Intent, legal undertakings must be executed and capital goods/inputs must be attested before a Green Card is issued.
- Various formalities like warehousing licenses and bond execution are
The document discusses the tax treatment of income from immovable property under the OECD Model Convention.
Key points:
- Article 6 of the OECD Model Convention grants primary right to tax income from immovable property to the source state where the property is located. The residence state may also tax but must provide relief from double taxation.
- Income includes rental income, income from agriculture/forestry, and capital gains from sale of immovable property.
- The source state has primary right to tax capital gains on sale of immovable property under Article 13. Gains on movable property of a PE are also taxed in the source state.
Business and Business Income Lecture Notesgetabelete
This document discusses business income and its taxation under Ethiopian law. It defines business as any organized commercial activity conducted for profit, including industries, professions, ventures. Business income under Ethiopian tax law refers to gross amounts derived from conducting a business, including disposal of assets and provision of services, excluding employment income. The document outlines how Ethiopian commercial and tax laws characterize and regulate different business forms and activities to determine what qualifies as a business and business income subject to taxation.
OBJECTIVE
In the present era of cross-border transactions across the globe, the effect of taxation is one of the important considerations for any trade and investment decisions in other countries. Where a taxpayer is resident in one country but has a source of income situated in another country it gives rise to possible double taxation, to address the same Double Taxation Avoidance Agreements (DTAAs) are entered between countries. In this webinar, we shall understand and analyse the DTAA entered by India-UAE.
The remittance of funds abroad from perspective of Income Tax Act, 1961 (“IT Act”) requires a clear understanding of its process flow (right from the applicability of the Act to the procedure in which the funds will be remitted outside India). By way of this presentation, we have tried to simplify the Income Tax provisions for remittance of funds abroad for our readers.
MAZARS Luxembourg - New substance requirements for holding and financing comp...Quentin Van Gansberghe
The OECD BEPS project has rapidly moved to the implementation phase, leaving a new tax environment. This new environment requires businesses to re-evaluate your holding and financing structures, and assess your tax strategy with the aim of developing a sustainable tax framework.
Mazars Luxembourg has hosted a conference to present this new tax environment and to identify adequate strategy(ies). Our guest speaker, Dr. Vikram Chand, Executive Director of the Master of Advanced Studies in International Tax and Executive Program in Transfer Pricing at the University of Lausanne and our Mazars has covered, during this conference, the following three topics:
• The impact of the OECD BEPS and EU Anti Tax Avoidance Package on holding and financing companies;
• The substance requirements for holding activities ; and
• The substance requirements for financing activities, especially, in light of the Actions 8-10 of the BEPS plan and the new Luxembourg transfer pricing circular for intra-group financing activity.
You will find in attachment the slides of this presentation.
For any questions, feel free to contact Dr Vikram Chand (vikram.chand@unil.ch) or Mr François Karolyi (francois.karolyi@mazars.lu)
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Final - FEMA presentation-Harshal Bhuta_Deposit and Accounts FEMAHarshal Bhuta
The document discusses various types of bank accounts that can be opened and maintained in India by non-residents and foreign currency accounts by Indian residents under FEMA regulations. It provides details on NRE, FCNR, NRO and SNRR accounts including eligibility to open, permitted credits/debits, repatriability of funds, tax treatment and operation of accounts upon change of residential status. Escrow accounts that can be opened by non-resident corporates are also summarized. The document appears to be notes for a training course covering key FEMA regulations regarding deposits and accounts in India.
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The document is a letter from an accounting firm providing comments on India's draft guidance on determining a company's place of effective management (POEM) for tax purposes. It raises three key concerns: 1) The definition of "passive income" is too broad and could capture income that is not truly passive. 2) The guidelines about senior management and identification of POEM headquarters need more clarity. 3) The guidelines contradict themselves by stating a company can only have one POEM but later allowing for the possibility of a POEM in two places. The firm requests clarification and revisions to address these concerns.
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Overview of DTAA Provisions_WIRC_14.05.16 - Harshal Bhuta
1. Overview of DTAA Provisions
Harshal Bhuta
M.Com., F.C.A., A.D.I.T., LL.M. (Hons.) in International Tax Law [WU]
2. P. R. Bhuta & Co. CAs
Structure of DTAA
14/05/2016 WIRC 2
Category Includes
Scope of Convention Persons and Taxes Covered
Definitions General Definitions; Definition of Resident and PE
Taxation of Income Income from Immovable Property; Business Profits;
Shipping and Air Transport; AEs; Dividends; Interest;
Royalties/FTS; CG; IPS; DPS; Directors Remuneration;
Pension; Government Service; Teachers; Students;
Other Income
Taxation of Capital Capital
Methods for Elimination
of Double Taxation
Exemption/Credit method
Special Provisions LOB; Non-discrimination; MAP; EOI; Assistance in
Collection of Taxes; Diplomats and Members of
Consular Posts
Final Provisions Entry into Force; Termination
Protocol Amendments to DTAA
3. P. R. Bhuta & Co. CAs14/05/2016 WIRC 3
Title & Preamble of DTAA
TITLE
UN Model DTC 2011
Avoidance of Double Taxation
Prevention of Fiscal evasion
Comments
Addtl: Promoting Economic cooperation
PREAMBLE
UN Model DTC 2011
In accordance with constitutional procedures
Comments
BEPS: Enhancement of co-operation in tax matters; Conclusion
of DTAA w/o creating opportunities for non-taxation or reduced
taxation through treaty shopping arrangements
4. P. R. Bhuta & Co. CAs
Article 1 – Persons Covered
14/05/2016 WIRC 4
UN Model DTC 2011
“Persons”
“Residents”
One or both of the Contracting States
Comments
Pass through partnerships?
Article 2 – Taxes Covered
UN Model DTC 2011
Taxes on Income & Capital. Includes tax on wages / salaries, CG
Imposed by Contracting State or Political Subdivision or Local
Authority
Listing of various types of existing taxes
Introduction of / Replacement by identical and substantially similar
taxes covered. Competent authorities to notify each other.
5. P. R. Bhuta & Co. CAs14/05/2016 WIRC 5
Article 2 – Taxes Covered
Comments
Some Indian DTAAs (e.g. Spain DTAA) contain reference to
wealth tax. But abolishment of wealth tax makes it redundant.
Many Indian DTAAs cover even State taxes [e.g. Germany
DTAA(trade tax)] whereas with USA does not cover state taxes;
covers even municipal taxes [e.g. Switzerland (communal taxes)];
covers even taxes imposed on elements of income although not
income tax [e.g. Finland DTAA (church tax)]
Equalisation levy?
Article 3 – General Definitions
UN Model DTC 2011
Contains important definitions
For undefined terms, meaning to be taken from domestic law “at
that time under law” (firstly tax law failing which general law
meaning)
6. P. R. Bhuta & Co. CAs14/05/2016 WIRC 6
Article 3 – General Definitions
Comments
India-UK Protocol: Definition of person specifically amended to
accommodate UK pass through partnerships
Sec 90(3) of Income Tax Act: Terms not defined under Act or
DTAA, meaning to be assigned to it from CBDT Notification
Ambulatory approach or Static Approach? – many Indian DTAAs
prescribe ambulatory approach (Australia, Finland, Indonesia)
Article 4 – Resident
UN Model DTC 2011
Definition of ‘Resident’
“Liable to tax”
Deciding factors as referred to in domestic tax law
Excludes Limited liability to tax
7. P. R. Bhuta & Co. CAs14/05/2016 WIRC 7
Article 4 – Resident
UN Model DTC 2011
Tie Breaker Test Hierarchy - Individuals
Permanent Home
Centre of Vital Interest – Personal and economic relations
Habitual Abode
Nationality
Competent authority mutual agreement
Tie Breaker Test Hierarchy – Other than individuals
POEM
Competent authority mutual agreement
Comments
Split period residence
POEM interpretation countrywise
BEPS Action 6 discards POEM test
8. P. R. Bhuta & Co. CAs14/05/2016 WIRC 8
Article 5 – Permanent Establishment
UN Model DTC 2011
Fixed Place PE
Place of business: a facility such as premises or, in certain
instances, machinery or equipment
At disposal requirement
Fixed: Distinct place; Certain degree of permanence
Carrying on: Regularity of business
Examples of Fixed place PE: Branch, office, factory, workshop
Construction PE
Building site, construction, assembly, installation, connected
supervisory activities
>6 months
Service PE
Furnishing of services
> 183 days in any 12 month period (not necessarily tax year)
9. P. R. Bhuta & Co. CAs14/05/2016 WIRC 9
Article 5 – Permanent Establishment
UN Model DTC 2011
Preparatory and Auxiliary activities: [Non-essential / Non-significant]
Use of Facilities for storage or display
Maintenance of stock for storage or display / processing by
another enterprise
Maintenance of place of business for mere purchase
Maintenance of place of business for collecting information
Maintenance of place of business for other preparatory or auxiliary
activities such as advertising, carrying out scientific research,
servicing of patent
Agency PE
Habitually exercises authority to conclude contract
Habitually maintains stock and regularly delivers from such stock
Activities devoted wholly or almost wholly on behalf of the
enterprise and dealing at non-ALP
10. P. R. Bhuta & Co. CAs14/05/2016 WIRC 10
Article 5 – Permanent Establishment
UN Model DTC 2011
Insurance PE
Foreign reinsurer collects premium in Source State
Insures risks in Source State
Subsidiary as PE
Either fixed place PE or agency PE
Comments
BEPS Action 1 – Digital economy
Delivery activity through warehouse may constitute PE under UN
Model DTC 2011
Assembly operations covered under Construction PE vis-à-vis
OECD Model DTC
Article 5(1) vs. Article 5(2)
11. P. R. Bhuta & Co. CAs14/05/2016 WIRC 11
Article 6 – Income from Immovable property
UN Model DTC 2011
Source taxation rights given for income from immovable property
Meaning of immovable property as per domestic law
Immovable property includes livestock, right to work mineral
deposit, sources and other natural resources
Excludes ships, boats, aircrafts
Article 7 – Business profits
UN Model DTC 2011
Business profits taxable in source state only if there is PE
Force of attraction rule
Attribution based on separate entity approach
Deduction for executive and general administrative expenses
wherever incurred (i.e. even head office expenditure).
12. P. R. Bhuta & Co. CAs14/05/2016 WIRC 12
Article 7 – Business profits
UN Model DTC 2011
No deduction / income consideration for internal dealings between
PE and head office (or between two PEs of the same head office)
otherwise than reimbursement of actual expenses (Exception for
banks in case of interest payment/receipt)
Alternative provision: Attribution based on formulary apportionment
Consistency in attribution approach
Priority of special articles over Article 7
Comments
Subject to limitations of tax laws of Source State - Sec 44C, 44DA,
etc.
Attribution is a complex exercise and prone to litigation ;
Rule 10
Profit attribution exercise undertaken by each State since
Residence State has to grant credit
UN vs. OECD – Profit attribution
13. P. R. Bhuta & Co. CAs14/05/2016 WIRC 13
Article 8 – Shipping, Inland Waterways
Transport & Air Transport
UN Model DTC 2011
Two alternatives:
o Sole taxing rights to State in which POEM is situated vs.
o Limited Source State taxing rights arising from more than
casual operations
“International traffic”
Types of income covered: Transportation income; Directly
connected income; Ancillary activity income
Participation in pool, joint business, international operating agency
Comments
Most Indian DTAAs do not cover inland waterways.
Treatment of investment income of shipping/air transport
enterprises
Article 8 prevails over Article 7
14. P. R. Bhuta & Co. CAs14/05/2016 WIRC 14
Article 9 – Associated Enterprises
UN Model DTC 2011
Adjustments to profits for tax purposes only. Not for accounting
purposes
AEs if participation in (and/or common) management, control,
capital and non ALP dealings
Corresponding adjustment by Residence State
Corresponding adjustment not to be granted in case of fraud or
gross negligence or wilful default
Comments
Does not conflict with national legislations
Corresponding adjustments not automatic. Only if competent
authority of Residence State considers the adjustment as proper.
Otherwise MAP.
Thin capitalisation rules not in conflict with Article 9
Secondary adjustment
15. P. R. Bhuta & Co. CAs14/05/2016 WIRC 15
Article 10 – Dividends
UN Model DTC 2011
Application of Article: Dividends paid by resident of Source State
to resident of Residence State
Shared taxing rights but limitation for source state.
Definition of “Dividend” + Meaning of “Beneficial owner”
Equal taxation rights to source state (i.e. Article 7 and 14 presides
over Article 10) if holding (in respect of which dividends are paid)
is effectively connected with PE/Fixed base in Source State
No force of attraction: Source State cannot tax the dividends
distributed (or undistributed profits) by enterprise of residence
state even if such dividends are out of profits arising from Source
State.
Comments
Effectively connected: PE is economic owner
Dividends “paid”
Branch profit tax
16. P. R. Bhuta & Co. CAs14/05/2016 WIRC 16
Article 11 – Interest
UN Model DTC 2011
Application of Article: Interest arising in Source State and paid to
resident of Residence State
Shared taxing rights but limitation for source state.
Definition of “Interest” + Meaning of “Beneficial owner”
Equal taxation rights to source state (i.e. Article 7 and 14 presides
over Article 10) if debt-claim (in respect of which interest is paid) is
effectively connected with PE/Fixed base in Source State
“Arising”: Deemed in the Source State if payer is resident of
Source State or if PE/fixed base of payer located in Source State
(and interest borne by PE/fixed base)
Article applies only to ALP amounts. Excess amount could be
recharacterized under domestic law
Comments
Exemption for government(-run) banks;Islamic finance instruments
Risk of double taxation in case of back to back arrangements
17. P. R. Bhuta & Co. CAs14/05/2016 WIRC 17
Article 12 – Royalties
UN Model DTC 2011
Application of Article: Royalties arising in Source State and paid
to resident of Residence State
Shared taxing rights but limitation for source state.
Definition of “Royalties” + Meaning of “Beneficial owner”
Equal taxation rights to source state (i.e. Article 7 and 14
presides over Article 10) if right or property (in respect of which
royalty is paid) is effectively connected with PE/Fixed base in
Source State
“Arising”: Deemed in the Source State if payer is resident of
Source State or if PE/fixed base of payer located in Source State
(and royalty borne by PE/fixed base)
Article applies only to ALP amounts. Excess amount could be
recharacterized under domestic law
18. P. R. Bhuta & Co. CAs14/05/2016 WIRC 18
Article 12 – Royalties
Comments
FTS Article to be introduced in revised UN Model; present in most
Indian DTAAs
Concept of FIS – Make available
Exemption of payment for personal use under FTS
Exemption of payment for teaching activities under FTS
Characterization issues for Royalty:
o ICS equipment
o ICS experience
o Computer Software
o E-commerce payments (e.g. cloud computing, download of
digital products)
o Transponder leasing
Secondary source rule: India-USA DTAA (Payment by non-
resident payer to US payee for right to use ICS equipment in India)
19. P. R. Bhuta & Co. CAs14/05/2016 WIRC 19
Article 13 – Capital Gains
UN Model DTC 2011
Alienation of Immovable property: Shared taxation rights
between Residence State and Source State
Alienation of Movable property of PE/fixed base: Shared taxation
rights between Residence State and Source State
Alienation of PE/Fixed Base itself: Shared taxation rights
between Residence State and Source State
Alienation of Ships and aircraft by operator: Sole taxation rights
to state in which POEM is situated
Source Rule - Alienation of shares in company / interest in
partnership, trust, estate where such shares / interest derives >
50% value from immovable property in Source State: Shared
taxation rights between Residence State and Source State
Alienation of shares of Source State resident company held for
more than 12 months: Shared taxation rights between
Residence State and Source State
20. P. R. Bhuta & Co. CAs14/05/2016 WIRC 20
Article 13 – Capital Gains
UN Model DTC 2011
Alienation of any other property: Sole taxation rights given to
Residence State
Comments
Computation mechanism: As given in respective domestic laws
(e.g. indexation, forex conversion rate, cost of acquisition, etc)
Taxation of other securities such as bonds, debentures solely in
Residence State
Meaning of alienation?: Under domestic laws since not defined
under DTAA. Sale, exchange, transfer, conversion, gift,
inheritance?
21. P. R. Bhuta & Co. CAs14/05/2016 WIRC 21
Article 14 – Independent Personal Services
UN Model DTC 2011
Primary right of taxation given to Residence State
Secondary right given to Source State if:
o There is fixed base in Source State and activities are
performed in Source State through that fixed base or
o Residents stay in Source stay for > 183 days in any 12
month period
Illustration of professional services
Comments
Inclusive meaning and not exhaustive.
Same principles for determination of and attribution to PE to be
applied for determining existence of as well as attribution to fixed
base
No force of attraction principle under this Article unlike Article 7
Hierarchy between IPS and FTS
22. P. R. Bhuta & Co. CAs14/05/2016 WIRC 22
Article 15 – Dependent Personal Services
UN Model DTC 2011
Primary right of taxation given to Residence State
Secondary right given to Source State if:
o Employee is present in Source stay for > 183 days in any 12
month period and
o Remuneration is paid by employer of Residence State and
o Remuneration is not borne by PE/fixed base of employer in
Source State
Remuneration for employment exercised aboard ship/aircraft
operated in international traffic: Secondary taxation rights given to
state in which POEM of employer is situated
Subject to Article on Directors Fees, Pension & Government Service
Comments
Meaning of “borne” by PE
Concept of economic employer for 2nd condition
ESOPs
23. P. R. Bhuta & Co. CAs14/05/2016 WIRC 23
Article 16 – Directors’ Fees & Remuneration of Top-
Level Managerial Officials
UN Model DTC 2011
Shared taxation rights between Residence State and Source State
Article 17 – Artistes and Sportspersons
UN Model DTC 2011
Shared taxation rights between Residence State and Source State
“Entertainer” and “sportsperson”
Artiste companies clause
Comments
Entertainment character should be present
Public performance criteria
Streams of income covered?: Royalties, advertising income,
sponsorship income
24. P. R. Bhuta & Co. CAs14/05/2016 WIRC 24
Article 18 – Pensions and Social Security Payments
UN Model DTC 2011
Subject to Article on Government Service
Two alternatives: Sole taxation right with Residence State vs.
Shared taxation rights between Residence State and Source State
But if pension and annuity paid under social security scheme of a
Contracting State, then taxable solely under that State.
Article 19 – Government Service
UN Model DTC 2011
Employment income paid by a Contracting State is taxable solely
under that State unless it is paid to a national of the other state
who did not become a resident solely for rendering the service.
Pension and annuity paid by a Contracting State for services
rendered to it is taxable solely under that State unless it is paid to
a national cum resident of the other State.
If business motive present, then this Article not applicable
25. P. R. Bhuta & Co. CAs14/05/2016 WIRC 25
Article 20 – Students
UN Model DTC 2011
Remittances from abroad to a student / business trainee /
apprentice studying in the Other Contracting State shall not be
taxed in that State.
Comments
Time limitation in many DTAAs
Article on similar lines for Teachers / Professors / Research
Scholars dealing with remuneration earned by them in Source
State
Article 22 – Capital
UN Model DTC 2011
Similar on lines of Article 13 – Capital Gains
Comments
Redundant in Indian context since wealth tax has been abolished
26. P. R. Bhuta & Co. CAs14/05/2016 WIRC 26
Article 21 – Other Income
UN Model DTC 2011
Application of Article: For items of income not dealt with in any
other Article of DTAA
Shared taxation rights between Residence State and Source
State
Other income effectively connected to PE / Fixed base in Source
State will be governed under Article 7 or 14 respectively
Comments
Meaning of “not dealt with”
E.g. Alimony payment; lottery income; gift income
Wherever arising: Rent paid by a resident of a Contracting State
for the use of immovable property situated in a third State
27. P. R. Bhuta & Co. CAs14/05/2016 WIRC 27
Article 23 – Exemption / Credit Method
Exemption
Method
Credit
Method
Full
Exemption
Exemption with
progression
Direct
credit
Indirect
credit
Special
credit
Full
credit
Ordinary
Credit
Underlying
Tax credit
Tax
sparing
Methods of Elimination of double taxation
28. P. R. Bhuta & Co. CAs14/05/2016 WIRC 28
Article 23 – Exemption / Credit Method
Comments
Most Indian DTAAs contain credit method as far as credit by
India is concerned
Under a particular DTAA, each Contracting State could also
select different methods (e.g. India-Swiss DTAA)
Exemption method generally excludes income streams under
Article 10,11,12
Qualification conflicts
Timing mismatch
Subject-to-tax clause
Relief from taxes subject to domestic tax law provisions (viz. FTC
rules)
Recent draft FTC rules prescribe source by source as well as
country by country limitation
29. P. R. Bhuta & Co. CAs14/05/2016 WIRC 29
Article 24 – Non-Discrimination
UN Model DTC 2011
24(1): Nationality based Non-Discrimination
24(2): Stateless persons Non-Discrimination
24(3): PE Non-Discrimination
24(4): Debtor-Creditor Non-Discrimination
24(5): Ownership based Non-Discrimination
24(6): Non-Discrimination not restricted by taxes listed u/a 2
Comments
Most Indian DTAAs do not contain provision similar to Art. 24(2)
& 24(6)
“Same circumstances”; “carrying on same activities”; “same
conditions”
Triangular situations
30. P. R. Bhuta & Co. CAs14/05/2016 WIRC 30
Article 25 – Mutual Agreement Procedure
UN Model DTC 2011
Actions of one or both Contracting States result or will result in
taxation in variance with provisions of DTAA
Irrespective of remedies under domestic law
Case to be presented within 3 years of first notification of such
action
MAP agreement to be implemented notwithstanding domestic
law time limits
Alternative provision: Arbitration proceedings if MAP Agreement
not reachable within three years of presentation.
Exception to Arbitration: If court has given a ruling already
Comments
Interaction between MAP agreement and domestic court ruling
31. P. R. Bhuta & Co. CAs14/05/2016 WIRC 31
Article 26 – Exchange of Information
UN Model DTC 2011
Exchange of information which is “foreseeable relevant”
Not restricted by Article 1 and 2 of DTAA
Information exchanged to be treated as secret and permitted to be
shared/disclosed only under specific circumstances
No exchange of information which contains professional and trade
secret /process and/or sensitive for public policy purpose
Information held by a Bank/FI also liable to be obtained and
exchanged
Comments
Many DTAAs also contain Article on “Assistance in Tax Collection”
Recent Developments
Cbc Multilateral Competent Authority Agreement
Multilateral Convention on Mutual Administrative Assistance in Tax
Matters
32. P. R. Bhuta & Co. CAs14/05/2016 WIRC 32
Article 28 – Entry into force
UN Model DTC 2011
Ratification of DTAA as per domestic law of each State
Exchange of Instruments of Ratification by each State
Effective Date: May be different for each State
Comments
Could be retrospective too especially for protocol introducing
Article on EOI
Article 28 – Termination
UN Model DTC 2011
Time period given for sending Notice of Termination
Effective Date
33. P. R. Bhuta & Co. CAs14/05/2016 WIRC 33
Limitation of Benefit
Comments
US DTAA Model
BEPS Action 6
Many Indian DTAAs amended to include LOB clause
Application of Domestic GAAR vs. LOB clause under DTAA
“Main purpose test”
Exclusions
Protocol
Comments
Post negotiation / signing of DTAA
MFN clause
34. P. R. Bhuta & Co. CAs14/05/2016 WIRC 34
Thank you
Disclaimer : The opinions and views expressed in this presentation are for
informational purposes only. The information is not intended to be a
substitute for professional opinion. A fact-based professional opinion
should always be sought before advising the client.
35. P. R. Bhuta & Co. CAs14/05/2016 WIRC 35
Harshal Bhuta
M.Com., F.C.A., A.D.I.T., LL.M. (Hons.) in International Tax Law [WU (Vienna)]
M/s. P. R. Bhuta & Co. Chartered Accountants,
Contact Information
Address 2-I, Jeevan Sahakar, 2nd Floor, Sir P. M. Road, Fort, Mumbai – 400001, India.
Telephone +91 22 22660010/3427; 43471727
Mobile +91 9930114418
Fax +91 22 22662793
E-mail harshal.bhuta@bhutaco.com
Website www.bhutaco.com