INDIA and Bhutan today signed
a DTAA for the
prevention of fiscal evasion with respect to taxes on income. The Agreement
was signed by Mr P. Chidambaram, Minister of Finance on behalf of the
Government of India and by Mr. Lyonpo Wangdi Norbu, Bhutanese Finance Minister,
on behalf of the Royal Government of Bhutan. This is the first ever DTAA
for Bhutan with any country.
The DTAA provides that business profits will be taxable in the source state
if the activities of an enterprise constitute a permanent establishment in
the source state. Profits derived by an enterprise from the operation of aircraft
in international traffic shall be taxable in the country of place of effective
management of the enterprise. Dividends, interest, royalty income and fees
for technical or professional services will be taxed both in the country of
residence and in the country of source. However, the maximum rate of tax to
be charged in the country of source will not exceed 10% on such dividends,
interest, royalties and fees for technical services. Capital gains from the
sale of shares will be taxable in the country of source.
The Agreement further incorporates provisions for effective exchange of information
and assistance in collection of taxes between tax authorities of the two countries
including exchange of banking information and also incorporates anti-abuse
provisions to ensure that the benefits of the Agreement are availed of by the
genuine residents of the two countries.
|
