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Submitted to:Prof.Subha Kant Padhi

Prepared by:
Sandeep Dasmohapatra (U407041)








 
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Sandeep Dasmohapatra (U407041)



All these double Taxation avoidance agreements have some common clauses. The
clauses are mainly defining the way in which individual tax payer & Business entities
who have sources of income in both the countries or have business interests in both the
countries will pay tax to each government. We will discuss few agreements and try to
find out similarities and dissimilarities among these agreements. We will also try to find
out any unique features in any agreement.


 
This article discusses about the way to determine domicile of a person for taxation
purpose.


  A person/Organization will be termed as resident of either India or UK in
which he is normally liable to pay taxes due to his domicile ,permanent residence or
having permanent management of the organization.

2) But if a person have resident in both countries then will be treated as resident of that
country in which his personal and economical relations are closer. If there is any
difficulty in determining the country where his personal /economical relations are more
closer or he does not have a permanent residence in any of the two countries , then he
will be treated as resident of that country in which he normally stays.

3)In case he normally stays in both countries then he will be treated as resident of that
country whose national he is. However if he is not national of any of these two
countries then the issue of resident will be settled mutually between tax authorities of
both countries..For a person other than individual if the person is resident of both
countries then he will be considered as resident of that country where the person¶s
management is.


 ! !": same as India-U.K as discussed above.


# $
 same as India-U.K


c%&!": Same as above
 ! !"c%&!": Same as India -UK .However here one more clause is added to
determine the Resident status that is ³the state or any local party or local authority are
included as resident.


# $
: Same as India-U.K

c%&!"c
 Same as India ±U.K

 '
This article gives definition Permanent Establishment for taxation Purpose.


  : It means a fixed place in a country through which business is partially or
fully carried out. This include Place of management, A branch ,an office ,a factory, a
sales outlet where orders are received ,A mine of natural resources., A project site
continuing for more than 6 months, any supervisory activity for less than 6 months
related to erection of equipments where supervisory cost is more than 10% of sales
price of equipment/machinery. This also includes management services other than in
the shape of Royalties or technical fees for a period of 90 days within a year.

However following will not be treated as permanent Establishment-: Facility for only
storage, storing for processing by other enterprises, Office for purchasing of goods or
collection of information only .Office for only advertising or for research .Combination of
any of these activities which are auxiliary/secondary in nature.

A person in a country acting on behalf of any company of other country shall be

considered to be permanent establishment of that company if he normally negotiates on
behalf of the company(except the negotiations are only for purchase ),he maintains
stock of goods and regularly delivers the goods from the stock to customers, normally
he receives orders for supply of goods on behalf of the company,

A company will not be considered to have permanent establishment in other country if it

carries business through an agent/broker in other country whose normal business is
broking and he is not doing it exclusively for a particular company and doing it for many
companies as his habitual business..If he is doing it for exclusively for any one
company, then this will be treated as business establishment of the company.

If any company has control over a business enterprises in other country by holding
major part or share or voting rights ,it will be treated as permanent establishment.


 ! !": Same as India-U.K as discussed above but in this agreement An
agricultural, forestry, and plantation farm in other country will also be treated as
permanent establishment.

 # $
 :The 1st part is same as India-U.K .Documents of second part not
available.


#c%&!": Same as India-UK.

! !"c%&!": Same as India-UK .but here consulting services related to aproject
in other country for a period only more than 12 months will be treated as permanent
establishment.

! !"c%&!": Same as India-UK but here consulting services related to a project
in other country. for a period only more than 9 months to 12 months will be treated as
permanent establishment.

 $
"Same as India-UK except that here is no mention about consultancy
or supervisory services.

c%&!"c
 Details are not available:

Article 7 Related to business Profits:


 #  An enterprise shall pay tax in that country where it carries its business
unless it carries business in other country through a permanent establishment in other
country. In such case the enterprise will pay tax in the other country for the amount of
income which can be directly or indirectly related to the business in other country
through the permanent establishment.

If the permanent establishment takes some part works on behalf of the original
enterprise, then a proportionate portion(as per the contribution given) of income of
original Enterprise will be treated as indirect income of permanent establishment. For
determining the profits of permanent establishment will be determined as per the tax
laws of that country in which the permanent establishments situated. The pro
proportionate income of principal enterprise will also be determined by the Tax law of
that country. The expenses such as general administrative, executive etc will be
governed by the law of that country in which it is situated.

If the law of the country in which the permanent establishment is situated impose any
restriction on the expenses allowed and that is relaxed due to any agreement among
OECD countries then it has to be notified to the other country. If the permanent
establishment pays any amount to the parent enterprise in the form of
royalty(commission for services received from the parent enterprise, that amount will not
be allowed as expense.

No profits shall be charged against the permanent establishment for purchase of goods
for principal enterprise.
If profits include items which are covered by other conventions, then those
conventions¶s article will not be affected by this convention.


 ! !": Same as India-U.K


# $
: No documents found.


c%&!": Same as India ±UK except here it is mentioned that for determining the
profits of permanent establishment from total income of the enterprise normally each
year same method is to be followed

! !"c%&!": Same as India-Cyprus.

 $
" Same as India-Cyprus

c%&!"c
 Details are not available

 (Related to Capital gains:


 : Except from Air Transport or shipping business capital gains will be charged
according to laws of the country where permanent establishment is situated.

 )This article is about the agreement for Elimination of Double taxation by

contracting countries :


#  If any enterprise of UK paid tax in India for profits made in India as per the
tax laws of India and that is as per DTAA convention, then tax credit will be given in UK
against any tax calculated in UK with reference to same profits or income.

If dividend is paid by a company which is resident of UK and controls 10% or more

voting right in Indian establishment, then tax Credit will be allowed for the amount paid
as dividend tax in India, while calculating tax in U.K.

Similarly tax paid in UK by any Indian enterprise for the Income made from sources
within UK, tax credit will be allowed in India for such income chargeable in India(at the
same proportion) .Relief from UK tax shall also be given in respect of income from any
source if the income relates to a period starting more than 10 fiscal years after the
deduction, while computing taxable income or exemption from or reduction of Indian tax
is first granted to resident of UK or to resident of India. Incomes which as per the
convention can not be subject to tax in any country may be taken in to consideration for
calculation of other tax.


 ! !" :If tax paid by a resident Indian in Mauritius is as per the tax laws of
Mauritius because of his income from Mauritius, shall be given tax credit in India against
income from the same business subject to the credit does not exceed the tax payable in
India. If it is an Indian Enterprise who have to pay surtax in India ,the tax credit from
Mauritius ,will be adjusted first against the income tax and the leftover will be later
adjusted against surtax payable.

The rule related to dividend is same as India-UK convention. The credit of dividend tax
paid in Mauritius shall be deemed to include the amount which would have been
payable at Mauritius for any year but for an exemption of tax granted for any part of year
thereof. Other conditions are same as India ±UK convention.


 # $
 Netherland while imposing tax to its resident will take into
consideration whether such income is taxable in India or not as per the convention.
Similarly a resident of Netherland if eligible to be taxed in India as per the convention,
then Netherland will exempt such items of income by allowing reduction in its tax.
Similarly when an Indian resident is taxed, if he is liable to be taxed in Netherland for
such income, India will reduce its tax by that amount which that person has paid in
Netherland .If such person is an company by which surtax is payable in India, the
deduction in respect of income tax paid in Netherland shall be first allowed from income
tax payable by the company in India and as to the balance if any from surtax by it in
India. For determining the taxes on income to be paid to the Netherland tax authority
the investment premiums and bonuses and disinvestment payment as per the
Netherland Investment Account law. If resident of one country derives gain in other
country which is taxable in that country then the country of residence of the tax payer
shall allow deduction from its tax payable on gains equal to amount of tax paid in other
country.


c%&!"Here the avoidance of double taxation clause under article 25.If income
of an Indian resident is taxable in Cyprus the India will allow tax credit equal to tax paid
in Cyprus for the same income. Similarly Indian tax payable as per Indian tax law will be
treated as tax credit against any tax payable at Cyprus in respect to the same profit.
However this exemption can not be more than tax payable in Cyprus. The tax payable
in one country shall be deemed to include the tax which should have been paid but not
paid due to incentive in that country for promoting economic development. Here the
dividend tax is mentioned as 10% or 15%,tax on interest at 10%,for royalties at 15% of
gross royalties and 10% of gross technical fees. It is an uniqueness in this agreement
which clearly mentioned about tax rates.

! !"c%&!": Here in this agreement it is clearly mentioned the actions to be

taken by each country to avoid double taxation. The conditions are very clearly
described .

For Mauritius: If a resident of Mauritius derives income from Cyprus ,the amount of tax
paid in Cyprus will be credited against the tax imposed at Mauritius to that person.
In case of company paying Dividend the conditions are same as India ±UK.

For Cyprus: Same as to be done in part of Mauritius only with addition that the credit
should not exceed the tax payable in Cyprus. Related to lower tax due to tax promotion
scheme for economic development conditions are same as India _Cyprus.

* $
: Here the elimination of double taxation is covered under article-22..Tax
credit rules are same as India-UK agreement. Rules regarding dividend paid by a
company same as India-UK.. Rules regarding determination of Netherlands tax is same
as India -Netherland..For Netherland: same action as per tax credit for tax paid at UK
.Other conditions are same as India-Netherland & India _UK.

c%&!"c
: Tax credit :same as all other tax credit agreement. Related Dividend
paid by company in Cyprus to enterprise in Canada is same as other agreement. The
capital expenditure for enterprises mainly in Hotel business, manufacturing, assemblies
civil engineering, ship building, electricity etc. which are for development of Cyprus is
allowed, after signing of this convention. Other conditions are same as all agreement.

 + This article is related to treatment of income from Shipping and Air traffic
Business. 
 # ! !" : Profits from business of Ship or Aircraft in international
route shall be taxable in that country where the effective management of the enterprise
is located. If the effective management of the shipping enterprise is in a ship then it will
be considered to be situated in the country in which the ship¶s home harbor is and if
there is no such home harbor ,then the resident of the operator will be treated as the
place of resident for the shipping business.

Any interest on funds connected with operation of operation of ships or aircraft in

international traffic shall be treated as profit from operation of such ship or aircraft. The
business of ship or aircraft means business of transporting per sons, goods, livestock
etc ,selling tickets on behalf of such enterprise and occasional leasing of ship or aircraft.

! !" #c%&!" Same as India-Mauritius but no detail process of determining the
country of residence is mentioned.

 , Income from immovable property:


# ! !" : The meaning of immovable property shall be in accordance with the
tax laws of that country where such property is situated .The term includes all property
which are accessory to immovable property which are accessory to immovable
property, livestock and equipments used in agriculture and forestry, rights to work
,mineral deposits, oil wells, quarries and other place of natural resources. However
ships and boats will not be considered as immovable property.
 ! !"c%&!"  Same as India-Mauritius. The provision is applicable for income
from immovable property for both Individual and enterprise services

 (-    .

": In most of the agreements the ways to treat the
dividend income is described under head Business profits.


c%&!" : Dividends paid by a company which is resident of a contracting state to
a resident of the other contracting country may be taxed in other country.

As per the agreement the term Dividend means income from shares or other rights but
not debt claim, participating in profits as wel as income from other corporate rights .

subjected to the same taxation treatment as income share by the laws of the state of
which the company is resident.

If a company which is resident of a country derives profit from other country ,then that
other state may not impose any tax on dividends paid by the company except in some
special cases.

c%&!"c
: Same as India.

  (/ 
 # $
 Gains derived by resident of one of the countries
from the alienation/disposal of immovable property situated in other country will be
taxed in other country as per tax rule of that country.. Gains from the selling of movable
property forming part of the business property of a permanent establishment which an
enterprise of one of the countries has in the other country or of movable property
pertaining to a fixed base available to a resident of one of the countries in the other
country for the performance of independent personal service will be taxed in the other
country.. Gains from alienation of ships or aircraft operated in international route or
movable property pertaining to the operation of such aircraft shall be taxable only in the
country of the enterprise..

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