INDIA
and Kazakhstan have signed today a Protocol to amend the existing Double
Taxation Avoidance Convention (DTAC) between the two countries signed on 9th
December, 1996 for the avoidance of double taxation and for the prevention of
fiscal evasion with respect to taxes on income. Salient features of the Protocol
are as under:
(i) The Protocol provides internationally accepted
standards for effective exchange of information on tax matters. Further, the
information received from Kazakhstan for tax purposes can be shared with other
law enforcement agencies with authorisation of the competent authority of
Kazakhstan and vice versa.
(ii) The Protocol inserts a Limitation of
Benefits Article, to provide a main purpose test to prevent misuse of the DTAC
and to allow application of domestic law and measures against tax avoidance or
evasion.
(iii) The Protocol inserts specific provisions to facilitate
relieving of economic double taxation in transfer pricing cases. This is a
taxpayer friendly measure and is in line with India’s commitment under Base
Erosion and Profit Shifting (BEPS) Action Plan to meet the minimum standard of
providing Mutual Agreement Procedure (MAP) access in transfer pricing cases.
(iv) The Protocol inserts service PE provisions with a threshold and
also provides that the profits to be attributed to PE will be determined on the
basis of apportionment of total profits of the enterprise.
(v) The
Protocol replaces existing Article on Assistance in Collection of Taxes with a
new Article to align it with international standards.
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