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DOUBLE TAX AVOIDANCE AGREEMENTS

 
     DTAA International Taxation     Notes  
 

DTAA International Taxation

Double Tax Avoidance Treaties override the domestic tax provisions to the extent they are more beneficial to the assessees. Relief is granted in respect of income chargeable to tax, both under the Income Tax Act of India and the Income Tax laws in that other country, in order to promote mutual economic relations, trade and investment. Most of the Indian treaties are based on the United Nations Model and therefore provide for aggressive role for the Source States to tax the incomes. While transfer pricing provisions are on the Statute, many other treaty abuse provisions like CFC Regulations are non existent.

Withholding Tax Rates:
  [Tax rates applicable in India under ADT Agreement]
 
 
 
  Interest Royalty Fees for technical service
Armenia 10% 10% 10%
Australia 15%    
Austria 10% 10% 10%
Bangladesh 10% 10% No separate provision  
Belarus 10% 15% Both
Belgium 15% (10% if granted by a bank) 10% Both
Brazil 15% 25% for use of trademark; 15% for others No separate provision  
Bulgaria 15% 15% of royalty relating to literary, artistic, scientific works other than films or tapes used for radio or television broadcasting; 20% in other cases Both
Canada 15% 10%-20% Both
China 10% 10% Both
Cyprus 10% 15% Both
CzeckRepublic 10% 10% Both
Denmark 10% if loan is granted by bank; 15% for others 20% Both
Germany 10% 10% Both
Finland 10% 15%-20% during 1997-2001, 15% for subsequent years; 10% for equipment royalty Both
France 10% 10% Both
Greece 20% 30% No separate provision
Hungary 10% 10% Both
Indonesia 10% 15% No separate provision
Ireland 10% 10% Both
Israel 10% 10% Both
Italy 15% 20% Both
Japan 10% if the recipient of interest is bank; 15% for others [Note 2] 20% Both
Jordan 10% 20% Both
Kazakstan 10% 10% Both
Kenya 15% 20% Both
Korea 10% if interest is paid to a bank; 15% for others 15% Both
KyrgyzRepublic 10% 15% Both
Libyan Arab Jamahiriya 20% 30% No provision
Malaysia 10% 10% Both
Malta 10% 15% Both
Mangolia 15% 15% Both
Mauritius 20% 15% No separate provision
Morocco 10% 10% Both
Namibia 10% 10% Both
Nepal 10% if interest is paid to bank 15% for others 15% No separate provision
Netherlands 10% 10-20% Both
New Zealand 10% 10% Both
Norway 15% 10% Both
Oman 10% 15% Both
Philippines 10% if interest is received by a financial institution or insurance company; 15% in other cases 15% if it is payable in pursuance of any collaboration agreement approved by the Government of India  
Poland 15% 22.50% Both
PortugueseRepublic 10% 10% Both
Quatar 10% 10% Both
Romania 15% 22.50% Both
Russian Federation 10% 10% Both
Singapore 10% if loan is granted by a bank/similar institute including an insurance company; 15% for others 15% for copyrights; 10% for others Both
South Africa 10% 10%  
Spain 15%   Both
Srilanka 10% 10% Both
Sudan 10% 10% Both
Sweden 10% 10% No separate provision
Swiss 10% 10% Both
Syria 7.5% 10% Both
Tanzania 12.50% 20% No separate provision
Thailand 10% for financial institutions and insurance company; 20% for others 15% No separate provision
Trinidad and Tobago 10% 10%  
Turkey 10% if recipient is bank, etc.; 15% in other cases 15% Both
Turkmenistan 10% 10%  
Uganda 10% 10% Both
Ukraine 10% 10% Both
United Arab Emirates 5% if loan is granted by a bank/similar financial institute; 12.5% for others 10% Both  
      No separate provision
United Arab Republic 20% 30% No separate provision
United Kingdom 10% if interest is paid to a bank; 15% for others   Both
United States 10% if loan is granted by a bank/similar institute including insurance company; 15% for others   Source
Uzbekistan 15% 15% Both
Vietnam 10% 10% Both
Zambia 10% 10% No separate provision
 
   
 

Notes

  1. 10 per cent of the gross amount of the interest on loans made or guaranteed by a bank or other financial institution carrying on bona fide banking or financing business or by an enterprise which holds directly or indirectly at least 10 per cent of the capital of the company paying the interest.
  2. Dividend/interest earned by the Government and certain institutions like the Reserve Bank of India is exempt from taxation in the country of source.
  3. Royalties and fees for technical services would be taxable in the country of source at the following rates:
    1. 10 per cent in case of rental of equipment and services provided along with know-how and technical services ;
    2. any other case
      1. during first five years of the agreement
        • 15 per cent if the payer is Government or specified organisation;
        • 20 per cent in other cases ;
      2. subsequent years, 15% in all cases.
        Income of Government and certain institutions will be exempt from taxation in the country of source.
  4. Royalties and fees for technical services would be taxable in the country of source at the following rates :
    1. 10 per cent in case of royalties relating to the payments for the use of, or the right to use, industrial, commercial or scientific equipment;
    2. 20 per cent in case of fees for technical services and other royalties.
  5. 10 per cent of the gross amount of the interest on loans made or guaranteed by a bank or other financial institution carrying on bona fide banking or financing business or by an enterprise which holds directly or indirectly at least 20 per cent of the capital of the company paying the interest.
 
   
     

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