Finally, after about 33 years of the India-Mauritius tax treaty coming into force, the treaty has now been amended. What is the key feature of the amendment?. Recent news of India and Mauritius signing a Protocol to amend their 33 year old tax treaty caused seismic changes in the tax world. Though not completely. India and Mauritius have concluded negotiations with respect to the double tax avoidance agreement (India-Mauritius DTAA) between the two countries.
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However, such dividends may also be taxed in the Contracting Jauritius of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed—. This assistance is not restricted by Article 1 and 2.
Azadi Bachao Andolan, cited supra, in the following passage: The exchange of information or documents shall be either on a routine basis or on request with reference to inddia cases or both.
India-Mauritius DTAA Revised
Paragraph 4 deals with taxation of capital gains arising from the alienation of any property other than those mentioned in the preceding paragraphs and gives the right of taxation of capital gains only to that State of which the person deriving the capital gains is a resident.
In case of divergence between the two texts, the English text shall be the operative one. However, aggressive tax avoidance by multinational companies involves complex ways of artificially moving profits from countries where economic activity takes place to low or no tax countries where a group company may be incorporated. India, which was an active participant in drafting the multilateral treaty, adopted it in June in Paris but when Mauritius joined the club a month later, it kept the bilateral treaty with India outside the scope of the multilateral deal.
The benefits of this article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this article for more than five consecutive years from the date of his first arrival in that other Contracting State.
The Double Tax Avoidance Agreement between India and Mauritius
The DTAA, meant to prevent double taxation of the same income in both the countries, had actually resulted in mauritiuw escaping tax in both the countries, a practice referred to as double non-taxation. After Mauritius, Cyprus was next Novemberand on the last day ofit was Singapore.
The Convention is amended by adding after Article 12 the following new Article:.
As we have pointed out, Circular No. In witness whereof the undersigned, duly authorized, have signed this Protocol.
However India has been keen to show its preference by lowering Indian withholding tax on interest to just 7. Notwithstanding the provisions of paragraph 2 of this article, gains from the alienation of ships and aircraft operated in international traffic and movable property pertaining to the operation of such ships and aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
However, the tax charged shall not exceed the rate of the Mauritius tax on profit of the company paying the dividends.
The Convention is amended by adding after Article 26 the following new Article:. Gains from the alienation of shares acquired on or after 1st April in a company which is resident of a Contracting State may be taxed in that State. Concluding remarks The signing of the Protocol is certainly a decisive move by the Government of India which puts at rest more than a decade long controversy around the Mauritius treaty.
India, Mauritius set to hold fresh talks on DTAA amendments – Livemint
This case must be presented within three years of the date of receipt of notice of the action which gives rise to taxation not in accordance with the Convention. Including the two nations, 71 countries are now party to the global anti-tax avoidance framework. After 31 Marchtax will be charged at full domestic tax rates.
Two people with knowledge of communications between Delhi and Port Louis, on condition of anonymity, separately said talks to upgrade the DTAA will start soon. Maritius from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
The laws in force in either of the Contracting States shall continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Convention.
Paragraphs 3A and 3B inserted by Notification No. Notwithstanding the provisions of paragraphs 1 and 2 of this article, a person acting in a Contracting State for or on tdaa of an enterprise of the other Contracting State [other than an agent of an independent status to whom the provisions of mauritiua 5 apply] shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if: The investment strategy between the two long-term investment partners must now be revisited because of the introduction of GAAR and due to the amendments in the DTAA, both effective from 1 April Where under this Convention a resident of a Contracting State is muritius from tax in that Contracting State in respect of income derived from the other Contracting State, then the first-mentioned Contracting State may, in calculating tax on the remaining income of that person, apply the rate of tax which would have been applicable if the income exempted from tax in accordance with this Convention had not inria so exempted.
India-Mauritius tax treaty: An end and a new beginning
For the purposes of this article and article 20 an individual shall be deemed to be resident of a Contracting State if he is a resident in that Contracting State in the “previous year” or the “year of infia, as the case may be, in which he visits the other Contracting State or in the immediately preceding “previous year” or the “year of income”. Agreement for avoidance of double taxation and prevention of fiscal evasion with Australia Whereas the annexed Agreement between the Government of the Republic of India and the.
The cases of legal entities not having bona fide business activities dtaaa be covered by Article 27A 1 of the Convention. Income-tax Double Taxation Relief Aden Rules, – Present position thereunder These Rules being consistent with the corresponding provisions of the Act, continued to be.
Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State maruitius which he is a resident. This Convention shall remain in force indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give the other Contracting State through diplomatic channels, written notice of termination and, in such event, this Convention shall cease to have effect—.
The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein and the right or property mauritus respect of which the income is paid is effectively connected with such permanent establishment or fixed base.
Comprehensive Agreements Agreement for avoidance of double taxation and prevention of fiscal evasion with Australia Whereas the annexed Agreement between the Government dttaa the Republic of India and the. Vistra News Bulletin – Edition The tax standards prescribe greater transparency in reporting of business operations by companies and limit their ability to exploit tax arbitrage.
Prev Far-reaching implications of the Mauritius protocol. The provisions of paragraphs 12 and 3 shall not apply if the beneficial owner of the dividends, being a resident of the Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base.
Get instant notifications from Economic Times Allow Not now You can switch off notifications anytime using browser settings. It develops leaders who team up to deliver on their promises to all its stakeholders. However, rumblings from the Indian authorities with regard to the alleged ‘abuses’ are still continuing in and and it was announced in June that discussions between the two countries to amend the treaty are to mauritous soon.