India and Kazakhstan have signed a Protocol to amend the existing Double Taxation Avoidance Convention (DTAC) between the two countries in New Delhi.
The DTAC between both countries was earlier signed in December 1996 for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income.
Salient features of Protocol
- Provides internationally accepted standards for effective exchange of information on tax matters. Further, allows tax authorities to share information with other law enforcement agencies with prior authorisation.
- Limitation of Benefits Article has been inserted to provide a main purpose test to prevent misuse of the DTAC and to allow application of domestic law and measures against tax evasion or avoidance.
- Specific provisions to facilitate relieving of economic double taxation in transfer pricing cases also have been inserted.
- It is a taxpayer friendly measure and is in line with India’s commitment under Base Erosion and Profit Shifting (BEPS) Action Plan to meet standards of Mutual Agreement Procedure (MAP) access in transfer pricing cases.
- Service PE (PE provisions) provisions also have been inserted with a threshold and the profits to be attributed to PE will be determined on the basis of apportionment of total profits of the enterprise.
- It replaces existing Article on Assistance in Collection of Taxes with a new Article in order to align it with international standards.