Finally, after about 33 years of the India-Mauritius tax treaty coming into force, the treaty has now been amended. What is the key feature of the amendment?. New Delhi: India and Mauritius are set to begin a fresh round of negotiations to amend their double tax avoidance agreement (DTAA) to ensure. The Double Tax Avoidance Agreement (herein referred as “DTAA”) entered into between India and Mauritius provides for potential tax exemption to the foreign.
|Published (Last):||12 May 2018|
|PDF File Size:||3.23 Mb|
|ePub File Size:||19.73 Mb|
|Price:||Free* [*Free Regsitration Required]|
Thank you for your comment, we value your opinion and the time you took to write to us!
India-Mauritius tax treaty: An end and a new beginning
Any agreement reached shall be implemented notwithstanding any time limits in the laws of the Maurutius States. Subject to the provisions of paragraph 3 of this article, where an enterprise of a Invia State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
Subject to the provisions of Articles 16, 17, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless maurtiius employment is exercised in the other Contracting State.
Notwithstanding the maurritius of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such.
This assistance is not restricted by Article 1 and 2. Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount.
India-Mauritius DTAA amendments – a Bird’s eye view | Taxsutra
The Mauritius route is a channel used by foreign investors to invest in India. Any agreement reached shall be implemented notwithstanding any time limits in the laws of the Contracting States.
Further, where such resident is a company by which surtax is payable in India, the credit aforesaid shall be allowed inida the first instance against income-tax payable by the company in India and as to the balance, if any, against surtax payable by it in India. The Indian Revenue have in the past questioned the eligibility of capital gains tax exemption under the Tax Treaty on the ground that the Mauritian Company has no real dtaq substance and it has been merely set-up for Treaty Shopping.
Why a deal can fail to create value Want to build a purposeful organisation?
Nine of the 10 largest foreign business organizations or companies investing in India from April January are based in Makritius. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be —.
Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount.
Where by reason of the provision of paragraph 1, a person other than an individual is a resident of both the Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated.
The Double Tax Avoidance Agreement between India and Mauritius
The existing taxes to which this Convention shall apply are: Where under this Convention a resident of Contracting State is exempt from tax in that Contracting State in respect of income derived from the other Contracting State, then the first mentioned Contracting State may, in calculating tax on the remaining income of that person, apply the rate of tax which would have been applicable if the income exempted from tax in accordance with this Convention had not been so exempted.
Article 1 Article 5 Permanent Establishment of the Convention shall be amended by inserting in paragraph 2 the following new sub-paragraph: Prior to its substitution, said Article read as under: A much needed and timely impetus. The provisions of paragraphs 123 and 4 shall not apply if the recipient of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base.
Article 13 of the Convention deals with taxation of capital gains and it has five paragraphs. The Government also deserves to be applauded for giving sufficient notice of close to a year before the change takes effect as well as providing protection to existing investments. For the purposes of this article and article 20 an individual shall be deemed to be resident of a Contracting State if he is a resident in that Contracting State in the “previous year” or the “year of income”, as the case may be, in which he visits the other Contracting State or in the immediately preceding “previous year” or the “year of income”.
The Double Tax Avoidance Agreement between India and Mauritius
The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention.
Remuneration, other than pension, paid by the Government of a Contracting State to an individual who is a national maurutius that State in respect of services rendered to that State, shall be taxable only in that State.
In terms of paragraph 4, dtaz gains derived by a resident of Mauritius by alienation of shares of companies shall be taxable only in Mauritius according to Mauritius tax law. The terms ” resident of India ” and ” resident of Mauritius ” shall be construed accordingly. However, the position of taxability of capital gains is otherwise under the provisions of DTAA between India and Mauritius.
For the purposes of this Convention, the term ‘ permanent establishment ‘ means a fixed place of business through which the business of the enterprise is wholly or partly carried on. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of mauritiuw a permanent establishment alone or together with the whole enterprise or of such a fixed base, may be taxed in that other State.