INDIA 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 Georgia. The Agreement was signed by Mr. M.C.Joshi,
Chairman, CBDT, on behalf of the Government of
India, and Mr. Zurab Katchkatchishvili, Ambassador of Georgia to India,
on behalf of the Government of Georgia.
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, insurance PE and agency PE.
The Agreement incorporates para 2 in Article 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 & fess
for technical services (10%) will promote greater investments, flow of technology
and technical services between the two countries.
The Agreement incorporates provisions for effective exchange of information
between tax authorities of the two countries in line with best international
standards, including exchange of banking information and supplying of information
without recourse to domestic interest. The Agreement also provides for sharing
of information to other agencies with the consent of supplying state.
The Agreement has an article on assistance in collection of taxes, including
provision for taking measures 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.
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