India and Cyprus ink Revised DTAA

India and Cyprus have inked a revised Agreement for Avoidance of Double Taxation and Prevention of Fiscal evasion (DTAA) with respect to taxes on income, along with its Protocol.
It will replace the existing DTAA that was signed by two countries in June 1994. The provisions of new DTAA will enter into force after completion of necessary internal procedures in both countries.
Key provisions of new DTAA

• Provides source based taxation of capital gains arising from alienation of shares, instead of residence based taxation provided under the existing DTAA.
• Provides for Assistance between the two countries for collection of taxes. Updates the provisions related to Exchange of Information to accepted international standards.
• Enables exchange of banking information and allow the use of such information for purposes other than taxation with the prior approval of the Competent Authorities.
• Expands the scope of ‘permanent establishment’ and reduces the tax rate on royalty in the country from which payments are made to 10% from the existing rate of 15%.
• Updates the text of other provisions in accordance with the international standards and consistent policy of India in respect of tax treaties.

Month: Current Affairs - November, 2016