THE Government
of the Republic of India signed a Double Taxation Avoidance Agreement (DTAA)
with the Government of Republic of Fiji for the avoidance of double taxation
and for the prevention of fiscal evasion with respect to taxes on income.
The Agreement was signed here yesterday by Mr P. Chidambaram, Union Minister
of Finance on behalf of the Government of India and by Mr. Aiyaz Sayed-Khaiyum,
Attorney General and Minister of Justice, Anti-Corruption, Public Enterprises,
Communications, Civil Aviation, Tourism, Industry and Trade, on behalf of
the Government of Republic of Fiji.
Speaking on the occasion, Mr Chidambaram said that the need for the DTAA between
the two countries was felt and negotiations were completed in 2011. He said
that the Agreement will provide tax stability to the residents of India and
Fiji and facilitate mutual economic cooperation as well as stimulate the flow
of investment, technology and services between India and Fiji. The Finance
Minister further said that the Agreement incorporates provisions for an effective
exchange of information and assistance in collection of taxes between tax authorities
of the two countries including exchange of banking information.
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 the prescribed limit
for 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 also incorporates anti-abuse provisions to ensure
that the benefits of the Agreement are availed of only by the residents
of the two countries and to prevent any abuse of treaty.
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