India-Kazakhstan Current Affairs

Kazakhstan opens consulate in Chennai

Kazakhstan has opened its honorary consulate in Chennai. The consulate will cover the states of Tamil Nadu, Karnataka and Kerala. It will be headed by well-known businessman Suraj Shantakumar. This year marks the 25th anniversary of the establishment of diplomatic relations between India and Kazakhstan.

Kazakhstan has expressed confidence that the establishment of the consulate in Chennai, which is a major industrial centre would promote the potential for economic cooperation in a number of areas like IT industry, engineering, tourism, transport infrastructure, as well as agricultural production.

Background

Among the countries that constituted former USSR, Kazakhstan has emerged as the second largest economic partner for India. Kazakhstan is natural resources, minerals, oil and gas and chemical products. It is the largest exporter of Uranium to India. The prospectus of cooperation looms large in several areas. Recently, there was a meeting between the special working groups on textiles from the two countries in Kazakhstan. The bilateral trade between the two countries was around 618 million USD in 2016. India exports pharmaceuticals, tea, tobacco, and engineering equipment to Kazakhstan and imports oil products, metals and natural minerals from that country.

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India and Kazakhstan sign Protocol to amend DTAC

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.

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