DTAA Current Affairs - 2019
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India and China have signed protocol to amend Double Taxation Avoidance Agreement (DTAA) for the avoidance of double taxation and for prevention of fiscal evasion with respect to taxes on income by allowing exchange of information. Under Section 90 of Income-tax Act, 1961, India can enter into agreement with foreign country or specified territory for the avoidance of double taxation of income, for exchange of information for the prevention of evasion.
The Protocol to amend DTAA with China updates existing provisions for exchange of information to latest international standards. It incorporates changes required to implement treaty related minimum standards under the Action reports of Base Erosion & Profit Shifting (BEPS) Project. Besides minimum standards, it also brings in changes as per BEPS Action reports as agreed upon by the two sides. It will help prevent tax evasion by allowing the exchange of information.
Tags: Base erosion and profit shifting • BEPS • Corporate tax avoidance • Double taxation • Double Taxation Avoidance • DTAA • Economy • Foreign Direct Investment • India-China • International taxation • Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting • National • Tax • Tax avoidance • Tax Evasion • Taxation in the United States • World Economy
The Central Board of Direct Taxes (CBDT) has notified protocol to amend existing Double Taxation Avoidance Agreement (DTAA) between India and Kuwait. The DTAA between both countries was signed in June 2006 for the avoidance of double taxation and for prevention of fiscal evasion with respect to taxes on income.
The said protocol amends existing DTAA was entered into force in March 2018. It updates the provisions in DTAA for exchange of information as per international standards. Further, it enables sharing of information received from Kuwait for tax purposes with other law enforcement agencies with authorisation of competent authority of Kuwait and vice versa.
Double Taxation Avoidance Agreement (DTAA)
DTAA is a tax treaty signed between countries (or any two/multiple countries) so that taxpayers do not pay double taxes on their income earned from source country as well as their residence country. So far, India has signed double tax avoidance treaties with more than 80 countries around the world.
The need for DTAA arises out of imbalance in tax collection on global income of individuals. person aims to do business in foreign country, he may end up paying income taxes in both countries i.e. in the country where income is earned and country where individual holds his citizenship or residence. DTAA helps to taxpayers to do away issues of paying double taxes.
Benefits of DTAA
Tax payers do not have to pay double taxes on the same income. It has lower withholding tax (Tax Deduction at Source or TDS). It provides tax credits, certain exemption from taxes. It also minimises opportunity for tax evasion for tax payers in either or both of countries between which the bilateral and multilateral DTAA agreement have been signed.