THE Government
of India here today signed an Agreement for Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
Income and on Capital (DTAA) with Government of Albania. The Agreement
was signed by Dr. Sudha Sharma, Chairperson, Central Board of Direct
Taxes (CBDT), on behalf of the Government of India and Mr. Fatos Kerciku,
Ambassador, Republic of Albania on behalf of the Government of Albania.
The DTAA provides that business profits will be taxable in the source
state if the activities of an enterprise constitute a Permanent
Establishment (PE) in the source state. The Agreement provides for fixed
place PE, building site, construction & installation PE, service PE
and agency PE.
The Agreement incorporates para 2 in Article 9 concerning Associated
Enterprises. This would enhance recourse to Mutual Agreement Procedure
to relieve double taxation in cases involving transfer pricing
adjustments.
Dividends, Interest and Royalties & Fees for Technical Services
income will be taxed both in the country of residence and in the country
of source. The low level of withholding rates of taxation for dividend
(10%), interest (10%) and royalties & fees for technical services
(10%) will promote greater investments, flow of technology and technical
services between the two countries.
The Agreement further incorporates provisions for effective exchange
of information between tax authorities of the two counties in line with
latest international standard, including exchange of banking information
and supplying of information without recourse to domestic interest.
The Agreement also contains an Article on Assistance in Collection of
Taxes. This article also includes provision for taking measure of
conservancy. The Agreement incorporates anti-abuse (limitation of
benefits) provisions to ensure that the benefits of the Agreement are
availed of by the genuine residents of the two countries.
The Agreement will provide tax stability to the residents of India and
Albania and will facilitate mutual economic cooperation between the two
countries. It will also stimulate the flow of investment, technology
and services between India and Albania.
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