Notification No. G.S.R.
758(E), dated 8th September, 1992
Whereas the annexed
Convention between the Government of the Republic of India and the Government
of the People's Republic of Bangladesh for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income has come into
force on the 27th May, 1992, after the exchange of Instruments of Rectification
as required by paragraph I of article 31 of the said Convention;
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961), the Central Government hereby directs that all the provisions of the
said Convention shall be given effect to in the Union of India.
Convention between the
Government of the Republic of India and the Government of the People's Republic
of Bangladesh for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income
The Government of the
Republic of India and the Government of the People's Republic of Bangladesh,
Desiring to conclude a
Convention for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income,
Have agreed as follows:
Chapter I
Scope of the Convention
Article 1
Personal scope
This Convention shall
apply to persons who are residents of one or both of the Contracting States.
Article 2
Taxes covered
(1) The existing taxes to
which this Convention shall apply are--
(a) in the case of Bangladesh:
the income-tax,
(hereinafter referred to as "Bangladesh
tax");
(b) in the
case of India:
(i) the income-tax including any surcharge thereon;
(ii) the
surtax;
(hereinafter referred to as "Indian
tax").
(2) This Convention shall also apply to any
identical or substantially similar taxes which are imposed by either
Contracting State after the date of signature of the present Convention in
addition to, or in place of, the taxes referred to in paragraph (1). The
competent authorities of the Contracting States shall notify each other of any
substantial changes which are made in their respective taxation laws.
Chapter II
Definitions
Article 3
General definitions
(1) In this Convention, unless the context
otherwise requires:
(a) the term "Bangladesh" means the People's Republic
of Bangladesh;
(b) the term
"India" means the Republic of India;
(c) the terms "a Contracting
State" and "the other Contracting State" mean Bangladesh or
India as the context requires;
(d) the term
"tax" means Bangladesh tax or Indian tax, as the context requires;
(e) the term "person" includes an
individual, a company and any other entity which is treated as a taxable unit
under the tax laws in force in the respective Contracting States;
(f) the term "company" means any
company, body corporate or any other entity which is treated as a company under
the tax laws of the respective Contracting States;
(g) the terms "resident of a
Contracting State" and "resident of the other Contracting State"
mean a person who is a resident of Bangladesh or a person who is a resident of
India, as the context requires;
(h) the terms "enterprise of a
Contracting State" and "enterprise of the other Contracting
State" mean respectively an enterprise carried on by a resident of a
Contracting State and an enterprise carried on by a resident of the other
Contracting State;
(i) the term "nationals" means
all individuals possessing the nationality of the respective Contracting States
and also all legal persons, partnerships and associations deriving their status
as such from the law in force in the respective Contracting States;
(j) the term "competent
authority" means in the case of Bangladesh, the National Board of Revenue
or their authorised representative and in the case of India, the Central
Government in the Ministry of Finance (Department of Revenue) or their
authorised representative;
(k) the term "international
traffic" means any transport by a ship or aircraft operated by an
enterprise of a Contracting State, except when the ship or aircraft is operated
solely between places in the other Contracting State;
(2) As regards the application of this
Convention by a Contracting State any term not otherwise defined shall, unless
the context otherwise requires, have the meaning which it has under the laws of
that contracting State relating to the taxes which are the subject of this
Convention.
Article 4
Resident
(1) For the purposes of this Convention, the
term "resident of a Contracting State" means any person who, under
the law of that State, is liable to taxation therein by reason of his domicile,
residence, place of management or any other criterion of a similar nature.
(2) Where by reason of the provisions of
paragraph (1) an individual is a resident of both Contracting States, then his
case shall be determined in accordance with the following rules:
(a) He shall be deemed to be a resident of
the Contracting State in which he has a permanent home available to him. If he
has a permanent home available to him in both Contracting States, he shall be
deemed to be a resident of the Contracting State with which his personal and
economic relations are the closest (centre of vital interests);
(b) If the Contracting State in which he has
his centre of vital interests cannot be determined, or if he has not a
permanent home available to him in either Contracting State, he shall be deemed
to be a resident of the Contracting State in which he has an habitual abode;
(c) If he has an habitual abode in both
Contracting States or in neither of them he shall be deemed to be a resident of
the Contracting State of which he is a national;
(d) If he is a national of both Contracting
States or of neither of them, the competent authorities of the Contracting
States shall settle the question by mutual agreement.
(3) Where by reason of the provisions of
paragraph (1) a person other than an individual is a resident of both
Contracting States, then it shall be deemed to be a resident of the Contracting
State in which its place of effective management is situated.
Article 5
Permanent establishment
(1) For the purposes of this Convention, the
term "permanent establishment" means a fixed place of business in
which the business of the enterprise is wholly or partly carried on.
(2) The term "permanent
establishment" shall include especially:
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a
warehouse;
(g) a mine,
quarry or other place of extraction of natural resources;
(h) a building site or construction or
assessmbly project or the like which exists for more than 183 days.
(3) The term "permanent
establishment" shall not be deemed to include:
(a) the use of facilities solely for the
purposes of storage or display of goods or merchandise belonging to the
enterprise;
(b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage or display;
(c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;
(d) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise, or for
collecting information, for the enterprise;
(e) the maintenance of a fixed place of
business solely for the purpose of advertising, for the supply of information,
for scientific research or for similar activities which have a preparatory or
auxiliary character for the enterprise.
(4) Notwithstanding the provisions of
paragraphs (1) and (2), where a person -- other than an agent of an independent
status to whom paragraph (5) applies -- is acting in a Contracting State on
behalf of an enterprise of the other Contracting State, that enterprise shall
be deemed to have a permanent establishment in the first-mentioned State, if--
(a) he has, and habitually exercises, in the
first-mentioned State a general authority to conclude contracts for or on
behalf of the enterprise, unless his activities are limited to the purchase of
goods or merchandise for the enterprise, or
(b) he habitually maintains in the
first-mentioned State a stock of goods or merchandise belonging to the
enterprise from which that person regularly delivers goods or merchandise for
or on behalf of the enterprise, or
(c) he habitually secures orders in the
first-mentioned State, wholly or almost wholly, for the enterprise itself, or
for the enterprise or other enterprises which are controlled by it or have
controlling interest in it.
(5) An enterprise of a Contracting State
shall not be deemed to have a permanent establishment in the other Contracting
State merely because it carries on business in that other State through a
broker, general commission agent or any other agent of an independent status,
where such persons are acting in the ordinary course of their business and
their activities do not fall within the scope of paragraph (4)(c) above.
(6) The fact that a company which is a
resident of a Contracting State controls or is controlled by a company which is
a resident of the other Contracting State, or which carries on business in that
other State (whether through a permanent establishment or otherwise) shall not
of itself make either company a permanent establishment of the other.
(7) An enterprise of a Contracting State
shall be deemed to have a permanent establishment in the other Contracting
State if it carries on a business which consists of providing the services of
public entertainers (such as stage, motion picture, radio or television
artistes and musicians) or athletes in that other Contracting State unless such
services are provided within the scope of a cultural or sports exchange
programme agreed or by both the Contracting State.
Chapter III
Taxation of income
Article 6
Income from immovable
property
(1) Income from immovable property shall be
taxable only in the Contracting State in which such property is situated.
(2) The term "immovable property"
shall be defined in accordance with the law and usage (having the force of law)
of the Contracting State in which the property in question is situated. The
term shall in any case include property accessory to immovable property,
livestock and equipment used in agriculture, forestry and fishery rights to
which the provisions of general law respecting landed property apply, usufruct
of immovable property and rights to variable or fixed payments in cash or kind
as consideration for the working of, or the right to work, mineral deposits,
sources and other natural resources; ships and aircraft shall not be regarded
as immovable property.
(3) The provisions of paragraph (1) shall
apply to income derived from the direct use, letting, or use in any other form
of immovable property.
(4) The provisions of paragraphs (1) and (3)
shall also apply to the income from immovable property of an enterprise and to
income from immovable property used for the performance of independent personal
services.
Article 7
Business profits
(1) The profits of an enterprise of a
Contracting State shall be taxable only in that State unless the enterprise
carries on business in the other Contracting State through a permanent
establishment situated therein. If the enterprise carried on business as
aforesaid, then so much of the profits of the enterprise as is attributable to
that permanent establishment shall be taxable only in that other Contracting
State.
(2) Where an enterprise of a Contracting
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. In
any case, where the correct amount of profits attributable to a permanent
establishment is incapable of determination or the ascertainment thereof
presents exceptional difficulties, the profits attributable to the permanent
establishment may be computed on a reasonable basis.
(3) In the determination of the profits of a
permanent establishment, there shall be allowed as deductions expenses which
are incurred for the purpose of the permanent establishment including executive
and general administrative expenses so incurred, whether in the State in which
the permanent establishment is situated or elsewhere, but this does not include
any expenses which, under the law of that State, would not be allowed to be
deducted by an enterprise of that State.
(4) In so far as it has been customary in a
Contracting State to determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits of the
enterprise to its various parts, nothing in paragraph (2) shall preclude that
Contracting State from determining the profits to be taxed by such an
apportionment as may be customary; the method of apportionment adopted shall,
however, be such that the result shall be in accordance with the principles
laid down in this Article.
(5) No profits shall be attributed to a
permanent establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
(6) For the purpose of the preceding
paragraphs, the profits to be attributed to the permanent establishment shall
be determined by the same method year by year unless there is good and
sufficient reason to the contrary.
(7) Where profits include items of income
which are dealt with separately in other Articles of this Convention, then the
provisions of those Articles shall not be affected by the provisions of this
Article.
Article 8
Air transport
(1) Profits derived by an enterprise of a
Contracting State from the operation of aircraft in international traffic shall
be taxable only in that Contracting State.
(2) The provisions of paragraph (1) shall
likewise apply in respect of income derived from participation in pools of any
kind by enterprises engaged in air transport.
Article 9
Shipping
(1) Profits of an enterprise of a Contracting
State derived from the other Contracting State from the operation of ships in
international traffic may be taxed in that other Contracting State, but the tax
chargeable in that other Contracting State on such income shall be reduced by
an amount equal to fifty per cent of such tax.
(2) The provisions of paragraph 1 shall also
apply to profits derived from the participation in a pool, a joint business or
an international operating agency.
Article 10
Associated enterprises
Where--
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a Contracting
State and an enterprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those conditions
have accrued to one of the enterprises, but by reason of those conditions, have
not so accrued, may be included in the profits of that enterprise and taxed
accordingly.
Article 11
Dividends
(1) Dividends paid by a company which is a
resident of a Contracting State to a resident of the other Contracting State
may be taxed in that other Contracting State.
(2) However, such dividends may also be taxed
in the Contracting State of which the company paying the dividends is a
resident and according to the laws of that Contracting State, but if the
recipient is the beneficial owner of the dividends, the tax so charged shall
not exceed:
(a) 10 per cent of the gross amount of the
dividends if the beneficial owner is a company which holds directly at least 10
per cent of the capital of the company paying the dividends;
(b) 15 per
cent of the gross amount of the dividends in all other cases.
This paragraph shall not
affect the taxation of the company in respect of the profits out of which the
dividends are paid.
(3) The term "dividends" as used in
this Article means income from shares, mining shares, founder's shares or other
rights, not being debt-claims, participating in profits, as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the company making the
distribution is a resident.
(4) The provisions of paragraphs (1) and (2)
shall not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein and the holding in respect
of which the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article
15, as the case may be, shall apply.
(5) Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State
that other Contracting State may not impose any tax on the dividends paid by
the company, except insofar as such dividends are paid to a resident of that
other Contracting State or insofar as the holding in respect of which the
dividends are paid is effectively connected with a permanent establishment or a
fixed base situated in that other Contracting State, nor subject the company's
undistributed profits to a tax on the company's undistributed profits, even if
the dividends paid or the undistributed profits consist wholly or partly of
profits or income arising in such other Contracting State.
Article 12
Interest
(1) Interest arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other Contracting State.
(2) However, such interest may also be taxed
in the Contracting State in which it arises and according to the laws of that
State, but if the recipient is the beneficial owner of the interest the tax so
charged shall not exceed 10 per cent of the gross amount of the interest.
(3) Notwithstanding the provisions of
paragraph (2):
(a) interest arising in India and paid to
the Government of Bangladesh or to the Bangladesh Bank shall be exempt from
Indian tax;
(b) interest arising in Bangladesh and paid
to the Government of India or to the Reserve Bank of India shall be exempt from
Bangladesh tax.
The competent authorities
of the Contracting States may determine by mutual agreement any other
institution to which this paragraph shall apply.
(4) The term "interest" as used in
this Article means income from debt-claims of every kind, whether or not
secured by mortgage and whether or not carrying a right to participate in the
debtor's profits, and in particular, income from Government securities and
income from bonds or debentures, including premium and prizes attaching to such
securities, bonds or debentures. Penalty charges for late payment shall not be
regarded as interest for the purpose of this Article.
(5) The provisions of paragraphs (1) to (3)
shall not apply if the beneficial owner 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 Contracting 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. In such case the provisions of Article 7 or Article 15, as the case
may be, shall apply.
(6) Interest shall be deemed to arise in a
Contracting State when the payer is that Contracting State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the Contracting State in
which the permanent establishment or fixed base is situated.
(7) Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the interest, 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 beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Convention.
Article 13
Royalties
(1) Royalties arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other Contracting State.
(2) However, such royalties may also be taxed
in the Contracting State in which they arise, and according to the laws of that
Contracting State, but if the recipient is the beneficial owner of the
royalties, the tax so charged shall not exceed 10 per cent of the gross amount
of the royalties.
(3) The term "royalties" as used in
this Article means payments of any kind received as a consideration for the use
of, or the right to use, any copyright of literary, artistic or scientific
work, including cinematograph films, or tapes used for radio or television
broadcasting, any patent, trade mark, design or model, plan, secret formula or
process, or for the use of, or the right to use, industrial, commercial, or
scientific equipment, or for information concerning industrial, commercial or
scientific experience but does not include any payments in respect of the
operation of mineral deposits, sources and other natural resources.
(4) The provisions of paragraphs (1) and (2)
shall not apply if the beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the royalties arise, through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the royalties
are paid is effectively connected with such permanent establishment or fixed
base. In such case the provisions of Article 7 or Article 15, as the case may
be, shall apply.
(5) Royalties shall be deemed to arise in a
Contracting State when the payer is that Contracting State itself, a political
sub-division, a local authority or a resident of that Contracting State. Where,
however, the person paying the royalties, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the liability to pay the royalties was
incurred, and such royalties are borne by such permanent establishment or fixed
base, then such royalties shall be deemed to arise in the Contracting State in
which the permanent establishment or fixed base is situated.
(6) Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of
the royalties, having regard to the use, right or information for which they
are paid, exceeds the amount which would have been agreed upon by the payer and
the beneficial owner in the absence of such relationship, the provisions of
this Article shall apply only to the last-mentioned amount. In such case, the
excess part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Convention.
Article 14
Capital gains
(1) Subject to the provisions of paragraph
(3), capital gains arising from the sale, exchange or transfer of a capital
asset as defined under the respective tax laws of the Contracting States shall
be taxable only in the Contracting State in which the capital asset is situated
at the time of such sale, exchange or transfer.
(2) For the purpose of this Article, the
situs of the shares of a company shall be deemed to be in the Contracting State
in which the company is incorporated.
(3) Capital gains derived from the sale,
exchange or transfer of a capital asset being a ship or aircraft operated in
international traffic by an enterprise of a Contracting State shall be taxable
only in that Contracting State.
Article 15
Independent personal
services
(1) Income derived by a resident of a
Contracting State in respect of professional services or other activities of an
independent character shall be taxable only in that Contracting State. However,
such income may be taxed in the other Contracting State if:
(a) he has a fixed base regularly available
to him in the other Contracting State for the purposes of performing his
activities; in that case, only so much of the income as is attributable to that
fixed base may be taxed in that other Contracting State; or
(b) he is present in the other Contracting
State for a period or periods exceeding in the aggregate 120 days in the
previous year or income year concerned of that Contracting State.
(2) The term "professional
services" includes especially independent scientific, literary, artistic,
educational or teaching activities, as well as the independent activities of physicians,
surgeons, lawyers, engineers, architects, dentists and accountants.
Article 16
Dependent personal
services
(1) Subject to the provisions of Articles
17,19 and 20 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 Contracting State unless the employment is exercised in the other
Contracting State. If the employment is so exercised such remuneration as is
derived therefrom shall be taxable only in that other Contracting State.
(2) Notwithstanding the provisions of
paragraph (1), remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting State shall be
taxable only in the first-mentioned Contracting State, if--
(a) he is present in that other Contracting
State for a period or periods not exceeding in the aggregate 183 days during
the "previous year" or "income year" concerned or he is
present in that other Contracting State for any period which forms part of a
continuous period exceeding 183 days throughout which he is present in that
other Contracting State, and
(b) the remuneration is paid by, or on
behalf of, an employer who is not a resident of that other Contracting State,
and
(c) the remuneration is not deducted from
the profits of a permanent establishment, chargeable to tax in that other
Contracting State.
(3) Notwithstanding the provisions of
paragraphs (1) and (2) of this Article, remuneration for personal services
performed aboard a ship or aircraft operated by an enterprise of a Contracting
State in international traffic shall be taxable only in that Contracting State.
Article 17
Director's fees
Director's fees and
similar payments derived by a resident of a Contracting State in his capacity
as a member of the Board of Directors of a company which is a resident of the
other Contracting State shall be taxable only in that other Contracting State.
Article 18
Entertainers and athletes
(1) Notwithstanding the provisions of Articles
15 and 16, income derived by a resident of a Contracting State as an
entertainer, such as theatre, motion picture, radio or television artiste, or a
musician, or as an athlete, from his personal activities as such exercised in
the other Contracting State, may be taxed in that other Contracting State.
(2) Where income in respect of personal
activities exercised by an entertainer or an athlete in his capacity as such
accrues not to the entertainer or athlete himself but to another person, that
income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed
in the Contracting State in which the activities of the entertainer or athlete
are exercised.
(3) The provisions of paragraphs (1) and (2)
shall not apply to remuneration or profits, salaries, wages and similar income
derived from activities performed in a Contracting State by entertainers or
athletes if their visit to that State is substantially supported from the
public funds of the other Contracting State, including those of any political
sub-division, a local authority or statutory body thereof, nor to income
derived by a non-profit making organization in respect of such activities
provided no part of its income is payable to, or is otherwise available for the
personal benefit of its proprietors, members or shareholders.
Article 19
Non-Governmental pensions
(1) Any pension other than pension to which
paragraph (1) of Article 20 applies and any annuity derived from sources within
a Contracting State by an individual, who is a resident of the other
Contracting State, shall be taxable only in the first-mentioned Contracting
State.
(2) The term "pension" as used in
Article 20 and this Article means periodic payments made in consideration for
services rendered or by way of compensation for injuries received.
(3) The term "annuity" as used in
paragraph (1), means a stated sum payable periodically at stated times, during
life or during a specified or ascertainable period of time, under an obligation
to make the payment in return for adequate and full consideration in money or
money's worth.
Article 20
Governmental remuneration
and pension
(1) Remuneration including pensions paid by
or out of funds by a Contracting State or a political sub-division or a local
authority thereof, to any individual who is a citizen of that Contracting State
in respect of services rendered to that Contracting State or political
sub-division or local authority thereof in the discharge of functions of a
governmental nature shall be taxable only in that State.
(2) The provisions of paragraph (1) shall not
apply to remuneration and pensions in respect of services rendered in
connection with any business carried on by the Government of either of the
Contracting States or a political sub-division or a local authority thereof for
the purpose of profit.
(3) The provisions of paragraph (1) of this
Article shall also apply to remuneration including pensions paid by the Reserve
Bank of India and the Bangladesh Bank.
Article 21
Students, trainees and
apprentices
(1) An individual who is a resident of a
Contracting State and who is temporarily present in the other Contracting
State, solely--
(a) as a student at a recognised university,
college, school or other educational institution in the other Contracting
State, or
(b) as a business or technical apprentice in
an organisation other than a permanent establishment of an enterprise of the
first-mentioned Contracting State, or
(c) as the recipient of a grant, allowance
or award for the primary purpose of study or research, from a religious,
charitable, scientific or educational organisation,
shall be exempt from tax
in that other Contracting State in respect of--
(i) the remittances from abroad for the
purpose of his maintenance, education, study, research or training the maximum
period of exemption being five years;
(ii) the
grant, allowance or award; and
(iii) any amount not exceeding the sum of Rs.
50,000 per annum or its equivalent sum in Bangladesh currency during the
"previous year" or income year as the case may be, representing
remuneration for an employment in that other Contracting State if the
employment is related with his studies or his training or if it is necessary
for his maintenance.
(2) An individual who is a resident of a
Contracting State and who is temporarily present in the other Contracting State
for a period not exceeding one year, as an employee of, or under a contract
with, an enterprise of the first-mentioned Contracting State or an organisation
referred to in sub-paragraph (c) of paragraph (1), solely to acquire technical,
professional or business experience from a person other than such enterprise or
organisation, shall be exempt from tax in that other Contracting State in
respect of remuneration for such period for his services directly related to
the acquisition of such experience, to the extent such remuneration does not
exceed the sum of Rs. 12,000 per annum or its equivalent sum in Bangladesh
currency, during the "previous year" or the "income year",
as the case may be.
(3) An individual who is a resident of a
Contracting State and who is temporarily present in the other Contracting State
under arrangements with the Government of that other Contracting State or any
agency thereof solely for the purpose of training, study or orientation shall
be exempt from tax in that other Contracting State in respect of remuneration
received by him on account of such training, study or orientation.
Article 22
Professors, teachers and
researchers
(1) A professor or a teacher who visits a Contracting
State for the purposes of teaching or engaging in research, or both, at a
university, college, school or other approved institution in that Contracting
State and who is, or was immediately before such visit, a resident of the other
Contracting State, shall be exempt from tax in the first-mentioned Contracting
State on any remuneration for such teaching or research for a period not
exceeding two years, from the date of his arrival in that Contracting State.
(2) This Article shall not apply to income
from research if such research is undertaken primarily for the private benefit
of a specific person or persons.
(3) For the purposes of this Article and
Article 21, an individual shall be deemed to be a resident of a Contracting
State if he is resident in that Contracting State in the "previous
year" or "income year" in which he visits the other Contracting
State, or in the immediately preceding "previous year" or
"income year", as the case may be.
(4) For purposes of paragraph (1)
"approved institution" means an institution which has been approved
in this regard by the competent authority of the concerned Contracting State.
Article 23
Income of Government and
institutions
(1) The Government of one of the Contracting
States shall be exempt from tax in the other Contracting State in respect of
any income derived by such Government from that other Contracting State.
(2) For the purposes of paragraph (1) of this
Article, the term "Government"--
(a) in the case of India means the Government of India and shall
include--
(i) the Governments of the States and the Union Territories of
India;
(ii) the
Reserve Bank of India;
(iii) any such institution or body as may be
agreed from time to time between the two Contracting States,
(b) in the case of Bangladesh means the
Government of the People's Republic of Bangladesh and shall include--
(i) the Bangladesh Bank;
(ii) any such institution or body as may be
agreed from time to time between the two Contracting States.
Article 24
Income not expressly mentioned
The laws in force in each
Contracting State shall continue to govern the taxation of income in the
respective Contracting States, except where express provision to the contrary
has been made in this Convention.
Article 25
Methods for elimination of
double taxation
(1) In the case of a resident of India,
double taxation shall be avoided as follows:
Subject to the provisions
of Indian tax laws regarding the allowance as a credit against Indian tax or
tax payable in any country other than India (which shall not affect the general
principle hereof) the Bangladesh tax payable (excluding in the case of a
dividend, tax payable in respect of the profits out of which the dividend is
paid) under the laws of Bangladesh and in accordance with this Convention,
whether directly or by deduction in respect of income from sources within
Bangladesh which has been subjected to tax both in Bangladesh and India shall
be allowed as a credit against Indian tax payable in respect of that income.
The credit shall not, however, exceed that proportion of Indian tax which the
income from sources within Bangladesh bears to the entire income subject to
Indian tax:
Provided that such credit
shall not exceed Indian tax (as computed before allowing any such credit),
which is appropriate to the income derived from sources within Bangladesh, so
however, that where such resident is a company by which surtax is payable in
India the credit aforesaid shall be allowed in 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.
(2) For the purposes of paragraph (1), the
term "Bangladesh tax payable" shall be deemed to include the amount
of Bangladesh tax which would have been payable if the Bangladesh tax had not
been exempted or reduced in accordance with the following provisions of
Bangladesh law:
(a) clause (x) of section 29(1), section 45 and section 46 of the
Income-tax Ordinance, 1984;
(b) paragraph
7 of the Third Schedule to the Income-tax Ordinance, 1984;
(c) paragraphs 10,11,12,13,15 and 22 of Part
B of the Sixth Schedule to the Income-tax Ordinance, 1984;
(d) paragraphs (c), (e), (f), (g) and (h) of
Notification No. S.R.O. 417A-L/76, dated 29th November, 1976; and paragraphs
(a), (b) and (d), of the said Notification so far as the exemption or relief
relates to loans made with a view to promoting economic development in
Bangladesh;
So far as they were in
force on, and have not been modified since, the date of signature of this
Convention, or have been modified only in minor respects so as not to affect
their general character; or
(e) under any other provision which may
subsequently be made granting an exemption or reduction of tax which is agreed
by the competent authorities of the Contracting States to be of a substantially
similar character, if it has not been modified thereafter or has been modified
only in minor respects so as not to affect its general character:
Provided that the amount
of the tax referred to in this paragraph shall not, however, exceed:
(a) in the case of dividends an amount equal
to 10 per cent of the gross amount of such dividends in the case of dividends
referred to in paragraph 2(a) of Article 11 and 15 per cent of the gross amount
of dividends in the case of dividends referred to in paragraph 2(b) of Article
11;
(b) in the case of interest an amount equal
to 10 per cent of the gross amount of such interest; and
(c) in the
case of royalties an amount equal to 10 per cent of the gross amount of such
royalties.
(3) In the case of a resident of Bangladesh,
double taxation shall be avoided as follows:
Subject to the provisions
of the law of Bangladesh regarding the allowance as a credit against Bangladesh
tax or tax payable in any country other than Bangladesh (which shall not affect
the general principle hereof), the Indian tax payable (excluding in the case of
dividends, tax payable in respect of profits out of which the dividend is paid)
under the law of India and in accordance with this Convention, whether directly
or by deduction, by a resident of Bangladesh in respect of income from sources
within India which has been subjected to tax both in India and Bangladesh shall
be allowed as a credit against Bangladesh tax payable in respect of such
income, but in an amount not exceeding that proportion of Bangladesh tax which
such income bears to the entire income chargeable to Bangladesh tax.
(4) For the purpose of paragraph (3) of this
Article the term "Indian tax payable" shall be deemed to include any
amount which would have been payable as Indian tax for any year but for an
exemption or reduction of tax granted for that year or any part thereof under:
(a) any of the following provisions, that is
to say, sections 10(4), 10(4A), 10(6)(viia), 10(15)(iv), 10A, 32A, 33A, 35C, 35CC,
54E, 80CC, 80HH, 80HHA, 80-I, 80J, 80K, 80L of the Income-tax Act, 1961; or
(b) any other provisions which may
subsequently be made granting an exemption or reduction of tax which is agreed
by the competent authorities of the Contracting States, to be of a
substantially similar character if it has not been modified thereafter or has
been modified only in minor respects so as not to affect its general character:
Provided that the amount
of the tax referred to in this paragraph shall not, however, exceed:
(a) in the case of dividends an amount equal
to 10 per cent of the gross amount of such dividends in the case of dividends
referred to in paragraph 2(a) of Article 11 and 15 per cent of the gross amount
of dividends in the case of dividends referred to in paragraph 2(b) of Article
11;
(b) in the case of interest an amount equal to 10 per cent of the gross amount of such interest; and
(c) in the
case of royalties an amount equal to 10 per cent of the gross amount of such
royalties.
Chapter V
Special provisions
Article 26
Non-discrimination
(1) The nationals of a Contracting State
shall not be subjected in the other Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which nationals of that other State in
the same circumstances and under the same conditions are or may be subjected.
(2) The taxation on a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State
shall not be less favourably levied in that other Contracting State than the
taxation levied on enterprises of that other Contracting State carrying on the
same activities in the same circumstances and under the same conditions.
(3) Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned Contracting State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and
connected requirements in which other similar enterprises of that
first-mentioned Contracting State are or may be subjected in the same
circumstances and under the same conditions.
(4) Nothing contained in paragraphs (1), (2)
and (3) of this Article shall be construed as--
(a) obliging a Contracting State to grant to
residents of the other Contracting State any personal allowances, reliefs and
reductions which it grants to its own residents;
(b) affecting any provisions of the tax laws
of the respective Contracting States regarding the imposition of tax on
non-resident persons as such;
(c) affecting any provisions of the tax laws
of the respective Contracting States regarding any tax concessions granted to
persons fulfilling specified conditions.
(5) In this Article the term
"taxation" means taxes which are the subject of this Convention.
Article 27
Mutual agreement procedure
(1) Where a resident of a Contracting State
considers that the actions of one or both of the Contracting States result or
will result for him in taxation not in accordance with this Convention, he may
notwithstanding the remedies provided by the national laws of those Contracting
States present the case to the competent authority of the Contracting State of
which he is a resident. The case must be presented within three years from the
date of the assessment or of the withholding of tax at the source whichever is
later.
(2) The competent authority shall endeavour,
if the objection appears to it to be justified and if it is not itself able to
arrive at an appropriate solution, to resolve the case by mutual agreement with
the competent authority of the other Contracting State with a view to the avoidance
of taxation not in accordance with this Convention. Any agreement reached shall
be implemented notwithstanding any time limits in the national laws of the
Contracting States.
(3) 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 this
Convention. They may also consult together for the elimination of double
taxation in cases not provided for in this Convention.
(4) The competent authorities of the
Contracting States may communicate with each other directly for the purposes of
applying the provisions of this Convention. When it seems advisable in order to
reach agreement to have an oral exchange of opinions, such exchange may take
place through a commission consisting of representatives of the competent
authorities of the Contracting States.
Article 28
Exchange of information
(1) The competent authorities of the
Contracting States shall exchange such information as is necessary for carrying
out the provisions of this Convention or for the prevention or detection of
evasion or avoidance of the taxes which are the subject of this Convention. Any
information so exchanged shall be treated as secret but may be disclosed only
to persons (including a court or administrative body) concerned with the
assessment, collection, enforcement or prosecution in respect of the taxes
which are the subject of this convention, or to persons with respect to whom
the information relates.
(2) The exchange of information shall be
either on a routine basis or on request with reference to particular cases, or
both. The competent authorities of the Contracting States shall agree from time
to time on the list of information which shall be furnished on a routine basis.
(3) In no case shall the provisions of
paragraph (1) be construed so as to impose on a Contracting State the
obligation:
(a) to carry out administrative measures at
variance with the laws or administrative practice of that or of the other
Contracting State;
(b) to supply informations which are not
obtainable under the laws or in the normal course of the administration of that
or of the other Contracting State;
(c) to supply information which would
disclose any trade, business, industrial, commercial or professional secret or
trade process or information the disclosure of which would be contrary to
public policy.
Article 29
Assistance in collection
(1) The two Contracting States undertake to
lend assistance and support to each other, in the collection of the taxes to
which this Convention relates, in the cases where the taxes are definitely due
according to the laws of the Contracting State making the request.
(2) In the case of a request for enforcement
of collection, tax claims of either of the Contracting States which have been
finally determined will be accepted for enforcement by the other Contracting
State to which the request is made and collected in that Contracting State in
accordance with the laws applicable to the enforcement and collection of its
own taxes.
(3) In the case of Indian tax, the request
will be sent by the Central Board of Direct Taxes, Ministry of Finance
(Department of Revenue) to the National Board of Revenue of the Government of
the People's Republic of Bangladesh and will be accompanied by such certificate
as is required by the laws of India to establish that the taxes have been
finally determined and are due from the taxpayer.
(4) In the case of Bangladesh tax, the
request will be sent by the National Board of Revenue of the Government of the
People's Republic of Bangladesh to the Central Board of Direct Taxes, Ministry
of Finance (Department of Revenue) in India and will be accompanied by such
certificate as is required by the laws of Bangladesh to establish that the
taxes have been finally determined and are due from the taxpayer.
(5) Where the tax claim has not become final
by reason of its being subject to appeal or any other proceeding, a Contracting
State may, in order to protect its revenues, request the other Contracting
State to take such interim measures in this behalf as are lawful under the laws
of that other Contracting State.
(6) A request for assistance in collection of
taxes due from a taxpayer shall be made only if adequate assets of that
taxpayer are not available for recovering the taxes from him in the Contracting
State making the request.
(7) The Contracting State in which tax is
recovered in pursuance of paragraphs (1), (2) and (5) of this Article shall
immediately thereafter remit the amount so recovered to the Contracting State
which made the request but it shall be entitled to reimbursement of costs, if
any, incurred in the course of rendering assistance in the recovery of such
tax.
Article 30
Diplomatic and consular
officials
Nothing in this Convention
shall affect the fiscal privileges of diplomatic or consular officials under
the general rules of international law or under the provisions of special
Convention.
Chapter VI
Final provisions
Article 31
Entry into force
(1) This Convention shall be ratified and the
instruments of ratification shall be exchanged as soon as possible.
(2) This Convention shall enter into force
upon the exchange of the instruments of ratification and its provisions shall
have effect:
(a) in Bangladesh, for any year of
assessment beginning on or after the first day of July in the calendar year
next following that in which the exchange of instruments of ratification takes
place; and
(b) in India, for any year of assessment
beginning on or after the first day of April in the calendar year next
following that in which the exchange of instruments of ratification takes
place.
Article 32
Termination
This Convention shall
remain in force indefinitely but either Contracting State may, on or before the
June 30 in any calendar year beginning after the expiration of a period of five
years from the date of its entry into force, give to the other Contracting
State, through diplomatic channels written notice of termination. In such
event, the Convention shall cease to have effect:
(a) in Bangladesh:
In respect of income
assessable for any year of assessment commencing on 1st day of July in the
calendar year next following that in which such notice is given, and subsequent
years;
(b) in India:
In respect of income
assessable for any year of assessment commencing on 1st day of April in the
calendar year next following that in which such notice is given, and subsequent
years.
IN WITNESS WHEREOF the
undersigned, duly authorised thereto, by their respective Governments, have
signed this Convention.
DONE in duplicate at New
Delhi the 27th August, 1991 in Hindi, Bengali and English languages, all texts
being equally authentic. In the case of divergence of interpretation the
English text shall prevail.
For the Government of the
Republic of India
For the Government of the
People's
Republic of Bangladesh.
(Sd.)
T.S. Krishna Murthy,
Joint Secretary,
Government of India.
Agreement between the
Government of the Republic of India and the Government of Republic of Belarus
forthe Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to taxes on Income and onproperty (capital)
Notification No. 10646 [F.
No. 501/7/92-FTD], dated 17-7-1998
Whereas the annexed
Agreement between the Government of the Republic of India and the Government of
the Republic of Belarus for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income and on property (capital)
shall enter into force on the seventeenth day of July, 1998, in accordance with
Article 30 of the said Agreement, thirty days after the receipt of later of
notifications by both the Contracting States to each other of completion of the
procedure required by their respective laws for bringing into force of the said
Agreement;
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961) and section 44A of the Wealth-tax Act, 1957 (27 of 1957), the Central
Government hereby directs that all the provisions of the said Agreement shall
be given effect to in the Union of India.
Annexure
Agreement between the
Government of the Republic of India and the Government of Republic of Belarus
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to taxes on Income and on property (capital)
The Government of the
Republic of India and the Government of the Republic of Belarus desiring to
conclude an Agreement for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income and on property (capital)
have agreed as follows:
Article 1
Personal Scope
This Agreement shall apply
to persons who are residents of one or both of the Contracting States.
Article 2
Taxes Covered
1. This Agreement shall apply to taxes on
income and on property (capital) imposed on behalf of a Contracting State or of
its political sub-divisions or local authorities, irrespective of the manner in
which they are levied.
2. There shall be regarded as taxes on
income and on property (capital) all taxes imposed on total income, on total
property (capital) or on elements of income or of property (capital) including
taxes on gains from the alienation of immovable property or property other than
immovable property and taxes on the total amounts of wages or salaries paid by
enterprises.
3. The taxes to which this Agreement shall apply are in
particular:
(a) in India:
(i) the income-tax including any surcharge thereon; and
(ii) wealth-tax
(hereinafter referred to
as "Indian Tax"); and
(b) in Belarus:
(i) the tax on income and profits of enterprises, associations
and organisations;
(ii) the
income-tax on individuals; and
(iii) the tax
on immovable property
(hereinafter referred to as "Belarusian
tax").
4. The Agreement shall apply also to any
similar or substantially identical taxes which are imposed by either
Contracting State after the date of signature of the Agreement in addition to,
or in place of, the taxes referred to in paragraph 3 above. The competent
authorities of the Contracting States shall notify each other of any
substantial changes which have been made in their respective taxation laws.
Article 3
General Definitions
1. In this Agreement, unless the context otherwise requires:
(a) the term "India" means the
territory of India and includes the territorial sea and airspace above it, as
well as any other maritime zone in which India has sovereign rights, other
rights and jurisdictions, according to the Indian law and in accordance with
International law and the U.N. Convention on the law of the Sea;
(b) the term "Belarus" means the
Republic of Belarus and when used in a geographical sense, means the territory
over which the Republic of Belarus exercises under the laws of the Republic of
Belarus and in accordance with international law sovereign rights and
jurisdiction;
(c) the terms "a Contracting
State" and "the other Contracting State" mean, as the context
requires, India or the Republic of Belarus;
(d) the term "tax" means Indian
tax or Belarusian tax, as the context requires, but shall not include any
amount which is payable in respect of any default or omission in relation to
the taxes to which this Agreement applies or which represents a penalty imposed
relating to those taxes;
(e) the term "person" includes an
individual, a company, a body of person and any other entity which is treated
as a taxable unit under the taxation laws in force in the respective
Contracting States;
(f) the term "company" means--
(i) in India, any body corporate or other
entity which is treated as a company or body corporate under the taxation laws
in force;
(ii) in Belarus, any legal person or any
entity which is treated as a legal person for tax purposes;
(g) the terms "enterprise of a
Contracting State" and "enterprise of the other Contracting
State" mean respectively an enterprise carried on by a resident of a
Contracting State and an enterprise carried on by a resident of the other
Contracting State;
(h) the term "competent authority" means:
(i) in the case of India, the Central
Government in the Ministry of Finance (Department of Revenue) or their
authorised representative;
(ii) in the
case of Belarus, the State Tax Committee or its authorised representative;
(i) the term "national" means:
(i) any individual possessing the nationality of a Contracting
State;
(ii) any legal person, partnership or
association deriving its status as such from the laws in force in a Contracting
State;
(j) the term "international
traffic" means any transport by a ship or aircraft operated by an
enterprise of a Contracting State, except when the ship or aircraft is operated
solely between places in the other Contracting State;
(k) the term "fiscal year" means:
(i) in the case of India, "previous year" as defined
under section 3 of the Income-tax Act, 1961;
(ii) in the case of Belarus, the calendar
year from 1st day of January to 31st day of December of the year.
2. As regards the application of the
Agreement by a Contracting State, any term not defined therein shall, unless
the context otherwise requires, have the meaning which it has under the laws of
that State concerning the taxes to which the Agreement applies.
Article 4
Resident
1. For the purposes of this Agreement, the
term "resident of a Contracting State" means any person who, under
the laws of that State, is liable to tax therein by reason of his domicile,
place of incorporation, residence, place of management or any other criterion
of a similar nature. However, this term does not include any person who is
liable to tax in that State only in respect of income from sources in that
State or property situated therein.
2. Where by reason of the provisions of
paragraph 1 an individual is a resident of both Contracting States, then his
status shall be determined as follows:
(a) he shall be deemed to be a resident of
the State in which he has a permanent home available to him; if he has a
permanent home available to him in both States, he shall be deemed to be a
resident of the State with which his personal and economic relations are closer
(centre of vital interests);
(b) if the State in which he has his centre
of vital interests cannot be determined or if he does not have permanent home
available to him in either Contracting State, he shall be deemed to be a
resident of the Contracting State in which he has an habitual abode;
(c) if he has an habitual abode in both
States or in neither of them, he shall be deemed to be a resident of the State
of which he is a national;
(d) if each State considers him as its own
national or if he is not a national of either of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement.
3. Where by reason of the provisions of
paragraph 1 if a person other than an individual is a resident of both
Contracting States, then it shall be deemed to be a resident of the State in
which its place of effective management is situated. If the State in which its place of effective
management is situated cannot be determined, then the competent authorities of
the Contracting States shall settle the question by mutual agreement.
Article 5
Permanent Establishment
1. For the purposes of this Agreement, the
term "permanent establishment" means a fixed place of business
through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes
especially:
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a mine,
an oil or gas well, a quarry or any other place of extraction of natural
resources;
(g) a
warehouse in relation to a person providing storage facilities for others;
(h) a farm, plantation or other place where
agriculture, forestry, plantation, or related activities are carried on;
(i) a sales outlet;
(j) an
installation or structure used for the exploration or exploitation of natural
resources;
(k) a building site or construction or
assembly project or supervisory activities in connection therewith only if such
site, project or activity lasts for more than six months.
3. Notwithstanding the preceding provisions
of this Article, the term "permanent establishment" shall be deemed
not to include:
(a) the use of facilities solely for the
purposes of storage, display or delivery of goods or merchandise belonging to
the enterprise;
(b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display;
(c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;
(d) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise, or of
collecting information, for the enterprise;
(e) the maintenance of a fixed place of
business solely for the purpose of carrying on, for the enterprise, any other
activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of
business solely for any combination of activities mentioned in sub-paragraphs
(a) to (e), provided that the overall activity of the fixed place of business
resulting from this combination is of a preparatory or auxiliary character.
However, the provisions of
sub-paragraphs (a) to (f) shall not be applicable where the enterprise
maintains any other fixed place of business in the other Contracting State for
any purposes other than the purposes specified in the said sub-paragraphs.
4. Notwithstanding the provisions of
paragraphs 1 and 2, where a person -- other than an agent of an independent
status to whom paragraph 5 applies -- is acting on behalf of an enterprise of
the other Contracting State, that enterprise shall be deemed to have a
permanent establishment in the first-mentioned Contracting State in respect of
any activities which that person undertakes for the enterprise, if such a
person:
(a) has and habitually exercises in that
State an authority to conclude contracts in the name of the enterprise, unless
the activities of such person are limited to those mentioned in paragraph 3
which, if exercised through a fixed place of business, would not make this
fixed place of business a permanent establishment under the provisions of that
paragraph; or
(b) has no such authority, but habitually
maintains in the first-mentioned State a stock of goods or merchandise from
which he regularly delivers goods or merchandise on behalf of the enterprise.
5. An enterprise of a Contracting State
shall not be deemed to have a permanent establishment in the other Contracting
State merely because it carries on business in that other State through a
broker, a commission agent or any other agent of an independent status,
provided that such persons are acting in the ordinary course of their business.
However, when the activities of such an agent are devoted wholly or almost
wholly on behalf of that enterprise itself or on behalf of that enterprise and
other enterprises controlling, controlled by, or subject to the same common
control, as that enterprise, he will not be considered an agent of an
independent status within the meaning of this paragraph.
6. The fact that a company which is a
resident of a Contracting State controls or is controlled by a company which is
a resident of the other Contracting State or which carries on business in that
other Contracting State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a permanent
establishment of the other.
7. An enterprise shall be deemed to have a
permanent establishment in a Contracting State and to carry on business through
that permanent establishment if it provides services or facilities in
connection with, or supplies plant and machinery on hire used for or to be used
in the prospecting for, or extraction or exploitation of mineral oils in that
State.
8. Notwithstanding the preceding provisions
of this Article, an insurance enterprise of a Contracting State shall, except
in regard to re-insurance, be deemed to have a permanent establishment in the
other Contracting State if it collects premiums in the territory of that other
State or insures risks situated therein through a person other than an agent of
an independent status to whom paragraph 5 applies.
Article 6
Income from immovable
property
1. Income derived by a resident of a
Contracting State from immovable property (including income from agriculture or
forestry) situated in the other Contracting State may be taxed in that other
State.
2. The term "immovable property"
shall have the meaning which it has under the law of the Contracting State in
which the property in question is situated. Ships, boats, motor vehicles and
aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall
apply to income derived from the direct use, letting or use in any other form
of immovable property.
4. The provisions of paragraphs 1 and 3
shall apply to income from immovable property of an enterprise and also to
income from immovable property used for the performance of independent personal
services.
Article 7
Business profits
1. The profits of an enterprise of a Contracting
State shall be taxable only in that State unless the enterprise carries on
business in the other Contracting State through a permanent establishment
situated therein. If the enterprise carries on business as aforesaid, the
profits of the enterprise may also be taxed in the other State but only so much
of them as is attributable to:
(a) that permanent establishment;
(b) sales in that other State of goods or
merchandise of the same or similar kind as those sold through that permanent
establishment; or
(c) other business activities carried on in
that other State of the same or similar kind as those effected through that
permanent establishment.
2. Subject to the provisions of paragraph
3, where an enterprise of a Contracting 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 make if it were a separate independent enterprise
engaged in the same or similar activities under the same or similar conditions
and acting wholly independently with the enterprise of which it is a permanent
establishment.
3. In determining the profits of a
permanent establishment, there shall be allowed as deduction expenses which are
incurred for the purposes of the permanent establishment, including executive
and general administrative expenses so incurred, whether in the State in which
the permanent establishment is situated or elsewhere, in accordance with the
provisions of and subject to the limitations of the taxation laws of that
State.
4. No profits shall be attributed to a
permanent establishment by reason of the mere purchase of goods or merchandise
by that permanent establishment for the enterprise.
5. For the purpose of the preceding
paragraphs, the profits to be attributed to the permanent establishment shall
be determined by the same method year by year unless there are good and
sufficient reasons to the contrary.
6. Where the profits include items of
income which are dealt with separately in other Articles of this Agreement,
then the provisions of those Articles shall not be affected by the provisions
of this Article.
Article 8
International traffic
1. Profits of an enterprise of a Contracting
State from the operation of ships or aircraft in international traffic, as the
case may be, shall be taxable only in that State.
2. The provisions of paragraph 1 shall also
apply to profits from the participation in a pool, a joint business or an international
operating agency.
3. For the purposes of this article,
interest on funds connected with the operation of ships or aircraft in
international traffic shall be regarded as profits derived from the operation
of such ships or aircraft, and the provisions of Article 11 shall not apply in
relation to such interest.
4. For the purposes of this Article,
profits from the operation of ships or aircraft in international traffic shall
mean profits derived by an enterprise from the transportation by sea or air,
respectively, of passengers, mail, livestock, goods or merchandise carried on
by the owners or lessees or charterers of ships or aircraft. This will also
include:
(a) the sale of tickets for such transportation on behalf of
other enterprises;
(b) the use, maintenance, or rental of
containers (including trailers, barges, and related equipment for the
transportation of containers) used in connection with the operation of ships or
aircrafts in international traffic;
(c) the rental of ships or aircraft incidental
to the operation of ships or aircraft in international traffic; and
(d) other
activity directly connected with operation of ships or aircraft in
international traffic.
Article 9
Associated Enterprises
Where
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a Contracting
State and an enterprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would have accrued to one of
the enterprises, but, by reason of those conditions, have not so accrued, may
be included in the profits of that enterprise and taxed accordingly.
Article 10
Dividends
1. Dividends paid by a company which is a
resident of a Contracting State to a resident of the other Contracting State
may be taxed in that other Contracting State.
2. However, such dividends may also be
taxed in the Contracting State of which the company paying the dividends is a resident
and according to the laws of that State, but if the recipient is the beneficial
owner of the dividends the tax so charged shall not exceed:
(a) 10 per cent of the gross amount of the
dividends if the beneficial owner is a company which holds directly at least 25
per cent of the shares of the company paying the dividends;
(b) 15 per
cent of the gross amount of the dividends in all other cases.
This paragraph shall not
affect the taxation of the company in respect of the profits out of which the dividends
are paid.
3. The term "dividends" as used
in this Article means income from shares or other rights, not being
debt-claims, participating in profits, as well as income from other rights
which is subjected to the same taxation treatment as income from shares under
the laws of the Contracting State of which the company making the distribution
is a resident.
4. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the holding, in
respect of which, the dividends are paid, is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Articles
7 or 14, as the case may be, shall apply.
5. Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company,
except insofar as such dividends are paid to a resident of that other State or
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated
in that other State, nor subject the company's undistributed profits to a tax
on the company's undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in
that other State.
Article 11
Interest
1. Interest arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other State.
2. However, such interest may also be taxed
in the Contracting State in which it arises and according to the laws of that
State, but if the recipient is the beneficial owner of the interest the tax so
charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2,
(a) interest arising in a Contracting State
shall be exempt from tax in that State provided it is derived and beneficially
owned by:
(i) the Government, a political
sub-division or a local authority of the other Contracting State; or
(ii) the Central Bank of the other
Contracting State or any other bank or Governmental financial institutions that
may be mutually agreed upon between the two Contracting States;
(b) interest arising in a Contracting State
shall be exempt from tax in that Contracting State to the extent approved by
the Government of that State if it is derived and beneficially owned by any
person, other than a person referred to in sub-paragraph, (a) who is a resident
of the other Contracting State, provided that the transaction giving rise to
the debt-claim has been approved in this regard by the Government of the
first-mentioned Contracting State.
4. The term "interest" as used in
this Article means income from debt-claims of every kind, whether or not
secured by mortgage and whether or not carrying a right to participate in the
debtor's profits, and in particular, income from government securities and
income from bonds or debentures, including premiums and prizes attaching to
such securities, bonds or debentures. Penalty charges for late payment shall
not be regarded as interest for the purpose of this Article.
5. The
provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the
interest, being resident of a Contracting State, carries on business in the
other Contracting State in which 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. In such case the provisions of Articles
7 or 14, as the case may be, shall apply.
6. Interest shall be deemed to arise in a
Contracting State when the payer is that State itself, its political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the Contracting State in
which the permanent establishment or
fixed base is situated.
7. Where by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the interest 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 beneficial owner in the absence of such relationship,
the provisions of this Article shall apply only to the last-mentioned amount.
In such case, the excess part of the payments shall remain taxable according to
the laws of each Contracting State, due regard being had to the other
provisions of this Agreement.
Article 12
Royalties and fees for
technical services
1. Royalties or fees for technical services
arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State.
2. However, such royalties or fees for
technical services may also be taxed in the Contracting State in which they
arise and according to the laws of that State, but if the recipient is the
beneficial owner of the royalties or fees for technical services, the tax so
charged shall not exceed 15 per cent of the gross amount of the royalties or
fees for technical services.
3. The term "royalties" as used
in this Article means payment of any kind received as a consideration for the
use of, or the right to use, any copyright of literary, artistic or scientific
work, including cinematograph films or films or tapes for radio or television
broadcasting, any patent, trade mark, design or model, plan, secret formula or
process, or for the use of, or the right to use, industrial, commercial or
scientific equipment, for information concerning industrial, commercial or
scientific experience.
4. The term "fees for technical
services" as used in this Article means payment of any kind in
consideration for the rendering of any managerial, technical or consultancy
services including the provision of services by technical or other personnel
but does not include payments for services mentioned in Articles 14 and 15 of
this Agreement.
5. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the royalties or fees for technical
services being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical services
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the right, property or contract in respect of which the royalties or fees
for technical services are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or
Article 14, as the case may be, shall apply.
6. Royalties or fees for technical services
shall be deemed to arise in a Contracting State when the payer is that State
itself, a political sub-division, a local authority or a resident of that
State. Where, however, the person paying the royalties or fees for technical
services, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in connection with
which the liability to pay the royalties or fees for technical services was
incurred, and such royalties or fees for technical services are borne by such
permanent establishment or fixed base, then such royalties or fees for
technical services shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
7. Where by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of royalties or fees for technical services,
having regard to the use, right or information for which they are paid, exceeds
the amount which would have been agreed upon in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Agreement.
Article 13
Capital gains (Gains from
alienation of property)
1. Gains derived by a resident of a
Contracting State from the alienation of immovable property referred to in
Article 6 and situated in the other Contracting State may also be taxed in that
other Contracting State.
2. Gains from the alienation of property
other than immovable property forming part of the business property of
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State or of property other than immovable 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 such a permanent establishment
(alone or with the whole enterprise) or of such fixed base, may be taxed in
that other State.
3. Gains from the alienation of ships or
aircrafts operated in international
traffic or property other than immovable property pertaining to the operation
of such ships or aircraft, shall be taxable only in the Contracting State of
which the alienator is a resident.
4. Gains from the alienation of shares of
the capital stock of a company the property of which consists directly or
indirectly principally of immovable property situated in a Contracting State
may be taxed in that State.
5. Gains from the alienation of shares
other than those mentioned in paragraph 4 in a company which is a resident of a
Contracting State may be taxed in that State.
6. Gains from the alienation of any
property other than that referred to in paragraphs 1, 2, 3, 4 and 5 shall be
taxable only in the Contracting State of which the alienator is a resident.
Article 14
Independent personal
services
1. Income derived by a resident of a
Contracting State from the performance of professional services or other
independent activities of a similar character shall be taxable only in that
State except in the following circumstances when such income may also be taxed
in the other Contracting State:
(a) if he has a fixed base regularly
available to him in the other Contracting State for the purpose of performing
his activities, in that case, only so much of the income as is attributable to
that fixed base may be taxed in that other State; or
(b) if his stay in the other Contracting
State is for a period or periods amounting to or exceeding in the aggregate 183
days in a period of twelve months; in that case, only so much of the income as
is derived from his activities performed in that other State may be taxed in
that other State.
2. The term "professional services"
includes especially independent scientific, literary, artistic, educational or
teaching activities as well as independent activities of physicians, lawyers,
engineers, architects, dentists and accountants.
Article 15
Dependent personal
services
1. Subject to the provisions of Articles
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 the employment is exercised in the other Contracting
State. If the employment is so exercised, such remuneration as is derived
therefrom may be taxed in that other State.
2. Notwithstanding the provisions of
paragraph 1, remuneration derived by a resident of a Contracting State in respect
of an employment exercised in the other Contracting State shall be taxable only
in the first-mentioned State if:
(a) the recipient is present in the other
Contracting State for a period or periods not exceeding in the aggregate 183
days in any period of twelve months; and
(b) the remuneration is paid by, or on
behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a
permanent establishment or a fixed base which the employer has in the other
Contracting State.
3. Notwithstanding the preceding provisions
of this Article, the remuneration derived in respect of an employment exercised
aboard a ship or aircraft operated in international traffic by the enterprise
of a Contracting State may be taxed in that State.
Article 16
Directors' fees
Directors' fees and other
similar payments derived by a resident of a Contracting State in his capacity
as a member of the board of directors of a company which is a resident of the
other Contracting State may be taxed in that other State.
Article 17
Artists and sportspersons
1. Notwithstanding the provisions of
Articles 14 and 15, income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or television artiste, or
a musician, or as a sportsperson from his personal activities as such exercised
in the other Contracting State may be taxed in that other State.
2. Where income in respect of personal
activities exercised by an entertainer or a sportsperson in his capacity as
such accrues not to the entertainer or sportsperson himself but to another
person, such income may, notwithstanding the provisions of Articles 7, 14, and
15 be taxed in the Contracting State in which the activities of the entertainer
or sportsperson are exercised.
3. The provisions of paragraphs 1 and 2,
shall not apply to income from activities performed in a Contracting State by
entertainers or sportspersons if the visit to that State is supported wholly by
public funds of one or both of the Contracting States or of political
sub-divisions or local authorities thereof or the activity is exercised within
the framework of cultural or sports co-operation agreement between the
Contracting States. In such a case, the income is taxable only in the Contracting
State of which the entertainer or sportsperson is a resident.
Article 18
Government Service
1. (a) Remuneration,
other than a pension, paid by a Contracting State or a political sub-division
or a local authority thereof to an individual in respect of services rendered
to that State or sub-division or authority shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the other
Contracting State if the services are rendered in that other State and the
individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not
become a resident of that State solely for the purpose of rendering the
services.
2. (a) Any
pension paid by, or out of funds created by, a Contracting State or a political
sub-division or a local authority thereof, to an individual in respect of
services rendered to that State or sub-division or local authority thereof
shall be taxed only in that State;
(b) However, such pension shall be taxable only in the other Contracting
State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 15, 16 and 19
shall apply to remuneration and pensions in respect of services rendered in
connection with a business carried on by a Contracting State or a political
sub-division or a local authority thereof.
Article 19
Non-Government pensions
and Annuities
1. Any pension, other than a pension
referred to in Article 18, or any annuity derived by a resident of a
Contracting State from sources within the other Contracting State shall be
taxable only in the first-mentioned Contracting State.
2. The term "pension" means a
periodic payment made in consideration of past services or by way of
compensation for injuries received in the course of performance of services.
3. The term "annuity" means a
stated sum payable periodically at stated times during life or during a
specified or ascertainable period of time, under an obligation to make payments
in return for adequate and full consideration in money or money's worth.
Article 20
Students and apprentices
1. A student or business apprentice who is
or was a resident of one of the Contracting States immediately before visiting
the other Contracting State and who is present in that other State solely for
the purpose of his education or training, shall be exempt from tax in that
other State on:
(a) payments made to him by persons residing
outside that other State for the purposes of his maintenance, education or
training; and
(b) remuneration from employment in that
other State for an amount not exceeding the amount which is exempt from tax
under the laws of that other Contracting State for any fiscal year; provided
that such employment is directly related to his studies or is undertaken for
the purpose of his maintenance.
2. The benefits of this Article shall
extend only for such period of time as may be reasonable or customarily
required to complete the education or training undertaken, but in no event
shall any individual have the benefits of this Article, for more than five
consecutive years from the date of his first arrival in that other Contracting
State.
Article 21
Professors, Teachers and
Research Scholars
1. A professor or teacher who is or was a
resident of one of the Contracting State immediately before visiting the other
Contracting State for the purpose of teaching or engaging in research, or both,
at a university, college, or other similar institution in that other
Contracting State shall be exempt from tax in that other State on any
remuneration for such teaching or research for a period not exceeding two years
from the date of his arrival in that other State.
2. This Article shall not apply to income
from research if such research is undertaken primarily for the private benefit
of a specific person or persons.
3. For the purposes of this Article and
Article 20, an individual shall be
deemed to be a resident of a Contracting State if he is resident in that
Contracting State in the fiscal year in which he visits the other Contracting
State or in the immediately preceding fiscal year.
Article 22
Other Income
1. Items of income of a resident of a
Contracting State, wherever arising, not dealt with in the foregoing Articles
of this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income other than
income from immovable property as defined in paragraph 2 of Article 6, if the
recipient of such income, being a resident of a Contracting State, carries on
business in the other Contracting State through a permanent establishment
situated therein, or performs in that other State independent personal services
from a fixed base situated therein, and the right or property in respect of
which the income is paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or
Article 14, as the case may be, shall apply.
3. Notwithstanding the provisions of
paragraphs 1 and 2, items of income of a resident of a Contracting State not
dealt with in the foregoing Articles of this Agreement, and arising in the
other Contracting State may be taxed in that other State.
Article 23
Property (capital)
1. Property (capital) represented by
immovable property referred to in Article 6, owned by a resident of a
Contracting State and situated in the other Contracting State, may be taxed in
that other State.
2. Property (capital) represented by
property other than immovable 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 by property other than immovable 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,
may be taxed in that other State.
3. Property (capital) represented by ships
and aircraft operated in international traffic or by boats engaged in inland
waterways transport and by property other than immovable property pertaining to
the operation of such ships, boats and aircraft shall be taxable only in the
Contracting State of which the owner of
such ships, boats, aircraft or property is a resident.
4. All other elements of property (capital)
of, a resident of a Contracting State shall be taxed only in that State.
Article 24
Elimination of Double
Taxation
1. The laws in force in either of the
Contracting States shall continue to govern the taxation of income and property
(capital) in the respective Contracting States except where express provision
to the contrary is made in this Agreement.
2. In the case of India, double taxation shall be eliminated as
follows:
Where a resident of India
derives income or owns capital which, in accordance with the provisions of this
Agreement, may be taxed in the Republic of Belarus, India shall allow as a
deduction from the tax on the income of that resident an amount equal to the
income-tax paid in the Republic of Belarus whether directly or by deduction;
and as a deduction from the tax on the capital of that resident an amount equal
to the property (Capital) tax paid in the Republic of Belarus. Such deduction
in either case shall not, however, exceed that part of the income-tax or
capital tax (as computed before the deduction is given) which is attributable,
as the case may be, to the income or the capital which may be taxed in the
Republic of Belarus.
3. In the case of the Republic of Belarus, double taxation shall
be eliminated as follows:
Where a resident of the
Republic of Belarus derives income which, in accordance with the provisions of
this Agreement, may be taxed in India, the Republic of Belarus shall allow as a
deduction from the tax on the income of that resident, an amount equal to the
income-tax paid in India; and as a deduction from the tax on the property
(capital) of that resident, an amount equal to the capital tax paid in India.
Such deduction shall not, however, exceed that part of the income-tax or
property (capital) tax, as computed before the deduction is given, which is
attributable, as the case may be, to the income or the property (capital) which
may be taxed in India.
4. The
tax payable in the Contracting State mentioned in paragraphs 2 and 3 of this
Article shall be deemed to include the tax which would have been payable but
for the tax incentives granted under the laws of the Contracting State and
which are designed to promote economic development.
5. Income which in accordance with the provisions of this
Agreement, is not to be subjected to tax in a Contracting State, may be taken
into account for calculating the rate of tax to be imposed in that Contracting
State.
Article 25
Non-Discrimination
1. Nationals of a Contracting State shall
not be subjected in the other Contracting State to other or more burdensome
taxation or any requirement connected therewith, than the taxation and
connected requirements to which nationals of that other State in the same
circumstances are or may be subjected.
2. The taxation on a permanent
establishment which an enterprise of a Contracting State has in the other
Contracting State shall not be less favourably levied in that other State than
the taxation levied on enterprises of that other State carrying on the same
activities. This provision shall not be construed as preventing a Contracting
State from charging the profits of a permanent establishment which an
enterprise of the other Contracting State has in the first-mentioned State at a
rate of tax which is higher than that imposed on the profits of a similar enterprise
of the first-mentioned Contracting State, nor as being in conflict with the
provisions of paragraph 3 of Article 7 of this Agreement.
3. Nothing contained in this Article shall
be construed as obliging a Contracting State to grant to persons not resident
in that State any personal allowances, reliefs, reductions and deductions for
taxation purposes which are by law available only to persons who are so
resident.
4. Enterprises of a Contracting State the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and
connected requirements to which other similar enterprises of the
first-mentioned State may be subjected in the same circumstances and under the
same conditions.
5. In this Article, the term "taxation" means taxes
which are the subject of this Agreement.
6. Except where the provisions of Article
9, paragraph 7 of Article 11 or paragraph 7 of Article 12, apply, interest,
royalties and other disbursements paid by an enterprise of a Contracting State
to a resident of the other Contracting State shall, for the purpose of
determining the taxable profits of such enterprises, be deductible under the
same conditions as if they had been paid to a resident of the first mentioned
State. Similarly, any debts of an enterprise of a Contracting State to a
resident of the other Contracting State shall, for the purpose of determining
the taxable capital of such enterprise, be deductible under the same conditions
as if they had been contracted to a resident of the first mentioned State.
Article 26
Mutual Agreement Procedure
1. Where a resident of a Contracting State
considers that the actions of one or both of the Contracting States result or
will result for him in taxation, not in accordance with this Agreement, he may,
irrespective of the remedies provided by the domestic laws of those Contracting
States, present his case to the competent authority of the Contracting State of
which he is a resident, or if his case comes under paragraph 1 of Article 25,
to that of the Contracting State of which he is a national. The case must be
presented within three years from the date of the first notification of the
action resulting in taxation not in accordance with the provisions of this
Agreement.
2. The competent authority shall endeavour,
if the objection appears to it to be justified and if it is not itself able to
arrive at a satisfactory solution, to resolve the case by mutual agreement with
the competent authority of the other Contracting State for the avoidance of
taxation which is not in accordance with the Agreement. Any agreement reached
shall be implemented notwithstanding any time limits in the domestic law of the
Contracting States.
3. 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
Agreement. They may also consult together for the elimination of double
taxation in cases not provided for in the Agreement.
4. The competent authorities of the
Contracting States may communicate with each other directly for the purpose of
reaching an agreement in the sense of the preceding paragraphs. When it seems
advisable in order to reach an agreement to have an oral exchange of opinions,
such exchange may take place through a Commission consisting of representatives
of the competent authorities of the Contracting States.
Article 27
Exchange of information
1. The competent authorities of the
Contracting States shall exchange such information (including documents) as is
necessary for carrying out the provisions of this Agreement or of the domestic
laws of the Contracting States concerning taxes covered by the Agreement,
insofar as the taxation thereunder is not contrary to the Agreement. The
exchange of information is not restricted by Article 1. Any information
received by a Contracting State shall be treated as secret in the same manner
as information obtained under the domestic laws of that State and shall be
disclosed only to persons or authorities (including courts and administrative
bodies) involved in the assessment, or collection of, the enforcement or
prosecution in respect of, or the determination of appeals in relation to, the
taxes covered by the Agreement. Such persons or authorities shall use the
information only for such purposes. They may disclose the information in public
court proceedings or in judicial decisions. The competent authorities shall,
through consultation, develop appropriate conditions, methods and techniques,
the list of information and documents concerning the matters in respect of
which such exchange of information shall be made, including, where appropriate,
exchange of information regarding tax avoidance. The exchange of information or
documents shall be on request of the competent authorities of the Contracting
States.
2. In no case shall the provisions of
paragraph 1 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at
variance with the laws or administrative practice of that or the other
Contracting State;
(b) to supply information or documents which
are not obtainable under the laws or in the normal course of the administration
of that or of the other Contracting State;
(c) to supply information or documents which
would disclose any trade, business, industrial, commercial or professional
secret, or trade process, or information, the disclosure of which would be
contrary to public policy.
Article 28
Assistance in collection
1. The Contracting States undertake to lend
assistance and support to each other, in the collection of the taxes to which
this Agreement relates, in the cases where the taxes are definitely due
according to the laws of the State making the request.
2. In the case of a request for enforcement
of collection, tax claims of either of the Contracting States which have been
finally determined will be accepted for enforcement by the other Contracting
State to which the request is made and collected in that State in accordance
with the laws applicable to the enforcement and collection of its taxes.
3. In the case of Indian tax, the request
will be sent by the Central Board of Direct Taxes, Department of Revenue to the
State Tax Committee of the Republic of Belarus and will be accompanied by such
certificate as is required by the laws of India to establish that the taxes
have been finally determined and are due from the taxpayer.
4. In the case of Belarusian tax, the
request will be sent by the State Tax Committee of the Republic of Belarus to
the Central Board of Direct Taxes, Department of Revenue, in India and will be
accompanied by such certificate as is required by the laws of the Republic of
Belarus to establish that the taxes have been finally determined and are due
from the taxpayer.
5. Where that tax claim has not become
final by reason of its being subject to appeal or any other proceeding, a
Contracting State may, in order to protect its revenues, request the other
Contracting State to take such interim measures in this behalf as are lawful
under the laws of that other Contracting State.
6. A request for assistance in collection
of taxes due from a taxpayer shall be made only if adequate assets of that
taxpayer are not available for recovering the taxes from him in the Contracting
State making the request.
7. The Contracting State in which tax is
recovered in pursuance of paragraphs 1, 2 and 5 of this Article shall
immediately thereafter remit the amount so recovered to the Contracting State
which made the request but it shall be entitled to reimbursement of actual
costs, if any, incurred in the course of rendering assistance to the extent
mutually agreed between the competent authorities of the Contracting States.
Article 29
Diplomatic and consular
officials
Nothing in this Agreement
shall affect the fiscal privileges of diplomatic or consular officials under
the general rules of international law or under the provisions of special
agreements.
Article 30
Entry into force
1. The Contracting States shall notify each
other in writing, through diplomatic channels, the completion of the procedure
required by the respective laws for the entry into force of this Agreement.
2. This Agreement shall enter into force
thirty days after the receipt of the later of the notifications referred to in
paragraph 1 of this Article.
3. The provisions of this Agreement shall have effect:
(a) In India:
(i) in respect of income arising in any
fiscal year beginning on or after the first day of April next following the
calendar year in which the Agreement enters into force;
(ii) in respect of capital which is held on
the last day of any fiscal year beginning on or after the first day of April
next following the calendar year in which the Agreement enters into force;
(b) In Belarus:
(i) in respect of taxes withheld at source
on amounts of income, derived on or after 1st of January in the calendar year
next following the year in which the Agreement enters into force; and
(ii) in respect of other taxes on income and
taxes on property (capital) to such taxes chargeable in any taxable year
beginning on or after 1st January in the calendar year next following the year
in which the Agreement enters into force.
Article 31
Termination
This Agreement shall
remain in force indefinitely until terminated by a Contracting State. Either
Contracting State may terminate the Agreement, through diplomatic channels, by
giving notice of termination at least six months before the end of any calendar
year beginning after the expiration of five years from the date of entry into
force of the Agreement. In such event, the Agreement shall cease to have
effect:
(a) in India,
(i) in respect of income arising in any
fiscal year beginning on or after the first day of April next following the
calendar year in which the notice of termination is given,
(ii) in respect of capital which is held at
the expiry of any previous year beginning on or after the first day of April
next following the calendar year in which the notice of termination is given.
(b) in Belarus,
(i) in respect of taxes withheld at source,
to amounts of income derived on or after 1st of January in the calendar year
next following the year in which the notice is given;
(ii) in respect of other taxes on income or
taxes on property (capital) to such taxes chargeable in any taxable year
beginning on or after 1st of January in the calendar year next following the
year in which the notice is given.
In witness whereof, the
undersigned, being duly authorised thereto have signed the present Agreement.
Done in duplicate at New
Delhi, this 27th day of September, 1997 in Hindi, Belarusian and English
languages, all the texts being equally authentic. In case of divergence between
any of the texts, the English text shall be the operative one.
Protocol
The Government of Republic
of India and the Government of the Republic of Belarus have agreed at the
signing at New Delhi on 27th September, 1997 of the Agreement between the two
States for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income and on property (capital) upon the
following provisions which shall form an integral part of the said Agreement.
1. For purposes of this Agreement, the term
"political sub-division" as used in the Agreement shall be applicable
to India only.
2. With reference to Article 4, it is
understood that when establishing the "place of effective management"
as used in paragraph 3 of Article 4, circumstances which may, inter alia, be
taken into account are the place where a company is actually managed and
controlled, the place where the decision making at the highest level on
important policies essential for the management of a company takes place, the
place that plays a leading part in the management of a company from an economic
and functional point of view and the place where the relevant accounting books
are kept.
3. For purposes of this Agreement, it is
understood that the term "fixed base" includes a fixed place such as
an office or a room or any other place regularly available to him through which
the activity of a person performing independent personal services is wholly or
partly carried on.
In witness thereof, the
undersigned, being duly authorised thereto have signed this protocol.
Done, in duplicate, at New
Delhi, this 27th day of September, 1997 in Hindi, Belarusian and English languages,
all texts being equally authentic. In case of divergence between any of the
texts, the English text shall be the operative one.
Agreement between The
Government of the Republic of India and The Government of The Kingdom of
Belgium for the avoidance of Double Taxation and the prevention of fiscal
evasion with respect of taxes on income
Notification
No. 10448/97 [F. No. 505/2/89-FTD], dated 31-10-1997
Whereas the annexed
Agreement between the Government of the Republic of India and the Government of
Kingdom of Belgium for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income has come into force on the first
day of October, 1997, the thirtieth day after the receipt of later of
notifications by both the Contracting States to each other of the completion of
the procedures required for bringing into force of the said Agreement in
accordance with paragraph 1 of Article 29 of the said Agreement;
Now, therefore, in
exercise of the powers conferred under section 90 of the Income-tax Act, 1961
(43 of 1961), Sthe Central Government hereby directs that all the provisions of
the said Agreement shall be given effect to in the Union of India.
Agreement between The Government of the Republic of India and The Government of The Kingdom of Belgium for the avoidance of Double Taxation and the prevention of fiscal evasion with respect of taxes on income
The Government of the
Republic of India
and
The Government of the
Kingdom of Belgium
Desiring to conclude an
Agreement for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income,
have agreed as follows:
Chapter I
Scope of the agreement
Article 1
Personal scope
This Agreement shall apply
to persons who are residents of one or both of the Contracting States.
Article 2
Taxes covered
1. This Agreement shall apply to all taxes
imposed on total income or on elements of income including taxes on gains from
the sale, exchange or transfer of movable or immovable property and taxes on
the total amounts of wages or salaries paid by enterprises.
The term "taxes"
shall not include any amount which is payable in respect of any default or
omission in relation to the taxes to which the Agreement applies or which
represents a penalty imposed relating to those taxes.
2. The existing taxes to which the Agreement shall apply are:
(a) In the case of India:
(i) the income-tax including any surcharge thereon; and
(ii) the
surtax,
(hereinafter referred to
as "Indian tax").
(b) In the case of Belgium;
(i) the individual income-tax (I’impot des personnes physiques;
de personenbelasting);
(ii) the
corporate income-tax (I’impot des societes; de vennootschapsbelasting);
(iii) the income-tax on legal entities (I’impot
des personnes morales; de rechtspersonenbelasting);
(iv) the income-tax on non-residents (I’impot
des non-residents; de belasting der niet-verblijfhouders);
(v) the special levy assimilated to the
individual income-tax (la cotisation special assimilee a I’impot des personnes
physiques; de met de personenbelasting gelijkgestelde bijzondere heffing),
including the prepayments,
the surcharges on these taxes and prepayments, and the supplements to the
individual income-tax,
(hereinafter referred to
as "Belgiam tax").
3. The Agreement shall also apply to any
identical or substantially similar tax which is imposed after the date of
signature of the Agreement in addition to, or in place of, the existing taxes.
The competent authorities of the Contracting States shall, from time to time,
notify to each other any significant changes which have been made in their
respective taxation laws.
Chapter II
Definitions
Article 3
General definitions
1. In this Agreement, unless the context otherwise requires:
(a) the term "India" means the
territory of India and includes the territorial sea and airspace above it, as
well as any other maritine zone in which India has sovereign rights, other
rights and jurisdictions, according to the Indian law and in accordance with
international law;
(b) the term "Belgium" means the
Kingdom of Belgium; when used in a geographical sense, it means the national
territory, the territorial sea and any other area in the sea within which
Belgium, in accordance with international law, exercises sovereign rights or
its jurisdiction;
(c) the terms "a Contracting
State" and "the other Contracting State" mean India or Belgium
as the context requires;
(d) the term
"competent authority" means:
in the case of India, the
Central Government in the Ministry of Finance (Department of Revenue) or their
authorised representative, and
in the case
of Belgium, the Minister of Finance or his authorised representative;
(e) the term "tax" means "Indian tax" or
"Belgian tax" as the context requires;
(f) the term "person" includes an
individual, a company and any other entity which is treated as a taxable unit
under the tax laws in force in the Contracting State of which it is a resident;
(g) the term "company" means in
the case of India any entity which is a company or which is treated as a
company under the Indian tax law, and in the case of Belgium any entity which
is a company or which is treated as a body corporate under the Belgian tax law;
(h) the terms "enterprise of a
Contracting State" and "enterprise of the other Contracting
State" mean respectively an enterprise carried on by a resident of a
Contracting State and an enterprise carried on by a resident of the other
Contracting State;
(i) the term "international
traffic" means any transport by a ship or aircraft operated by an
enterprise of a Contracting State, except when the ship or aircraft is operated
solely between places in the other Contracting State;
(j) the term "national" means:
(i) any individual possessing the nationality of a Contracting
State;
(ii) any legal person, partnership and
association deriving its status as such from the laws in force in a Contracting
State.
2. As regards the application of the
Agreement by a Contracting State, any term not defined therein shall, unless
the context otherwise requires, have the meaning which it has under the law of
that State concerning the taxes to which the Agreement applies.
Article 4
Resident
1. For the purposes of this Agreement, the
term "resident of a Contracting State" means any person who, under
the laws of that State, is a resident of that State for the purposes of the
taxes of that State to which the Agreement applies.
2. Where by reason of the provisions of
paragraph 1 an individual is a resident of both Contracting States, then his
residential status for the purposes of the Agreement shall be determined in
accordance with the following rules:
(a) he shall be deemed to be a resident of
the Contracting State in which he has a permanent home available to him; if he
has a permanent home available to him in both Contracting States, he shall be
deemed to be a resident of the Contracting State with which his personal and
economic relations are closer (hereinafter referred to as his "centre of
vital interests");
(b) if the Contracting State in which he has
his centre of vital interests cannot be determined, or if he has not a
permanent home available to him in either Contracting State, he shall be deemed
to be a resident of the Contracting State in which he has an habitual abode;
(c) if he has an habitual abode in both
Contracting States or in neither of them, he shall be deemed to be a resident
of the Contracting State of which he is a national;
(d) if he is a national of both Contracting
States or of neither of them, the competent authorities of the Contracting
States shall determine the question by mutual agreement.
3. Where by reason of the provisions of
paragraph 1, a person other than an individual is a resident of both
Contracting States, then it shall be deemed to be a resident of the Contracting
State in which its place of effective management is situated.
Article 5
Permanent establishment
1. For the purposes of this Agreement, the
term "permanent establishment" means a fixed place of business
through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes
especially:
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop or a warehouse;
(f) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources;
(g) an
installation or structure used for the exploration or exploitation of natural
resources;
(h) the provision of services or facilities
in connection with or supply of plant and machinery on hire used or to be used
in, the prospecting for, or extraction or production of mineral oils;
(i) a
premises used as a sales outlet or for receiving or soliciting orders;
(j) a building site or construction,
installation or assembly project or supervisory activities in connection therewith,
where such site, project or activities (together with other such sites,
projects or activities, if any) continue for a period of more than six months,
or where such project or supervisory activity, being incidental to the sale of
machinery or equipment, continues for a period not exceeding six months and the
charges payable for the project or supervisory activity exceed 10 per cent of
the sale price of the machinery and equipment.
3. The term "permanent establishment" shall not be
deemed to include:
(a) the use of facilities solely for the
purpose of storage or display of goods or merchandise belonging to the
enterprise;
(b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display;
(c) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise, or for
collecting information, for the enterprise;
(d) the
maintenance of a fixed place of business solely for scientific research, for
the enterprise.
4. Subject to the provisions of paragraph
5, a person acting in a Contracting State on behalf of an enterprise of the
other Contracting State shall be deemed to have a permanent establishment of
that enterprise in the first-mentioned State if:--
(a) he has and habitually exercises in that
State an authority to conclude contracts on behalf of the enterprise, unless
his activities are limited to the purchase of goods or merchandise for the
enterprise; or
(b) he habitually maintains in the
first-mentioned Contracting State a stock of goods or merchandise belonging to
the enterprise from which the person regularly delivers goods or merchandise on
behalf of the enterprise; or
(c) he habitually secures orders in the
first-mentioned Contracting State, exclusively or almost exclusively, for the
enterprise itself, or for the enterprise and other enterprises which are
controlled by it or have a controlling interest in it.
5. An enterprise of a Contracting State
shall not be deemed to have a permanent establishment in the other Contracting
State merely because it carries on business in that other State through a
broker, general commission agent or any other agent of an independent status
provided that such persons are acting in the ordinary course of their business.
However, when the activities of such an agent are devoted wholly or almost
wholly on behalf of that enterprise itself or on behalf of that enterprise and
other enterprises controlling, controlled by, or subject to the same common
control, as that enterprise, he will not be considered an agent of an
independent status within the meaning of this paragraph.
6. The fact that a company which is a
resident of a Contracting State controls or is controlled by a company which is
a resident of the other Contracting State, or which carries on business in that
other Contracting State (whether through a permanent establishment or
otherwise) shall not of itself constitute either company a permanent
establishment of the other.
Chapter III
Taxation of income
Article 6
Income from immovable
property
1. Income from immovable property may be
taxed in the Contracting State in which such property is situated.
2. The term "immovable property"
shall be defined in accordance with the law of the Contracting State in which
the property in question is situated. The term shall in any case include
property accessory to immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of general law
respecting landed property apply, usufruct of immovable property and rights to
variable or fixed payments as consideration for the working of, or the right to
work, mineral deposits sources and other natural resources. Ships and aircraft
shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall
apply to income derived from the direct use, letting, or use in any other form
of immovable property.
4. The provisions of paragraphs 1 and 3
shall also apply to the income from immovable property of an enterprise and to
income from immovable property used for the performance of professional
services.
Article 7
Business profits
1. The profits of an enterprise of a
Contracting State shall be taxable only in that State unless the enterprise
carries on business in the other Contracting State through a permanent
establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to (a) that permanent establishment;
(b) sales in that other State of goods or
merchanside of the same or similar kind as those sold through that permanent
establishment; or (c) other business activities carried on in that other State
of the same or similar kind as those effected through that permanent
establishment.
2. Where an enterprise of a Contracting
State carried on business in the other Contracting State through a permanent
establishment situated therein, there shall be attributed to such permanent
establishment the profits which it might be expected to derive if it were an
independent enterprise engaged in the same or similar activities under the same
or similar conditions and dealing at arm's length with the enterprise of which
it is a permanent establishment.
3. (a) In the determination of the profits
of a permanent establishment, there shall be allowed as deductions expenses
which are incurred for the purposes of the business of the permanent
establishment including executive and general administrative expenses so
incurred, whether in the State in which the permanent establishment is situated
or elsewhere, subject to the limitations of the taxation laws of that State.
Provided that where the law of the State in which the permanent establishment
is situated imposes a restriction on the amount of the executive and general
administrative expenses which may be allowed, and that restriction is relaxed
or overridden by any Convention or Agreement between that State and a third
State which is a member of the OECD which enters into force after the date of
entry into force of this Agreement, the competent authority of that State shall
notify the competent authority of the other Contracting State of the terms of
the corresponding paragraph in the Convention or Agreement with that third
State immediately after the entry into force of that Convention or Agreement
and, if the competent authority of the other Contracting State so requests, the
provisions of this sub-paragraph shall be amended by protocol to reflect such
terms.
(b) However, no such
deduction shall be allowed in respect of amounts, if any, paid (otherwise than
towards reimbursement of actual expenses) by the permanent establishment to the
head office, of the enterprise or any of its other offices, by way of royalties,
fees or other similar payments in return for the use of patents or other
rights, or by way of commission or other charges for specific services
performed or for management, or, except in the case of a banking enterprise, by
way of interest on moneys lent to the permanent establishment. Likewise, no
account shall be taken, in the determination of the profits of a permanent
establishment, for amounts charged (otherwise than towards reimbursement of
actual expenses), by the permanent establishment to the head office of the
enterprise or any of its other offices, by way of royalties, fees or other
similar payments in return for the use of patents or other rights, or by way of
commission or other charges for specific services performed or for management,
or, except in the case of a banking enterprise, by way of interest on moneys
lent to the head office of the enterprise or any of its other offices.
4. Insofar as it has been customary in a
Contracting State to determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits of the
enterprise to its various parts, nothing in paragraph 2 or paragraph 3 shall
preclude such Contracting State from determining the profits to be taxed by
such an apportionment as may be customary; the method of apportionment adopted
shall, however, be such that the result shall be in accordance with the
principles laid down in this Article.
5. No profits shall be attributed to a
permanent establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the purpose of export to the
enterprise of which it is the permanent establishment.
6. For the purposes of the preceding
paragraphs, the profits to be attributed to the permanent establishment shall
be determined by the same method year by year unless there is good and
sufficient reason to the contrary.
7. Where profits include items of income
which are dealt with separately in other Articles of this Agreement, then the
provisions of those Articles shall not be affected by the provisions of this
Article.
Article 8
Shipping and air transport
1. Income derived from the operation of
ships or aircraft in international traffic by an enterprise of a Contracting
State shall not be taxed in the other Contracting State.
2. For the purposes of this Article:
(a) interest on funds directly connected
with the operation of ships or aircraft in international traffic shall be
regarded as income from the operation of such ships or aircraft and the provisions
of Article 11 shall not apply in relation to such interest; accordingly there
will be no withholding tax on such income;
(b) income derived from the operation of
ships or aircraft in international traffic shall mean income derived by an
enterprise described in paragraph 1 from the transportation by sea or air
respectively of passengers, mail, livestock or goods carried on by the owners
or lessees or charterers of ships or aircraft including:
(i) the sale of tickets for such transportation on behalf of
other enterprises;
(ii) any
other activity directly connected with such transportation;
(iii) the leasing of ships or aircraft on
charter fully equipped, manned and supplied, or on a bare boat charter basis
where the leasing is incidental to any activity directly connected with such
transportation;
(c) income derived from the operation of
ships in international traffic includes income derived from the use,
maintenance or rental of containers (including trailers and related equipment
for the transport of containers) in connection with the transportation of goods
or merchandise in international traffic, where the income is derived from any
activity which is incidental to any activity directly connected with such
transportation.
3. The provisions of this Article shall
also apply to income from the participation in a pool, a joint business or an
international operating agency.
Article 9
Associated enterprises
Where--
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those conditions,
have accrued to one of the enterprises, but, by reason of those conditions,
have not so accrued, may be included in the profits of that enterprise and
taxed accordingly.
Article 10
Dividends
1. Dividends paid by a company which is a
resident of a Contracting State to a resident of the other Contracting State
may be taxed in that other State.
2. However, such dividends may also be
taxed in the Contracting State of which the company paying the dividends is a
resident and according to the laws of that State, but if the beneficial owner
of the dividends is a resident of the other Contracting State, the tax so
charged shall not exceed 15 per cent of the gross amount of the dividends.
This paragraph shall not
affect the taxation of the company in respect of the profits out of which the
dividends are paid.
3. The term "dividends" as used
in this Article means income from shares, "jouissance" shares or
"jouissance" rights, mining shares, founders' shares or other rights,
not being debt-claims, participating in profits, as well as income from other
corporate rights which is subjected to the same taxation treatment as income
from shares by the laws of the State of which the company making the
distribution is a resident. This term means also income -- even paid in the
form of interest -- derived from capital invested by the members of a company
other than a company with share capital, which is a resident of Belgium.
4. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Article 7
or Article 14, as the case may be, shall apply.
5. Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company,
except insofar as such dividends are paid to a resident of that other State or
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated
in that other State, nor subject the company's undistributed profits to a tax
on the company's undistributed profits even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in
such other State.
Article 11
Interest
1. Interest arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other State.
2. However, such interest may also be taxed
in the Contracting State in which it arises and according to the laws of that
State, but if the beneficial owner of the interest is a resident of the other
Contracting State the tax so charged shall not exceed:
(a) 10 per cent of the gross amount of the
interest, if such interest is paid on any loan of whatever kind granted by a
bank; and
(b) 15 per
cent of the gross amount of the interest in all other cases.
3. The term "interest" as used in
this Article means income from debt-claims of every kind, whether or not
secured by mortgage and whether or not carrying a right to participate in the
debtor's profits, and in particular, income from government securities and
income from bonds or debentures, including premiums and prizes attaching to
such securities, bonds or debentures, however, the term "interest"
shall not include for the purpose of this Article interest regarded as dividends
under the second sentence of paragraph 3 of Article 10.
4. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner 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. In
such case the provisions of Article 7 or Article 14, as the case may be, shall
apply.
5. Interest shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
6. Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the interest 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 beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State.
Article 12
Royalties and fees for
technical services
1. Royalties and fees for technical
services arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such royalties and fees for
technical services may also be taxed in the Contracting State in which they
arise and according to the laws of that State, but if the beneficial owner of
the royalties or fees for technical services is a resident of the other
Contracting State, the tax so charged shall not exceed 20 per cent of the gross
amount of the royalties or fees for technical services.
3. (a) The term "royalties" as
used in this Article means payments of any kind received as a consideration for
the use of, or the right to use, any copyright of literary, artistic or
scientific work including cinmematograph films, or films or tapes used for
radio or television broadcasting, any patent, trade mark, design or model,
plan, secret formula or process, or for the use of, or other right to use,
industrial, commercial, or scientific equipment, or for information concerning
industrial, commercial or scientific experience.
(b) The term "fees
for technical services" as used in this Article means payments of any kind
to any person, other than payments to an employee of the person making the
payments and to any individual for independent personal services mentioned in
Article 14, in consideration for services of a managerial, technical or
consultancy nature, including the provision of services of technical or other
personnel.
4. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the royalties or fees for technical
services, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical services
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the right or property in respect of which, or the contract under which, the
royalties or fees for technical services are paid is effectively connected with
such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
5. Royalties and fees for technical
services shall be deemed to arise in a Contracting State when the payer is that
State itself, a political sub-division, a local authority or a resident of that
State. Where, however, the person paying the royalties or fees for technical
services, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in connection with
which the liability to make the payments was incurred and the payments are
borne by such permanent establishment or fixed base, then the royalties or fees
for technical services shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
6. Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the royalties or fees for technical
services, having regard to the use, right, information or technical services
for which they are paid, exceeds the amount which would have been agreed upon
by the payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In
such case, the excess part of the royalties or fees for technical services
shall remain taxable according to the laws of each Contracting State.
Article 13
Capital gains
1. Gains derived by a resident of a
Contracting State from the alienation of immovable property referred to in
Article 6 and situated in the other Contracting State may be taxed in that
other State.
2. 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 such
a permanent establishment (alone or together with the whole enterprise) or of
such fixed base, may be taxed in that other State.
3. Gains from the alienation of ships or
aircraft operated in international traffic or movable property pertaining to
the operation of such ships or aircraft shall be taxable only in the
Contracting State of which the alienator is a resident.
4. Gains from the alienation of shares of
the capital stock of a company the property of which consists directly or
indirectly princially of immovable property situated in a Contracting State may
be taxed in that State.
5. Gains from the alienation of shares
other than those mentioned in paragraph 4, forming part of a participation of
at least 10 per cent of the capital stock of a company which is a resident of a
Contracting State may be taxed in that State.
6. Gains from the alienation of any
property other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be
taxable only in the Contracting State of which the alienator is a resident.
Article 14
Independent personal
services
1. Income derived by an individual who is a
resident of a Contracting State from the performance of professional services
or other independent activities of a similar character shall be taxable only in
that State except in the following circumstances when such income may also be
taxed in the other Contracting State:
(a) if he has a fixed base regularly
available to him in the other Contracting State for the purpose of performing
his activities; in that case, only so much of the income as is attributable to
that fixed base may be taxed in that other State; or
(b) if his stay in the other Contracting
State is for a period or periods amounting to or exceeding in the aggregate 183
days in the relevant "previous year" or "taxable period",
as the case may be; in that case, only so much of the income as is derived from
his activities performed in that other State may be taxed in that other State.
2. The term "professional
services" includes independent scientific, literary, artistic, educational
or teaching activities, as well as the independent activities of physicians,
surgeons, lawyers, engineers, architects, dentists and accountants.
Article 15
Dependent personal
services
1. 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 the employment is exercised in the other
Contracting State. If the employment is so exercised, such remuneration as is
derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of
paragraph 1, remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting State shall be
taxable only in the first-mentioned State if:--
(a) the recipient is present in the other
State for a period or periods not exceeding in the aggregate 183 days in the
relevant "previous year" or "taxable period", as the case
may be;
(b) the remuneration is paid by, or on
behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not deductible in
computing the profits or income of a permanent establishment or a fixed base
which the employer has in the other State.
3. Notwithstanding the preceding provisions
of this Article, remuneration derived in respect of an employment exercised
abroad a ship or aircraft operated in international traffic by an enterprise of
a Contracting State may be taxed in that State.
Article 16
Directors' fees
1. Directors' fees and other similar
payments derived by a resident of a Contracting State in his capacity as a
member of the board of directors or a similar organ of a company which is a
resident of the other Contracting State may be taxed in that other State. This
provision shall also apply to payments derived in respect of the discharge of
functions which under the laws of the Contracting State of which the company is
a resident are treated as functions analogous to those stated hereinbefore.
2. Remuneration derived by a director
referred to in paragraph 1 from the company in regard to the discharge of
day-to-day functions of a managerial or technical nature and remuneration
received by a resident of a Contracting State consequent to the some personal
activity as a partner of a company, other than a company having a share capital
which is a resident of the other Contracting State, may be taxed in accordance
with the provisions of paragraph 1 of Article 15, as if such remuneration were
derived in respect of an employment.
Article 17
Income earned by
entertainers and athletes
1. Notwithstanding the provisions of
Articles 14 and 15, income derived by a resident of a Contracting State as an
entertainer such as a theatre, motion picture, radio or television artiste, or
a musician, or as an athlete, from his personal activities as such exercised in
the other Contracting State, may be taxed in the other State.
2. Where income in respect of personal activities
exercised by an entertainer or athlete in his capacity as such accrues not to
the entertainer or athlete himself but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer or athlete are
exercised.
3. Notwithstanding the provisions of
paragraph 1, income derived by an entertainer or an athlete who is a resident
of a Contracting State from his personal activities as such exercised in the
other Contracting State, shall be taxable only in the first-mentioned
Contracting State, if the activities in the other Contracting State are
supported wholly or substantially from the public funds of the first-mentioned
Contracting State, including any of its political sub-divisions or local
authorities.
4. Notwithstanding the provisions of
paragraph 2 and of Articles 7, 14 and 15, where income in respect of personal
activities exercised by an entertainer or an athlete in his capacity as such in
a Contracting State accrues not to the entertainer or athlete himself but to
another person, that income shall be taxable only in the other Contracting
State, if that other person is a resident of that other Contracting State and
is supported wholly or substantially from the public funds of that other State,
including any of its political sub-divisions or local authorities.
Article 18
Non-government pensions
and annuities
1. Any pension, other than a pension
referred to in Article 19, or any annuity derived by a resident of a
Contracting State from sources within the other Contracting State shall be
taxable only in the first-mentioned Contracting State.
2. Notwithstanding the provisions of
paragraph 1, pensions paid and other payments made under a public scheme which
is part of the social security system of a Contracting State or a political
sub-division or a local authority thereof shall be taxable only in that State.
3. The term "pension" means a
periodic payment made in consideration of past services, or by way of
compensation for injuries received in the course of performance of services.
4. The term "annuity" means a
stated sum payable periodically at stated times during life or during a
specified or ascertainable period of time, under an obligation to make the
payments in return for adequate and full consideration in money or money's
worth.
Article 19
Remuneration and pensions
in respect of government service
1. (a) Remuneration, other than a pension, paid by a Contracting
State or a political
sub-division or a local
authority thereof to an individual in respect of services rendered to that
State or sub-dividision or authority shall be taxable only in that State.
(b) However, such remuneration shall be
taxable only in the other Contracting State if the services are rendered in
that other State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not
become a resident of that State solely for the purpose of rendering the
services.
2. (a) Any
pension paid by, or out of funds created by, a Contracting State or a political
sub-
division or a local
authority thereof to an individual in respect of services rendered to that
State or sub-division or authority shall be taxable only in that State.
(b) However, such pension shall be taxable
only in the other Contracting State if the individual is a resident of, and a
national of, that other State.
3. The provisions of Articles 15, 16 and 18
shall apply to remuneration and pensions in respect of services rendered in
connection with a business carried on by a Contracting State or a political
sub-division or a local authority thereof.
Article 20
Teachers and researchers
1. An individual who is a resident of a
Contracting State and who, at the invitation of the Government of the other
Contracting State or of a university or other recognised educational
institution situated in that other Contracting State, visits such other
Contracting State for the primary purpose of teaching or engaging in research,
or both, at a university or other recognised educational institutions shall not
be subject to tax by that other Contracting State on his income from personal
services for such teaching or research for a period not exceeding twenty-four
months from the date of his arrival in that other Contracting State.
2. This article shall not apply to income
from personal services for research if such research is undertaken primarily
for the private benefit of a specific person or persons.
3. For the purposes of this Article and
Article 21, an individual shall be deemed to be a resident of a Contracting
State if he is a resident of that Contracting State in the year in which he
visits the other Contracting State or in the year immediately preceding that
year.
Article 21
Payments received by
students and apprentices
1. An individual who is a resident of a Contracting State and
visits the other Contracting State solely:
(a) as a student at a university, college or
other recognised educational institution in that other Contracting State, or
(b) as a
business apprentice, or
(c) for the purpose of study or research, as
a recipient of a grant, allowance or award, from a governmental, religious,
charitable, scientific or educational organisation,
shall be exempt from tax in that other
Contracting State:
(i) on all remittances from abroad for the purposes of
maintenance, education or training;
(ii) on the
grant, allowance or award; and
(iii) in respect of the amount, representing
remuneration for an employment in that other Contracting State, if such
remuneration does not exceed 1,00,000 Belgian Francs or its equivalent in
Indian Rupees, as the case may be, in any year.
2. An individual who is a resident of a
Contracting State and who visits the other Contracting State for a period not
exceeding one year as an employee of, or under contract with, an enterprise of
the first-mentioned Contracting State or an organisation referred to in
paragraph 1 for the primary purpose of acquiring technical, professional or
business experience from a person other than such enterprise or organisation
shall be exempt from tax in that other Contracting State in respect of the
remuneration received from that enterprise or organisation for such period, if
such remuneration does not exceed 1,20,000 Belgian Francs or its equivalent in
Indian Rupees, as the case may be, in any year.
Article 22
Other income
1. Items of income of a resident of a
Contracting State, wherever arising, not dealt with in the foregoing Articles
of this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not
apply to income, other than income from immovable property as defined in
paragraph 2 of Article 6, if the recipient of such income, being a resident of
a Contracting State, carries on business in the other Contracting State through
a permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the right
or property in respect of which the income is paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
3. Notwithstanding the provisions of
paragraphs 1 and 2, items of income of a resident of a Contracting State not
dealt with in the foregoing Articles of the Agreement and arising in the other
Contracting State may also be taxed in that other State.
Methods for elimination of
double taxation
Article 23
Elimination of double
taxation
1. The laws in force in either of the
Contracting States will continue to govern the assessment and taxation of
income in the respective Contracting States except where express provision to
the contrary is made in this Agreement.
2. In the case of India, double taxation shall be avoided as
follows:
(a) Where a resident of India derives income
which, in accordance with the provisions of the Agreement, may be taxed in
Belgium, India shall allow as a deduction from the tax on the income of that
resident an amount equal to the income-tax paid in Belgium whether directly or
by deduction. Such deduction shall not, however, exceed that part of the
income-tax (as computed before the deduction is given) which is attributable to
the income which may be taxed in Belgium. Further, where such resident is a
company by which surtax is payable in India, the deduction in respect of
income-tax paid in Belgium shall be allowed in the first instance from
income-tax payable by the company in India and as to the balance, if any, from
surtax payable by it in India.
(b) Where a resident of India derives income
which, in accordance with the provisions of the Agreement, shall be taxable
only in Belgium, India may include this income in the tax base but shall allow
as a deduction from the income-tax that part of the income-tax which is
attributable to the income derived from Belgium.
3. In the case of Belgium, double taxation shall be avoided as
follows:
(a) Where a resident of Belgium derives
income which may be taxed in India in accordance with the provisions of the
Agreement, other than those of paragraph 2 of Article 10, of paragraphs 2 and 6
of Article 11 and of paragraphs 2 and 6 of Article 12, Belgium shall exempt
such income from tax but may, in calculating the amount of tax on the remaining
income of that resident, apply the rate of tax which would have been applicable
if such income had not been exempted.
(b) (i) Where
a resident of Belgium derives items of his aggregate income for Belgian tax
purposes which are dividends taxable in accordance with paragraph 2 of Article
10, and not exempt from Belgian tax according to sub-paragraph (c), interest
taxable in accordance with paragraph 2 or 6 of Article 11, or royalties taxable
in accordance with paragraph 2 or 6 of Article 12, the Indian tax levied on
that income shall be allowed as a credit against Belgian tax relating to such
income in accordance with the existing provisions of Belgian law regarding the
deduction from Belgian tax of taxes paid abroad.
(ii) Where a resident of Belgium derives fees
for technical services which have been taxed in India in accordance with
paragraph 2 or 6 of Article 12, the provisions of Belgian tax law with respect
to earned income derived from sources outside Belgium and subject to foreign tax
shall apply.
(c) Where a company which is a resident of
Belgium owns shares in a company which is a resident of India, the dividends
which are paid to it by the latter company and which may be taxed in India in
accordance with paragraph 2 of Article 10, shall be exempt from the corporate
income-tax in Belgium under the conditions and limits provided for in Belgian
law.
(d) Where in accordance with Belgian law,
losses incurred by an enterprise carried on by a resident of Belgium in a
permanent establishment situated in India have been effectively deducted from
the profits of that enterprise for its taxation in Belgium, the exemption
provided for in sub-paragraph (a) shall not apply in Belgium to the profits of
other taxable periods attributable to that establishment to the extent that
those profits have also been exempted from tax in India by reason of
compensation for the said losses.
(e) For the purposes of sub-paragraph (b)(i)
the term "Indian tax levied" shall be deemed to include any amount
which would have been payable as Indian tax under the laws of India and in
accordance with the provisions of the Agreement for any year but for a
deduction allowed in computing the taxable income or an exemption from or a
reduction of tax granted for that year under:
(i)
sections 10(4), 10(4B), 10(15)(iv) and 80L of the Income-tax Act, 1961
(43 of 1961), so far as they were in force on, and have not been modified
since, the date of the signature of the Agreement, or have been modified only
in monir respects so as not to affect their general character; or
(ii)
any other provision which may be enacted after the Agreement enters
into force granting a deduction in computing the taxable income or an exemption
from or a reduction of tax and which the competent authorities of the Contracting
States agree to be for the purposes of economic development of India, if it has
not been modified thereafter or has been modified only in minor respects so as
not to affect its general character; the competent authorities may in such a
case decide as to the period for which the benefit of this clause shall apply.
Chapter V
Article 24
Non-discrimination
1. Nationals of a Contracting State shall
not be subjected in the other Contracting State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and
connected requirements to which nationals of that other State in the same
circumstances and under the same conditions are or may be taxed. This provision
shall, notwithstanding the provisions of Article 1, also apply to persons who
are not residents of one or both of the Contracting States.
2. Subject to the provisions of paragraph 3
of Article 7, the taxation on a permanent establishment which an enterprise of
a Contracting State has in the other Contracting State shall not be less
favourably levied in that other State than the taxation levied on enterprises
of that other State carrying on the same activities in the same circumstances
or under the same conditions.
3. The provisions of paragraph 2 shall not be construed as
preventing:
(a) a Contracting State from charging the
profits of a permanent establishment which an enterprise of the other
Contracting State has in the first-mentioned State at a rate of tax which is
higher than that imposed on the profits of a similar enterprise of the
first-mentioned Contracting State;
(b) Belgium from imposing the movable
property prepayment on dividends paid to a permanent establishment in Belgium
of a company which is a resident of India.
4. Nothing contained in this Article shall
be construed as obliging a Contracting State to grant to persons not resident
in that State any personal allowances, reliefs or reductions for tax purposes
which are by law available only to persons who are so resident.
5. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome than the
taxation and connected requirement to which other similar enterprises of that
first-mentioned State are or may be subjected in the same circumstances and
under the same conditions.
6. In this Article, the
term "taxation" means taxes of every kind as specified in this
Agreement.
Mutual agreement procedure
1. Where a person considers that the
actions of one or both of the Contracting States result or will result for him
in taxation not in accordance with the provisions of this Agreement, he may,
irrespective of the remedies provided by the domestic law of those States,
present his case to the competent authority of the Contracting State of which
he is a resident or, if his case comes under paragraph 1 of Article 24, to that
of the Contracting State of which he is a national. The case must be presented
within two years from the first notification of the action resulting in
taxation not in accordance with the provisions of the Agreement.
2. The competent authority shall endeavour,
if the objection appears to it to be justified and if it is not itself able to
arrive at a satisfactory solution, to resolve the case by mutual agreement with
the competent authority of the other Contracting State, with a view to the
avoidance of taxation which is not in accordance with the Agreement. Provided
that the case has been presented within the time period specified in paragraph
1, any agreement reached shall be implemented notwithstanding any time limits
in the domestic law of the Contracting States.
3. 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
Agreement.
4. The competent authorities of the
Contracting States may communicate with each other directly for the purpose of
giving effect to the provisions of the Agreement. When it seems advisable in
order to reach agreement to have an oral exchange of options, such exchange may
take place through a Commission consisting of representatives of the competent
authorities of the Contracting States.
Article 26
1. The competent authorities of the
Contracting States shall exchange such information as is necessary for carrying
out the provisions of this Agreement or of the domestic laws of the Contracting
States concerning taxes covered by the Agreement, insofar as the taxation
thereunder is not contrary to the Agreement, in particular for the prevention
of fraud or evasion of such taxes. The exchange of information is not
restricted by Article 1. Any information received by a Contracting State shall
be treated as secret in the same manner as information obtained under the
domestic laws of that State. However, if the information is originally regarded
as secret in the transmitting State, it shall be disclosed only to persons or
authorities (including courts and administrative bodies) involved in the
assessment or collection of, the enforcement or prosecution in respect of, or
the determination of appeals in relation to, the taxes which are the subject of
the Agreement. Such persons or authorities shall use the information only for
such purposes but may disclose the information in public court proceedings or
in judicial decisions. The competent authorities shall, through consultation,
develop appropriate conditions, methods and techniques concerning the matters
in respect of which such exchanges of information shall be made, including,
where appropriate, exchanges of information regarding tax avoidance.
2. Information may be exchanged either
spontaneously, on a routine basis or on request with reference to particular
cases or both. The competent authorities of the Contracting States shall agree
from time to time on the list of the information which shall be furnished on a
routine basis.
3. In no case shall the provisions of
paragraph 1 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at
variance with the laws or administrative practice of that or of the other
Contracting State;
(b) to supply information which is not
obtainable under the laws or in the normal course of the administration of that
or of the other Contracting State;
(c) to supply information which would
dislose any trade, business, industrial, commercial or professional secret or
trade process, or information the disclosure of which would be contrary to
public policy.
Article 27
Aid and assistance in
recovery
1. The Contracting States shall lend aid
and assistance to each other in order to notify and recover the taxes mentioned
in Article 2.
2. The interest due for delay or default in
the payment of taxes shall be treated as tax for the purposes of this Article.
3. On the request of the competent
authority of a Contracting State, the competent authority of the other
Contracting State shall secure, in accordance with the legal provisions and
regulations applicable to the notification and recovery of its taxes, the
notification and the recovery of taxes referred to in paragraph 1 which are due
in the first-mentioned State. Such taxes shall not be considered as
preferential claims in the requested State and that State shall not be obliged to
apply any means of enforcement which are not authorised by the legal provisions
and regulations of the requesting State.
4. Questions concerning any period of
limitation of a tax claim shall, notwithstanding the provisions of paragraph 3,
be governed solely by the laws of the applicant State.
5. Requests referred to in paragraph 3
shall be supported by an official copy of the instrument permitting the
execution, accompanied where appropriate, by an official copy of any final
administrative or judicial decision.
6. With regard to taxes which are open to
appeal, the competent authority of a Contracting State may, in order to
safeguard its rights, request the competent authority of the other Contracting
State to take the protective measures provided for in the legislation of that
other State; the provisions of paragraphs 1 to 4 shall apply mutatis mutandis
to such measures.
7. The Contracting State in which tax is
recovered in pursuance of the preceding paragraphs shall immediately thereafter
remit the amount so recovered to the other Contracting State.
8. The provisions of paragraph 1 of Article
26 shall also apply to any information which, by virtue of this Article, is
supplied to the competent authority of a Contracting State.
Diplomatic and consular
officials
Nothing in this Agreement
shall affect the fiscal privileges of diplomatic or consular officials under
the general rules of international law or under the provisions of special
agreements.
Chapter VI
Final provisions
Article 29
Entry into force
1. The Contracting States shall notify each
other in writing through diplomatic channels that the procedures required by
their respective laws for the bringing into force of this Agreement have been
completed. The Agreement shall enter into force on the thirtieth day after the
receipt of the later of these notifications and shall thereupon have effect:
(a) in India, in respect of income arising
in any previous year beginning on or after the first day of April next
following the calendar year in which the Agreement enters into force;
(b) in
Belgium:
(i) in respect of all tax due at source on
income credited or payable on or after the first day of January of the calendar
year next following the calendar year in which the Agreement enters into force;
(ii) in respect of all tax other than tax due
at source on income derived during any taxable period ending on or after the
thirty-first day of December of the calendar year next following the calendar
year in which the Agreement enters into force.
2. The Agreement between the Government of
India and the Government of Belgium for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income, and the
Protocol thereto, signed on 7th February, 1974 and the Supplementary Protocol
modifying the said Agreement and Protocol, signed on 20th October, 1984, shall
terminate and cease to have effect in respect of the taxes on income to which
the present Agreement applies in accordance with the provisions of paragraph 1
of this Article.
Article 30
This Agreement shall
remain in force indefinitely. However, either of the Contracting States may, on
or before the thirtieth day of June in any calendar year beginning after the
expiration of a period of five years from the date of its entry into force,
give the other Contracting State through diplomatic channels, written notice of
termination and, in such event, the Agreement shall cease to have effect:
(a) in India, in respect of income arising
in any previous year beginning on or after the first day of April next
following the calendar year in which the notice of termination is given;
(b) in
Belgium:
(i) in respect of all tax due at source on
income credited or payable on or after the first day of January of the calendar
year next following the calendar year in which the notice of termination is
given;
(ii) in respect of all tax other than tax due
at source on income derived during any taxable period ending on or after the
thirty-first day of December of the calendar year next following the calendar
year in which the notice of termination is given.
IN WITNESS WHEREOF the
undersigned, being duly authorised thereto, have signed the present Agreement.
DONE in duplicate at
Brussels this 26th day of April one thousand nine hundred and ninety-three, in
the Hindi, English, French and Dutch languages, all four texts being equally
authentic. In case of divergence of interpretation, the English text shall
prevail.
The Government of the
Republic of India and the Government of the Kingdom of Belgium,
Having entered into an
Agreement for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income,
Have agreed, at the time
of signing the said Agreement, on the following provisions which shall
constitute an integral part thereof:
1. Ad Articles 5, 7 and 12
If under any Convention or
Agreement between India and a third State being a member of the OECD which
enters into force after 1st January, 1990, India limits its taxation on
royalties or fees for technical services to a rate lower or a scope more
restricted than the rate or scope provided for in the present Agreement on the
said items of income, the same rate or scope as provided for in that Convention
or Agreement on the said items of income shall also apply under the present
Agreement with effect from the date from which the present Agreement or the
said Convention or Agreement is effective, whichever date is later.
2. Ad Article 7
(a) In the determination of the profits of a
permanent establishment in Belgium of an enterprise which is a resident of
India, Belgium shall allow as deductions, notwithstanding the provisions of the
first sentence of sub-paragraph (a) of paragraph 3 of Article 7, executive and
general administrative expenses incurred whether in Belgium or elsewhere
insofar as they are reasonably allocable to that permanent establishment.
(b) Where the law of the Contracting State
in which a permanent establishment is situated imposes in accordance with the
provisions of the first sentence of sub-paragraph (a) of paragraph 3 of Article
7 a restriction on the amount of the executive and general administrative
expenses which may be allowed as deductions in determining the profits of such
permanent establishment, it is understood that in determining the profits of
such permanent establishment the deduction in respect of such executive and
general administrative expenses in no case shall be less than what is allowable
as on the date of signature of the present Agreement under the law of that
Contracting State.
3. Ad Article 23
For the purposes of
sub-paragraph (a) of paragraph 2 and sub-paragraph (b) of paragraph 3 of
Article 23, it is understood that if, after the date of signature of the
Agreement, the law of a Contracting State is amended with regard to the
allowance of tax credit or the reduction of tax, the competent authority of
that State shall inform the competent authority of the other Contracting State
of the amendments so made and, if the competent authority of that other
Contracting State so requests, the competent authorities of both States shall
consult each other with a view to amend the Agreement, if necessary.
IN WITNESS WHEREOF the
undersigned, being duly authorised thereto, have signed the present Protocol.
DONE in duplicate at
Brussels this 26th day of April one thousand nine hundred and ninety three, in
the Hindi, English, French and Dutch languages, all four texts being equally
authentic. In case of divergence of interpretation, the English text shall
prevail.
Agreement between the
Government of India and the Government of Belgium for the avoidance of
doubletaxation and the prevention of fiscal evasion with respect to taxes on
income.
Notification No. 933 [F.
No. 11/21/65-FTD], dated 6 June, 1975 as amended by Notification No. 7788 [F.
No.505/1/87-FTD], dated 2 March, 1988
G.S.R. 323(E).--Whereas
the annexed Agreement between the Government of India and the Government of
Belgium for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income has been approved in accordance with
the laws in force in each of the two Contracting States, and letters to this
effect have been exchanged as required by paragraph 1 of Article 29 of the said
Agreement:
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961) and section 24A of the Companies (Profits) Surtax Act, 1964 (7 of
1964), the Central Government hereby directs that all the provisions of the
said Agreement Shall be given effect to in the Union of India.
ANNEXURE
The Government of India
and the Government of Belgium.
Desiring to conclude an
agreement for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income.
Have agreed as follows :
CHAPTER I
Scope of the agreement
ARTICLE I: Personal
scope.--This Agreement shall apply to persons who are residents of one or both
of the Contracting States.
ARTICLE II: Taxes
covered.—
1. This Agreement shall apply to taxes on
income imposed on behalf of each Contracting State or of its political
sub-divisions or local authorities, irrespective of the manner in which they
are levied.
2. There shall be regarded as taxes on
income all taxes imposed on total income or on elements of income including
taxes on gains from the sale, exchange or transfer of movable or immovable
property and taxes on the total amounts of wages or salaries paid by
enterprises.
3. The existing taxes to
which this Agreement shall apply are :
(a) In the case of India :
(i) the income-tax and any surcharge on
income-tax imposed under the Income-tax Act, 1961 (43 of 1961); and
(ii) the surtax imposed under the Companies
(Profits) Surtax Act, 1964 (7 of 1964);
(hereinafter referred to
as "Indian tax")
(b) In the case of Belgium:
(i) the individual income-tax (1'impot des personnes Physiques);
(ii) the
corporate income-tax (1'impot des societies);
(iii) the
income-tax on legal eatities (1'impot des personnes morales);
(iv) the income-tax
on non-residents (1'import des non-residents);
(v) the prepayments and additional
prepayments (les precomptes et complements de precompte); and
(vi) the surcharges (decimes et centimes
additionnels) on any of the taxes referred to in (i) to (v) above including the
communal supplement to the individual income-tax (taxe communale additionelle a
1'imports des personnes physiques);
(hereinafter referred to
as "Belgian tax").
4. This Agreement shall also apply to any
identical or substantially similar tax which is imposed after the date of
signature of this Agreement in addition to or in place of, the existing taxes.
The competent authorities of the Contracting States shall, from time to time,
notify to each other any significant changes which have been made in their
respective taxation laws.
ARTICLE III: General
definitions.--1. In this Agreement, unless the context otherwise requires :
(a) the term "India" means the
territory of India and includes any area adjacent to the territorial waters of
India which, in accordance with international law, has been or may hereafter be
designated under the laws of India as an area within which the rights of India
with respect to the sea-bed and sub-soil and their natural resources may be
exercised;
(b) the term "Belgium" means the
territory of the Kingdom of Belgium; it includes any area outside the Belgian
national sovereignty which under the Belgian laws concerning the Continental
Shelf, and in accordance with international law, has been or may hereafter be
designated as an area within which the rights of Belgium with respect to the
sea-bed and sub-soil and their natural resources may be exercised;
(c) the terms "a Contracting
State" and "the other Contracting State" mean India or Belgium
as the context requires;
(d) the term "competent authority"
means--in the case of India, the Central Government in the Ministry of Finance
(Department of Revenue and Insurance), and in the case of Belgium, the
competent authority according to Belgian legislation;
(e) the term
"tax" means "Indian tax" or "Belgian tax" as the
context requires;
(f) the term "person" includes
individuals, companies and all other entities, which are treated as taxable
units under the tax laws in force in the Contracting State of which they are
resident;
(g) the term "company" means in
the case of India, any entity which is a company or which is treated as a
company under the Indian tax laws, and in the case of Belgium, any entity which
is a company or which is treated as a body corporate under the Belgian tax
laws;
(h) the terms "enterprise of a
Contracting State" and "enterprise of the other Contracting
State" mean, respectively, an industrial or commercial enterprise or
undertaking carried on by a resident of a Contracting State and any such
enterprise or undertaking carried on by a resident of the other Contracting
State.
2. In the application of the provisions of
this Agreement by a Contracting State, any term used but not defined herein
shall, unless the context otherwise requires, have the meaning which it has
under the laws in force in that State relating to the taxes to which this
Agreement applies.
ARTICLE IV: Fiscal
domicile.—
1. For the purposes of this Agreement the
term "resident of a Contracting State" means any person who, under
the law of that State, is a resident of that State for the purposes of taxation
therein.
2. Where by reason of the provisions of
paragraph 1 an individual is a resident of both the Contracting States, then
his residential status for the purposes of this Agreement shall be determined
in accordance with the following rules:
(a) he shall be deemed to be a resident of
the Contracting State in which he has a permanent home available to him. If he
has a permanent how available to him in both the Contracting States, he shall
be deemed to be a resident of the Contracting State with which his personal and
economic relations are closer (hereinafter referred to as his "centre of
vital interests");
(b) if the Contracting State in which he has
his centre of vital interests cannot be determined, or if he has not a
permanent home available to him in either Contracting State, he shall be deemed
to be a resident of the Contracting State in which he has an habitual abode;
(c) if he has an habitual abode in both the
Contracting States or in neither of them, he shall be deemed to be a resident
of the Contracting State of which he is a national;
(d) if he is a national of both the
Contracting States or of neither of them, the competent authorities of the
Contracting States shall determine the question by mutual agreement.
3. Where by reason of the provisions 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.
ARTICLE V: Permanent
establishment.—
1. For the purposes of this Agreement, the
term "permanent establishment" means a fixed place of business in
which the business of the enterprise is wholly or partly carried on.
2. A "permanent establishment" shall include
especially :
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop or a warehouse;
(f) a mine, a
quarry, an oilfield or other place of extraction of natural resources;
(g) a building site or construction or
assembly project or supervisory activities in connection therewith, where such
site, project or activity continues for a period of more than six months, or
where such project or activity, being incidental to the sale of machinery or
equipment, continues for a period not exceeding six months and the charges
payable for the project or activity exceed 10 per cent of the sale price of the
machinery or equipment.
3. The term "permanent establishment" shall not be
deemed to include :
(a) the use of facilities solely for the
purpose of storage or display of goods or merchandise belonging to the
enterprise;
(b) the maintenance of s stock f goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display;
(c) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise, or for
collecting information, for the enterprise;
(d) the
maintenance of a fixed place of business solely for scientific research, for
the enterprise.
4. Subject to the provisions of paragraph
5, a person acting in a Contracting State on behalf of an enterprise of the
other Contracting State shall be deemed to be a permanent establishment of that
enterprise in the first-mentioned State if:
(i) he has and habitually exercises in that
State an authority to conclude contracts on behalf of the enterprise unless his
activities are limited to the purchase of goods or merchandise for that
enterprise; or
(ii) he habitually maintains in the
first-mentioned Contracting State a stock of goods or merchandise belonging to
the enterprise from which the person regularly delivers goods or merchandise on
behalf of the enterprise; or
(iii) he habitually secures orders in the
first-mentioned Contracting State, exclusively or almost exclusively, for the
enterprise itself, or for the enterprise and other enterprises which are
controlled by it or have a controlling interest in it.
5. An enterprise of a Contracting State
shall not be deemed to have a permanent establishment in the other Contracting
State merely because it carries on business in that other State through a
broker, a general commission agent or other agent of a genuinely independent
status acting in the ordinary course of his business.
6. the fact that a company, which is a
resident of a Contracting State, has a subsidiary company which either is a
resident of the other Contracting State or carries on a trade or business in
that other Contracting State (whether through a permanent establishment or
otherwise) shall not of itself constitute either company a permanent
establishment or the other.
Taxation of income
ARTICLE VI: Income from
immovable property.—
1. Income from immovable property may be
taxed in the Contracting State in which such property is situated.
2. The term "immovable property"
shall be defined in accordance with the law and usage of the Contracting State
in which the property in question is situated. The term shall in any case
include property, accessory to immovable property, livestock and equipment used
in agriculture and forestry, rights to which the provisions of general law
respecting landed property apply, usufruct of immovable property and rights to
variable or fixed payments as consideration for the working of, or the right to
work, mineral deposits sources and other natural resources; ships and aircraft
shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall
apply to income derived from the direct use, letting or use in any other form
of immovable property.
4. The provisions of paragraphs 1 and 3
shall also apply to the income from immovable property of an enterprise and to
income from immovable property used for the performance of professional services.
ARTICLE VII: Business
profits.—
1. Industrial or commercial profits of an
enterprise of a Contracting State shall be taxable only in that State unless
the enterprises is engaged in trade or business in the other Contracting State
through a permanent establishment situated therein. If the enterprise is
engaged in trade or business as aforesaid, the industrial or commercial profits
of the enterprise may be taxed in the other State but only so much of such
profits as are attributable to that permanent establishment.
2. Whether an enterprise of a Contracting
State is engaged in trade or business in the other Contracting State through a
permanent establishment situated therein, there shall be attributed to such
permanent establishment the industrial or commercial profits which it might be
expected to derive if it were an independent enterprise engaged in the same or
similar activities under the same or similar conditions and dealing at arm's
length with the enterprise of which it is a permanent establishment.
3. In the determination of the profits of a
permanent establishment, there shall be allowed as deductions expensed which
are incurred for the purposes of the business of the permanent establishment
whether in the State in which the permanent establishment is situated or
elsewhere; but the deduction so allowed for the executive and general
administrative expenses incurred outside the Contracting State in which the
permanent establishment is situated shall be in accordance with the provisions
of and subject to the limitation of of the taxation laws of that State. Where,
however, the taxation laws of the Contracting State where the permanent
establishment is situated, do not provide for the deduction of such expenses,
the deduction to be allowed shall not exceed 5 per cent of the net profit of
the permanent establishments computed before the deduction. However, no
deduction shall be allowed in respect of amounts, if any, paid (otherwise than
towards reimbursement of actual expenses) by that permanent establishment to
the head office of the enterprise or any of its other offices, by way of
royalties, fees or other similar payments in return for the use of patents or
other rights, or by way of commission, for specific services performed or for
management or except in the case of a banking enterprise, by way of interest on
moneys lent to the permanent establishment. Likewise, no account shall be taken
in the determination of the profits of a permanent establishment, for amounts
charged (otherwise than towards reimbursement of actual expenses), by the
permanent establishment to the head office of the enterprise or any of its
other offices, by way of royalties, fees or other similar payments in return
for the use of patents or other rights, or by say or commission for specific
services performed, or for management, or except in the case of a banking
enterprise. By way of interest on moneys lent to the head office of the
enterprise or any of its other offices.
4. In so far as it has been customary in a
Contracting State to determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits of the
enterprise to its various parts, nothing in paragraph 2 or paragraph 3 shall
preclude such contracting State from determining the profits to be taxed by
such an apportionment as may be customary; the method of apportionment adopted
shall, however, be such that the result shall be in accordance with the
principles laid down in this Article.
5. No profits shall be attributed to a
permanent establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the purpose of export to the
enterprise of which it is the permanent establishment.
6. The term "industrial or commercial
profits" means income derived by an enterprise from the conduct of a trade
or business; but does not include income in the form of rents, royalties, fees
for technical services, interest, dividends, capital gains, remuneration for
labour or personal (including profession) services or income from the operation
of ships or aircraft. The items of income so excluded shall be dealt with in
accordance with the provisions of the other Articles of this Agreement.
ARTICLE VIII: Air
transport and shipping.—
1. Income derived from the operation of
aircraft in international traffic by an enterprise of a Contracting State shall
not be taxed in the other Contracting State.
2. Paragraph 1 shall likewise apply in
respect of participations in pools of any kind by enterprises engaged in air
transport.
3. Income of an enterprise of a Contracting
State derived from the other Contracting State from the operation of ships in
international traffic may be taxed in the other Contracting State, but the tax
chargeable in that other Contracting State on such income shall be reduced by
an amount equal to 50 per cent of such tax.
4. Paragraph 3 shall not apply to profits arising as a result of
coastal traffic.
ARTICLE IX: Associated
enterprises.--Where.--
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a Contracting
State and an enterprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises; but by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
ARTICLE X: Dividends.—
1. Dividends paid by a company which is a
resident of a Contracting State to a resident of the other Contracting State
may be taxed in that other State.
2. However, such dividends may also be
taxed in the Contracting State of which the company paying the dividends is a
resident and according to the laws of that State, but if the beneficial owner
of the dividends is a company which is a resident of the other Contracting
State, the tax so charged shall not exceed 15 per cent of the gross amount of
the dividends.
This paragraph shall not affect the taxation of the company
in respect of the profits out of which
the dividends are paid.
3. The provisions regarding the reduction
in the rate of tax in paragraph 2 shall apply in respect of dividends arising
out of investments made after the entry into force of the Supplementary
Protocol modifying this Agreement.
4. The term "dividends" as used
in this Article means income from shares. "Jouissance" shares or
"jouissance" rights, mining shares, founders shares or other rights,
not being debt-claims, participating in profits, as well as income from other
corporate rights which is subjected to the same taxation treatment as income
from shares by the laws of the State of which the company making the distribution
is a resident. This term means also income-even paid in the from of
interest-which is taxable under the head of income on capital invested by the
members of a company other than company with share capital, which is a resident
of Belgium.
5. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent establishment
situated therein, or performs in that other State independent personal services
from a fixed base situated therein, and the holding in respect of which the
dividends are paid is effectively connected with such permanent establishment
or fixed base. In such case the provisions of Article 7 or Article 15, as the
case may be, shall apply.
6. Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company to
a person who is a resident of the first mentioned State, except insofar as the
holding in respect of which the dividends are paid is effectively connected
with a permanent establishment or a fixed base situated in that other State,
nor subject the company's undistributed profits to a tax on the company's
undistributed profits, even if the dividends paid or the undistributed profits
consist wholly or partly of profits or income arising in such other State.
ARTICLE XI: Interest.—
1. Interest arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other State.
2. However, such interest may also be taxed
in the Contracting State in which it arises and according to the laws of that
State but if the beneficial owner of the interest is a resident of the other
Contracting State the tax so charged shall not exceed 15 per cent of the gross
amount of interest in respect of a loan
advanced or debt created by the date of entry into force of the Supplementary
Protocol modifying this agreement.
3. The term "interest" as used in
this Article means income from debt-claims of every kind, whether or not
secured by mortgage and whether or not carrying a right to participate in the debtor's
profits, and in particular, income from Government securities and income from
bonds or debentures, including
premiums and prizes attaching to such securities, lands or debentures; however
the term "interest" shall not include for the purpose of this Article
penalty charges for late payment nor interest regarded as dividends under the
second sentence of paragraph 4 of Article 10.
4. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner 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. In
such case the provisions of Article 7 or Article 15, as the case may be, shall
apply.
5. Interest shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
6. Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the interest, 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 beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable in the Contracting State in which the interest arises according
to the law of that State.
ARTICLE XII: Royalties and
fees for technical services.—
1. Royalties and fees for technical
services arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such royalties and fees for
technical services may also be taxed in the Contracting State in which they
arise and according to the laws of that State provided that where the
beneficial owner of the royalties or fees for technical services is a resident
of the other Contracting State and the royalties and fees for technical
services are paid in respect of a right or property which is granted, or under
a contract which is signed, after the date of entry into force of the
Supplementary Protocol modifying this Agreement the tax so charged shall not
exceed 30 per cent of the gross amount of the royalties or fees for technical
services.
3.(a) The
term "royalties" as used in this Article means payments of any kind
received as a consideration for the use of, or the right to use, any copyright
of literary, artistic or scientific work including cinematograph and television
films, any patent trade mark, design or model, plan, secret formula or process,
or for the use of or the right to use, industrial, commercial, or scientific
equipment, or for information concerning industrial, commercial or scientific
experience.
(b) The term "fees for technical
services" as used in this Article means payments of any kind to any
person, other than payments to an employee of the person making the payments
and to any individual for independent personal services mentioned in Article
15, in consideration for services of a managerial, technical or consultancy
nature, including the provision of services of technical or other personnel.
4. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the royalties or fees for technical
services, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical services
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the right or property in respect of which, or the contract under which, the
royalties or fees for technical services are paid is effectively connected with
such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 15, as the case may be, shall apply.
5. Royalties and fees for technical
services shall be deemed to arise in a Contracting State when the payer is that
State itself, a political sub-division, a local authority or a resident of that
State. Where, however, the person paying the royalties or fees for technical
services, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in connection with
which the liability to make the payments was incurred and the payments are
borne by such permanent establishment or fixed base, then the royalties or fees
for technical services shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
6. Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person the amount of the royalties or fees for technical
services, having regard to the use, right, information or technical services
for which they are paid, exceeds the amount which/would have been agreed upon
by the payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In
such case, the excess part of the royalties or fees for technical services
shall remain taxable in the Contracting State in which the royalties or fees
for technical services arise, according to the law of that State.
ARTICLE XIII: Deleted.
ARTICLE XIV: Capital
gains.—
1. Subject to the provisions of paragraph
3, gains from the sale, exchange or transfer of a capital asset being immovable
property, as defined in paragraph 2 of Article 6, or from the sale, exchange or transfer of any movable
property, whether tangible or intangible, may be taxed in the Contracting State
in which such property is situated immediately before such sale, exchange or
transfer.
2. For the purpose of this Article, the
situs of the shares in a company shall be deemed to be in the Contracting State
in which the company is incorporated.
3. Capital gains deprived from the sale,
exchange or transfer of a capital asset being a ship or aircraft may be taxed
only in the Contracting State in which such ship or aircraft is registered.
ARTICLE XV: Independent
personal services.—
(1) Income derived by a resident of Belgium
in respect of professional services rendered or other independent activities of
a similar character performed in India may be taxed in India if
(a) he is present in India for a period or
periods exceeding in the aggregate 183 days during the relevant previous year;
or
(b) he has a fixed base regularly available
to him in India for the purpose of performing his services or activities;
but in each case only so
much of the income as is attributable to those services or activities.
(2) Income derived by a resident of India in
respect of professional services rendered or other independent activities of a
similar character performed in Belgium may be taxed in Belgium if
(a) he is present in Belgium for a period or
periods exceeding in the aggregate 183 days during the relevant taxable period;
or
(b) he has a fixed base regularly available
to him in Belgium for the purpose of performing his services or activities;
but in each case, only so
much of the income as is attributable to those services or activities.
(3) The term "professional
services" includes independent scientific, literary, artistic educational
or teaching activities as well as the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
ARTICLE XVI: Dependent
personal services.—
1. Subject to the provisions of Articles
17, 19, 20, 21 and 22, 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 the employment is exercised in the other
Contracting State. If the employment is so exercised, such remuneration as is
derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of
paragraph 1, remuneration derived by a resident of Belgium in respect of an
employment exercised in India shall not be taxed in India if:
(a) he is present in India for a period or
periods not exceeding in the aggregate 183 days during the relevant
"previous year";
(b) the remuneration is paid by, or on behalf of, an employer who
is not a resident of India;
(c) the
remuneration is subject to Belgian tax; and
(d) the remuneration is not deducted in computing
profits of an enterprise chargeable to Indian tax.
3. Notwithstanding the provisions or
paragraph 1, remuneration derived by a resident of India in respect of an
employment exercised in Belgium shall not be taxed in Belgium if:
(a) he is present in Belgium for a period of
periods not exceeding in the aggregate 183 days during the relevant taxable
period;
(b) the
remuneration is paid by, or on behalf or, an employer who is not a resident of
Belgium;
(c) the
remuneration is subject to Indian tax; and
(d) the remuneration is not deducted in
computing profits of an enterprise chargeable to Belgian tax.
4. Notwithstanding the preceding provisions
of this Article, remuneration in respect of an employment exercised abroad a
ship or aircraft operated by an enterprise of a Contracting State in
international traffic may be taxed only in that Contracting State.
ARTICLE XVII: Directors'
fees.--Directors' fees and similar payments (not being remuneration for the
discharge of day-to-day functions of a managerial or technical nature) derived
by a resident of a Contracting State in his capacity as a member of the board
of directors of a company which is a resident of the other Contracting State
may be taxed in that other Contracting State.
ARTICLE XVIII: Artists and
athletes.--Notwithstanding anything contained in Articles 15 and 16, income
derived by public entertainers, such as theatre, motion picture, radio or
television artistes and musicians, and by athletes, from their personal
activities as such may be taxed in the Contracting State in which these
activities are exercised.
ARTICLE XIX: Pensions.—
1. Any pension (including an annuity) other
than a pension referred to in Article 20 derived by a resident of a Contracting
State from sources within the other Contracting State in consideration of past
employment may be taxed in such other Contracting State.
2. The term "annuity' means a stated
sum payable periodically at stated times, during life or during a specified or
ascertainable period of time, under an obligation to make the payments in
return for adequate and full consideration in money or money's worth.
ARTICLE XX: Governmental
functions.—
1. Remuneration or pensions paid, by, or
out of funds created by a Contracting State, or a political sub-division or a
local authority thereof to any individual, being a national of that Contracting
State, in respect of services rendered to that Contracting State or political
sub-division or local authority thereof in the discharge of governmental
functions shall be exempt from tax in the other Contracting State.
2. The provisions of Articles 16, 17 and 19
shall apply to remuneration or pensions in respect of services in connection
with any trade or business carried on by either of the Contracting States or a
political sub-division or a local authority thereof for purpose of profit.
ARTICLE XXI: Teachers and
researchers.—
1. An individual who is a resident of a
Contracting State and who, at the invitation of the Government of the other
Contracting Sate or of a university or other recognised educational institution
situation that other Contracting State, visits such other Contracting State for
the primary purpose of teaching or engaging in research, or both, at a
university or other recognised educational institution shall not be subject to
tax by that other Contracting State on his income from personal services for
such teaching or research for a period not exceeding 24 months from the date of
his arrival in that other Contracting State.
2. This Article shall not apply to income
from personal services for research if such research is undertaken primarily
for the private benefit of a specific person or persons.
3. For the purposes of this Article and
Article 22 an individual shall be deemed to be a resident of a Contracting
State if he is a resident of that Contracting State in the year in which he
visits the other Contracting State or in the year immediately preceding that
year.
ARTICLE XXII: Students.—
1. An individual who is a resident of a Contracting State and
visits the other Contracting State solely :
(a) as a student at a university, college or
other recognised educational institution in that other Contracting State, or
(b) as a
business apprentice, or
(c) for the purpose of study or research as
a recipient of a grant, allowance or award, from a governmental, religious,
charitable, scientific or educational organisation,
shall be exempt from tax
in that other Contracting State:
(i) on all remittances from abroad for the purposes of
maintenance, education or training;
(ii) on the
grant, allowance or award; and
(iii) in respect of the amount, representing
remuneration for an employment in that other Contracting State, if such
remuneration does not exceed 1,00,000 Belgian Francs or its equivalent in
Indian Rupees, as the case may be, in any year.
2. An individual who is a resident of a
Contracting State and who visits the other Contracting State for period not
exceeding one year as an employee of, or under contract with, an enterprise of
the first-mentioned Contracting State or an organisation referred to in
paragraph 1 for the primary purpose of acquiring technical, professional or
business experience from a person other than such enterprise or organisation
shall be exempt from tax in that other Contracting State in respect of
remuneration for an employment in that other Contracting State for such period,
if such remuneration does not exceed 1,20,000 Belgian Francs or its equivalent
in Indian Rupees, as the case may be, in any year.
CHAPTER IV
ARTICLE XXIII:
1. The laws in force in either of the
Contracting States will continue to govern the assessment and taxation of
income in the respective Contracting State except where express provision to
the contrary is made in this Agreement.
2. Where a person who is a resident of
India derives income which, in accordance with the provisions of Chapter III of
this Agreement, may be taxed in Belgium, India shall, subject to the provisions
of sub-paragraph (a) of paragraph 4, exempt such income from its tax but may,
in calculating the tax on the remaining income of that person, apply the rate
of tax which would have been applicable if the exempted income had not been so
exempted.
3. (a) Where a person who is a resident of Belgium
derives income which, in accordance with the provisions of Chapter III of this
Agreement, may be taxed in India, Belgium shall, subject to the provisions of
sub-paragraphs (b) and (c) of this paragraph and sub-paragraph (b) of paragraph
4, exempt such income from its tax but may in calculating the tax on the
remaining income of that person, apply the rate of tax which would have been
applicable of the exempted income had not been so exempted.
(b) (i) Where a company which is a resident of Belgium,
owns shares in a company which is a resident of India, the dividends paid
thereon to the former company shall be exempt in Belgium from the tax referred
to in paragraph 3 (b) (ii) of Article 2 to the extent that exemption would have
been accorded under Belgian law if the two companies had been residents of
Belgium.
(ii) A company which is a resident of Belgium
and which during the whole of an accounting period of a company which is a
resident of India and is chargeable to Indian tax, has held the direct
ownership of shares in the latter company shall also be exempted from the
pre-payment on income from movable property (precompte mobilier) chargeable in
accordance with Belgian law on the dividends on those shares, provided that it
so requests in writing not later than the time limited for the submission of
its annual return for corporate tax; on the redistribution to its own
shareholders of the dividends so exempted, those dividends may not be deducted
from dividends distributed which are subject to the prepayment on income from
movable property. This provision shall not apply when the first-mentioned
company has elected that its profits be charged to the individual income-tax.
(c) Where a resident of Belgium receives
income by way of dividends referred to in Article 10 [not being dividends
covered by sub-paragraph (b) of this paragraph] or interest referred to in
Article 11 or royalties referred to in paragraph
3 (a), of Article 12 of
this Agreement, Belgium shall allow, against the Belgium tax chargeable on such
income, a credit in respect of tax chargeable in India on such income, whether
actually charged or spared. The amount of the credit to be so allowed shall be
computed on the gross amount of dividends, interest or royalties so received
after deduction of Indian tax, if any, at a rate which shall not be less than
15 per cent in the case of dividends and interest and 20 per cent in the case
of royalties.
4. (a) In a case to which paragraph 2 of
this Article applies, Indian tax may be charged on income chargeable to Belgian
tax to the extent that such income has not been charged to tax in Belgium for
any taxable period because of the set off of loss carried forward from an
earlier taxable period where such loss
is deducted in computing the taxable income in India for any year.
(b) In a case to which sub-paragraph (a) of paragraph 3 of this
Article applies Belgian tax may be charged on income chargeable to Indian tax
to the extent that such income has not been charged to tax in India for any
assessment year because of the set off of loss carried forward from an earlier assessment year, where such loss is
deducted in computing the taxable income in Belgium for any year.
ARTICLE XXIV:
Non-discrimination.—
1. The nationals of a Contracting State
shall not be subjected in the other Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which nationals of that other State in
the same circumstances and under the same conditions are or may be subjected.
2. The term "nationals of a Contracting State" means:
(a) all individuals possessing the nationality of that
Contracting State;
(b) all legal persons, partnerships and
associations deriving their status as such from the law in force in that
Contracting State.
3. The taxation on a permanent
establishment which an enterprise of a Contracting State has in the other
Contracting State shall not be less favourably levied in that other State than
the taxation levied on enterprise of that other State carrying on the same
activities in the same circumstances and under the same conditions.
This provision shall not
be construed as preventing Belgium from charging the total amount of profits of
a permanent establishment in Belgium of a company being a resident of India or
of any entity having its place of effective management in India at the rate of
tax provided by the Belgian law, but this rate may not--before the surcharges
referred to in paragraph 3 (b)(vi) of Article 2--exceed the maximum rate
applicable to the whole or a portion of the profits of companies which are
residents of Belgium.
4. Nothing contained in this Article shall
be construed as obliging a Contracting State to grant to persons not residents
in that State any personal allowances, reliefs or reductions for tax purposes
which are by law available only to persons who are so resident.
5. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly by one of more residents of the other Contracting State, shall not
be subjected in the first-mentioned Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of that
first-mentioned State are or may be subjected in the same circumstances and
under the same conditions.
6. In this Article, the term "taxation" means taxes of
very kind as specified in this Agreement.
ARTICLE XXV: Mutual
agreement procedure.—
1. Where a taxpayer considers that the
action of the taxation authorities of one or both of the Contracting States has
resulted or will result for him in double taxation not in accordance with the
provisions of this Agreement, he, may, notwithstanding the remedies provided by
the laws of those Contracting States address to the competent authority of the
Contracting State of which he is a resident an application in writing stating
the grounds for claiming revision of the incorrect taxation. The said
application must be submitted before the expiry of a period of two years from
the notification of liability to or the deduction at source of the second
charge to tax.
2. Should the taxpayers claim the deemed
worthy of consideration, the competent authority of the Contracting State to
which the claim is made shall endeavour to come to an agreement with the
competent authority of the other Contracting State with a view to the avoidance
of taxation not in accordance with this Agreement.
3. The competent authorities of the
Contracting States shall endeavour to reserve by mutual agreement and
difficulties arising as to the application of the Agreement.
4. The competent authorities of the Contracting
States may communicate with each other directly for the purpose of giving
effect to the provisions of this Agreement.
ARTICLE XXVI: Exchange of
information.—
1. The competent authorities of the
Contracting States shall exchange such information as is necessary for carrying
out the provisions of this Agreement or for the preventions of fraud or for the
administration of statutory provisions against legal avoidance in relation to
the taxes which are the subject of this Agreement. Any information so exchanged
shall be treated as secret but may be disclosed to persons (including a court
or administrative body) concerned with the assessment collection, enforcement
or prosecution in respect of the taxes which are the subject of this Agreement.
2. In no case shall the provisions of
paragraph 1 be construed so as to impose on a Contracting State the obligation
:
(a) to carry out administrative measures at
variance with the laws or administrative practice of that or of the other
Contracting State;
(b) to supply particulars which are not
obtainable under the laws or in the normal course of the administration of that
or of the other Contracting State;
(c) to supply information which would
disclose any trade, business, industrial, commercial or professional secret or
trade process, or information, the disclosure of which would be contrary to
public policy.
ARTICLE XXVII: Assistance
in collection.--Each of the Contracting States shall endeavour to collect as if
it were its own tax, any tax, referred to in Article 2, which has been imposed
by the other Contracting State and the collection of which is necessary to
ensure that any exemption or reduced rate of tax granted under this Agreement
by the other Contracting State shall not be enjoyed by persons not entitled to
such benefits.
ARTICLE XXVIII:
Miscellaneous.—
1. Nothing in this Agreement shall affect
the fiscal privileges of diplomatic or consular official under the general
rules of international law or under the provisions of special agreements
2. Nothing is this Agreement shall affect
the taxation on a company which is a resident of Belgium in the event of the
repurchase of its own shares or of the distribution of its assets.
ARTICLE XXIX: Entry into
force.—
1. This Agreement shall be approved in
accordance with the laws in force in each of the Contracting States. It shall
enter into force thirty days after the exchange of letters certifying that the
proper procedure was fulfilled in each Contracting State. The exchange of letters
shall take place at New Delhi.
2. The provisions of this Agreement shall have effect :
(a) In India, in respect of income derived
during any previous year beginning on or after the 1st day of January of the
calendar year in which the exchange of letters takes place;
(b) In Belgium :
(i) as respects all tax due at source on
income credited or payable on or after the 1st day of January of the calendar
year in which the exchange of letters takes place;
(ii) as respects all tax other than tax due at
source on income derived during any taxable period ending on or after the 31st
day of December of the said calendar year.
ARTICLE XXX:
Termination.--This Agreement shall continue in effect indefinitely but either
of the Contracting States may terminate it after a period of five years from
the date on which it enters into force, by giving to the other Contracting
State, through the diplomatic channels. Written notice of termination, provided
that such notice shall be given only on or before the 30th day of June in any
calendar year and in such event, this Agreement shall cease to be effective :
(a) In India, as respects income derived
during any "previous year" beginning on or after the 1st day of
January of the calendar year next following that in which the notice is given;
(b) In
Belgium :
(i) as respect all tax due at source on
income credited or payable on or after the 1st day of January of the calendar
year next following that in which the notice is given;
(ii) as respects all tax other than tax due
at source on income derived during any taxable period ending on or after the
31st day of December of the calendar year next following that in which the
notice is given.
In witness whereof the
undersigned, duly authorised thereto, have signed the present Agreement.
Done in duplicate at
Brussels this 7th day of February, 1974, one thousand nine hundred and
seventy-four in the Hindi, English, French and Netherlands languages all the
four texts having equal authenticity.
For the Government of
India For the Government of Belgium
(Sd.) K.B. Lall. (Sd.)
Van Elslande.
The Government of India
and the Government of Belgium Having entered into an Agreement for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to taxes on income. Have agreed, at the time of signing the said Agreement, on
the following provisions which shall constitute an integral part thereof :
(a) For the purposes of paragraph 1 of
Article 8, interest on funds directly connected with the operation of aircraft
in international traffic shall be regarded as income from the operation of such
aircraft; and the provisions of Article 11 shall not apply in relation to such
interest.
Further, notwithstanding
the provisions of Article 29, the provisions of paragraphs 1 and 2 of Article 8
shall have effect from the first day of January, 1967.
(b) The provisions of paragraph 3 of Article
8 shall not, in the case of India, affect the application of the provisions in
sub-sections (1) to (6) of section 172 of the Income-tax Act, 1961 to the
assessment of profits derived by a resident of Belgium from occasional shipping
or tramp steamers provided that where such resident claims, in accordance with
the provisions of sub-section (7) of the said section 172, an adjustment of his
tax liability in India on the basis of his total income of the previous year in
which the date of departure of the ship from the Indian port falls, the
provisions of paragraph 3 of Article 8 of the Agreement will be applied.
(c) The rate of tax provided by paragraph 2
of Article 10 has been fixed in consideration of the fiscal treatment presently
applicable under Belgium national law to dividends derived by a company which
is a resident of Belgium from permanent holdings in the share capital of
non-resident companies.
However, in the case of
any change of the Belgium national law in this respect affecting the tax
treatment of the dividend income in Belgium, the reduced rate of 15 per cent
provided in Article 10 would no longer apply.
(d) The credit referred to in sub-paragraph
(c) of paragraph 3 of Article 23 shall be given in an amount of not less than
20 per cent (instead of 15 per cent) in a case where a person, who is a
resident of Belgium, derives income by way of dividends, interest or royalties
which, in accordance with the provisions of this Agreement may be taxed in
India but which is at present exempted from taxation in India under the special
incentive measures designed to promote economic development in India contained
in section 10(15)(iv) and section 80K of the Income-tax Act, 1961 or which may,
in future, be exempted from taxation in India under special incentive measures
having a similar object, provided that an agreement to that effect is made
between the Governments of the Contracting States in respect of such special
measures.
(e) For the purposes of paragraph 4 of
Article 25 the term "competent authority" shall mean; in the case of
India the Chairman, Central Board of Direct Taxes, Government of India; and
in the case of Belgium,
the Director General of Direct Taxes.
In witness where of the
undersigned, duly authorised thereto, have signed the present Protocol.
Done at Brussels, in
duplicate, in the Hindi, English, French and Netherlands languages this 7th day
of February, 1974.
For the
Government of India For
the Government of Belgium
(Sd.) K.B. Lall (Sd.)
Van Elslande
Convention between the
Government of the Republic of India and the Government of the Federative
Republic of Brazil for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income
Notification No. GSR
381(E), dated 31 March, 1992
Whereas the annexed
Convention between the Government of the Republic of India and the Government
of the Federative Republic of Brazil for avoidance of double taxation and
prevention of fiscal evasion with respect of taxes on income has been ratified
and the Instruments of Ratification exchanged at Brasilia on 11th March, 1992,
as required by Article 28 of the said Convention;
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961) and section 24A of the Companies (Profits) Surtax Act, 1964 (7 of
1964), the Central Government hereby directs that all the provisions of the
said Convention shall be given effect to in the Union of India.
Convention between the
Government of the Republic of India and the Government of the Federative
Republic of Brazil for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income.
The Government of the
Republic of India and the Government of the Federative Republic of Brazil.
Desiring to conclude a
Convention for the avoidance of double taxation and the prevention of fiscal
evasion with respect of taxes on income.
Have agreed as follows:
ARTICLE 1: Personal
scope.--This Convention shall apply to persons who are residents of one or both
of the Contracting States.
ARTICLE 2: Taxes covered.—
(1) The taxes to which the Convention shall
apply are:
(a) In the case of Brazil:
the federal income-tax,
excluding the supplementary income-tax and the tax on activities of minor
importance; (hereinafter referred to as "Brazilian tax");
(b) in the
case of India:
(i) the income-tax including any surcharge thereon;
(ii) the
surtax; (hereinafter referred to as "Indian tax").
(2) The Convention shall also apply to any
identical or substantially similar taxes which are imposed after the date of
signature of the Convention in addition to, or in place of, the above-mentioned
taxes. The competent authorities of the Contracting States shall notify each
other of any substantial changes which have been made in their respective
taxation laws.
ARTICLE 3: General
Definitions.—
(1) For the purposes of this Convention,
unless the context otherwise requires:
(a) the term "nationals" means:
(i) all individuals possessing the nationality of a Contracting
State;
(ii) all legal persons, partnerships and
associations deriving their status as such from the law in force in a
Contracting State;
(b) the terms "a Contracting
State" and "the other Contracting State" mean Brazil or India,
as the context requires;
(c) the term "person", includes an
individual, a company and any other entity which is treated as a taxable unit
under the taxation laws in force in the respective Contracting States;
(d) the term "company" means any
body corporate or any entity which is treated as a body corporate for tax
purposes;
(e) the terms "enterprise of a
contracting State" and "enterprise of the other Contracting
State" mean respectively an enterprise carried on by a resident of a
Contracting State and an enterprise carried on by a resident of the other
Contracting State;
(f) the term "international
traffic" means any transport by a ship or aircraft operated by an
enterprise which has its place of effective management in a Contracting State,
except when the ship or aircraft is operated solely between places in the other
Contracting State;
(g) the term
"tax" means Brazilian tax or Indian tax, as the context requires;
(h) the term
"competent authority" means:
(i) in Brazil: the Minister of Finance, the
Secretary of Federal Revenue or their authorised representative;
(ii) in India: the Central Government in the
Ministry of finance (Department of Revenue) or their authorised representative.
(2) As regards the application of the
Convention by a Contracting State, any term not defined therein shall, unless
the context otherwise requires, have the meaning which it has under the law or
that State concerning the taxes to which the Convention applies.
ARTICLE 4: Fiscal
Domicile.—
(1) For the purposes of this Convention, the
term "resident of a Contracting State" means any person who, under
the law of that State, is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a similar nature.
(2) Where by reason of the provisions of
paragraph (1) an individual is a resident of both Contracting States, then his
status shall be determined as follows:
(a) he shall be deemed to be a resident of
the State in which he has a permanent home available to him; if he has a
permanent home available to him in both States, he shall be deemed to be a
resident of the State with which his personal and economic relations are closer
(centre or vital interests);
(b) if the State in which he has his centre
of vital interests cannot be determined, or if he has not a permanent home
available to him in either State, he shall be deemed to be a resident of the
State in which he has an habitual abode;
(c) if he has an habitual abode in both
States or in neither of them, he shall deemed to be a resident of the State of
which he is a national;
(d) if he is a national of both States or of
neither of them, the competent authorities of the Contracting States shall
settle the question by mutual agreement.
(3) Where by reason of the provisions of
paragraph (1) a person other than an individual is a resident of both
Contracting States, then it shall be deemed to be a resident of the State in
which its place of effective management is situated.
ARTICLE 5: Permanent
Establishment.—
(1) For the purposes of this Convention, the
term "permanent establishment" means a fixed place of business
through which the business of an enterprise is wholly or partly carried on.
(2) The term "permanent
establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a mine,
an oil or gas well, a quarry of other place of extraction of natural resources;
(g) a
building site or construction or assembly project which exists for more than
six months;
(h) an installation, drilling rig or ship
used for the exploration or exploitation of natural resources, but only if so
used for period of more than six months.
(3) Notwithstanding the preceding provisions
of this Article, the term "permanent establishment" shall be deemed
not to include;
(a) the use of facilities solely for the
purpose of storage or display of goods or merchandise belonging to the
enterprise;
(b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display;
(c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;
(d) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise or of
collecting information, for the enterprise;
(e) the maintenance of a fixed place of
business solely for the purpose of carrying on, for the enterprise, any other
activity of a preparatory or auxiliary character.
(4) Notwithstanding the provisions of
paragraphs 1 and 2, where a person--other than an agent of an independent
status to whom paragraph (5) applies--is acting on behalf of an enterprise and
has, and habitually exercises, in a Contracting State an authority to conclude
contracts in the name of the enterprise, that enterprise shall be deemed to
have a permanent establishment in that State in respect of any activities which
that person undertakes for the enterprise, unless the activities of such person
are limited to those mentioned in paragraph (3) which, if exercised through a
fixed place of business, would not make this fixed place of business a permanent
establishment under the provisions of that paragraph.
(5) An enterprise of a Contracting State
shall not be deemed to have a permanent establishment in the other Contracting
State merely because it carries on business in that other State through a
broker, general commission agent or any other agent of an independent status, provided that such
persons are acting in the ordinary course of their business. However, when the
activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise itself
or on behalf of that enterprise and other enterprises controlling, controlled
by, or subject to the same common control, as that enterprise, he will not be
considered an agent of an independent status within the meaning of this paragraph.
(6) The fact that a company which is a
resident of a Contracting State controls or is controlled by a company which is
a resident of the other Contracting State, or which carries on business in that
other State (whether through a permanent establishment or otherwise), shall not
of itself constitute either company a permanent establishment of the other.
ARTICLE 6: Income from
immovable property.—
(1) Income derived by a resident of a
Contracting State from immovable property (including income from agriculture or
forestry) situated in the other Contracting State may be taxed in that other
State.
(2) The term "immovable property"
shall have the meaning which it has under the law of the Contracting State in
which the property in question is situated. The term shall in any case include
property accessory to immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of general law
respecting landed property apply, usufruct of immovable property and rights to
variable or fixed payments as consideration for the working of, or the right to
work, mineral deposits, sources and other natural resources; ships and aircraft
shall not be regarded as immovable property.
(3) The provisions of Paragraph (1) shall
apply to income derived from the direct use, letting, or use in any other form
of immovable property.
(4) The provisions of Paragraphs (1) and (3)
shall also apply to the income from immovable property of an enterprise and to
income from immovable property used for the performance of independent personal
services.
ARTICLE 7: Business
profits.—
(1) The profits of an enterprise of a
Contracting State shall be taxable only in that State unless the enterprise
carries on business in the other Contracting State through a permanent
establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to that permanent establishment.
(2) Subject to the provisions of Paragraph
(3), where an enterprise of a Contracting 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.
(3) In determining the profits of a permanent
establisment, there shall be allowed as deductions expenses which are incurred
for the purposes of the permanent establishment, including executive and
general administrative expenses so incurred, in accordance with the provisions
of and subject to the limitations of the taxation laws of the Contracting State
concerned.
(4) No profits shall be attributed to a
permanent establishment by reason of the mere purchase by that permanent establishment
of goods or merchandise for the enterprise.
(5) Where profits include items of income
which are dealt with separately in other Articles of this Convention, then the
provisions of those Articles shall not be affected by the provisions of this
Article.
ARTICLE 8: Shipping and
Air transport.—
(1) Profits from the operation of ships or
aircraft in international traffic shall be taxable only in the Contracting
State in which the place of effective management of the enterprise is situated.
(2) If the place of effective management of a
shipping enterprise is aboard a ship, then it shall be deemed to be situated in
the Contracting State in which the home harbour of the ship is situated, or, if
there is no such home harbour, in the Contracting State of which the operator
of the ship is a resident.
(3) The provisions of Paragraph 1 shall also
apply to profits from the participation in a pool a joint business, or an
international operating agency.
(4) The term "operation of ships or
aircraft" shall mean business of transportation of persons, mail,
livestock or goods carried on by the owners or lessees or charterers of the
ships or aircraft, including the sale of tickets for such transportation on
behalf of other enterprises.
ARTICLE 9: Associated
enterprises.--Where,
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but by reason of those
conditions have not so accrued, may be included in the profits of that enterprise
and taxed accordingly.
ARTICLE 10: Dividends.—
(1) Dividends paid by a company which is a
resident of a Contracting State to a resident of the other Contracting State
may be taxed in that other State.
(2) However, such dividends may also be taxed
in the Contracting State of which the company paying the dividends is a
resident and according to the laws of that State, but if the recipient is a
company which is the beneficial owner of the dividends the tax so charged shall
not exceed 15 per cent of the gross amount of the dividends.
This paragraph shall not
affect the taxation of the company in respect of the profits out of which the
dividends are paid.
(3) The term "dividends" as used in
this Article means income from shares, "jouissance" shares or
"jouissance" rights, mining shares, founders shares or other rights,
not being debt-claims, participating in profits, as well as income from other
corporate rights which is subjected to the same taxation treatment as income
from shares by the laws of the State of which the company making the
distribution is a resident.
(4) The provisions of Paragraphs (1) and
(2) shall not apply if the beneficial owner of the dividends, being a resident
or a Contracting State, carries on business in the other Contracting State of which the company paying the
dividends is a resident, through a permanent establishment situated therein,
and the holding by virtue of which the dividends are paid is effectively
connected with such permanent establishment. In such case the provisions of
Article 7 shall apply.
(5) Where a resident of India has a permanent
establishment in Brazil, this permanent establishment may be subject to a tax
withheld at source in accordance with Brazilian law. However, such a tax cannot
exceed 15 per cent of the gross amount of the profits of that permanent
establishment determined after the payment of the corporate tax related to such
profits.
(6) Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company,
except in so far as such dividends are paid to a resident of that other State
or in so far as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment situated in that other
State, nor subject the company's undistributed profits to a tax on the
company's undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in
such other State.
ARTICLE 11: Interest.—
(1) Interest arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other State.
(2) However, such interest may also be taxed
in the Contracting State in which it arises and according to the laws of that
State, but if the recipient is the beneficial owner of the interest the tax so
charged shall not exceed 15 per cent of the gross amount of the interest.
(3) Notwithstanding the provisions of
Paragraphs (1) and (2):
(a) interest arising in a Contracting State
and paid to the Government of the other Contracting State, a political
sub-division thereof or any agency (including a financial institution) wholly
owned by that Government, or political sub-division shall be exempt from tax in
the first-mentioned State, unless sub-paragraph (b) applies;
(b) interest from securities, bonds or
debentures issued by the Government of a Contracting State, a political
sub-division thereof or any agency (including a financial institution) wholly
owned by that Government or political sub-division shall be taxable only in
that State.
(4) The term "interest" as used in
this Article means income from Government securities, bonds or debentures,
whether or not secured by mortgage and whether or not carrying a right to
participate in profits, and debt-claims of every kind as well as other income
assimilated to income from money lent by the taxation law of the Contracting
State in which the income arises.
(5) The provisions of Paragraphs (1) and (2)
shall not apply if the beneficial owner 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 and the
debt-claim in respect of which the interest is paid is effectively connected
with such permanent establishment. In such case the provisions of Articles 7
shall apply.
(6) The tax rate limitation provided for in
paragraph (2) shall not apply to interest arising in a Contracting State and
paid to a permanent establishment of an enterprise of the other Contracting
State which is situated in a third State.
(7) Interest shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a resident of that State. Where however, the
person paying the interest, whether he is a resident of a Contracting State or
not, has in a Contracting State a permanent establishment in connection with
which the indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment, then such interest shall be
deemed to arise in the State in which the permanent establishment is situated.
(8) Where, by a reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the interest, 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 beneficial owner in the absence of such relationship,
the provisions of this Article shall apply only to the last-mentioned amount.
In such case, the excess part of the payments shall remain taxable according to
the laws of each Contracting State, due regard being had to the other
provisions of this Convention.
ARTICLE 12: Royalties.—
(1) Royalties arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other State.
(2) However, such royalties may also be taxed
in the Contracting State in which they arise and according to the laws of that
State but if the recipient is the beneficial owner of the royalties, the tax so
charged shall not exceed:
(a) 25 per cent of the gross amount of the
royalties arising from the use or the right to use trade marks;
(b) 15 per
cent of the gross amount of the royalties in all other cases.
(3) The term "royalties" as used in
this Article means payments of any kind received as a consideration for the use
of, or the right to use, any copyright of literary, artistic or scientific work
(including cinematograph films, films or tapes for television or radio
broadcasting), any patent, trade mark, design or model, plan, secret formula or
process, or for the use of, or the right to use, industrial, commercial, or
scientific equipment, or for information concerning industrial, commercial or
scientific experience.
(4) The provisions of Paragraphs (1) and (2)
shall not apply if the beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the royalties arise, through a permanent establishment situated therein, and
the right or property in respect of which the royalties are paid is effectively
connected with such permanent establishment. In such cases, the provisions of
Article 7 shall apply.
(5) Royalties shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the royalties, whether he is a resident of a Contracting
State or not, has in a Contracting State a permanent establishment in
connection with which the obligation to pay the royalties was incurred, and
such royalties are borne by such permanent establishment, then such royalties
shall be deemed to arise in the State in which the permanent establishment is
situated.
(6) Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the royalties, having regard to the use,
right or information for which they are paid, exceeds the amount which would
have been agreed upon by the payer and the beneficial owner in the absence of
such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such cases, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Convention.
ARTICLE 13: Capital
gains.—
(1) Gains derived by a resident of a
Contracting State from the alienation of immovable property referred to in
Article 6, which is situated in the other Contracting State, may be taxed in
that other State.
(2) 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,
including such gains from the alienation of such a permanent establishment
(alone or with the whole enterprise), may be taxed in the other State. However,
gains from the alienation of ships or aircraft operated in international
traffic or movable property pertaining to the operation of such ships or
aircraft, shall be taxable only in the Contracting State in which the place of
effective management of the enterprise is situated.
(3) Gains from the alienation of any property
other than referred to in Paragraphs (1) and (2), may be taxed in both
Contracting States.
ARTICLE 14: Independent
personal services.—
(1) Income derived by a resident of a
Contracting State in respect of professional services or other activities of an
independent character shall be taxable only in that State, unless the
remuneration for such services or activities is paid by a resident of the other
Contracting State or is borne by a permanent establishment situated therein. In
such case, the income may be taxed in that other State.
(2) The term "professional services"
includes especially independent scientific, technical, literary, artistic,
educational or teaching activities of physicians, lawyers, engineers,
architects, dentists and accountants.
ARTICLE 15: Dependent
personal services.—
(1) Subject to the provisions of Articles 16,
18, 19 and 20, 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 the employment is exercised in the other Contracting
State. If the employment is so exercised, such remuneration as is derived
therefrom may be taxed in that other State.
(2) Notwithstanding the provisions of
Paragraph 1, remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting State shall be
taxable only in the first-mentioned State if:
(a) the recipient is present in the other
State for a period or periods not exceeding in the aggregate 183 days in the
fiscal year concerned, and
(b) the remuneration is paid by, or on
behalf of an employer who is not a resident of the other State, and
(c) the
remuneration is not borne by a permanent establishment which the
employer has in the other State.
(3) Notwithstanding the preceding provisions
of this Article, remuneration derived in respect of an employment exercised
aboard a ship or aircraft operated in international traffic may be taxed in the
Contracting State in which the place of effective management of the enterprise
is situated.
ARTICLE 16: Directors'
fees.--Directors' fees and other similar payments derived by a resident of a
Contracting State in his capacity as a member of the board of directors or of
any council of a company which is a resident of the other Contracting State may
be taxed in that other State.
ARTICLE 17: Artistes and
athletes.—
(1) Notwithstanding the provisions of
Articles 14 and 15, income derived by a resident of a Contracting State as an
entertainer, such as theatre, motion picture, radio or television artiste, or a
musician, or as an athlete, from his
personal activities, as such exercised in the other Contracting State, may be
taxed in that other State.
(2) Where income in respect of personal
activities exercised by an entertainer or an athlete in his capacity as such accrues
not to the entertainer or athlete himself but to another person, that income
may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer or athlete are
exercised.
(3) The provisions of Paragraphs 1 and 2 this
Article shall not apply to income derived from activities performed in a
Contracting State by an entertainer or an athlete if the visit to that
Contracting State is substantially supported by public funds of, or sponsored
by, the other Contracting State, including those of any political sub-division
or local authority.
ARTICLE 18: Pensions and
social security payments.—
(1) Subject to the provisions of Paragraph 2
of Article 10, pensions and other similar remuneration, alimony and annuities
paid to a resident of a Contracting State may be taxed in that State.
(2) However, such pensions and other similar
remuneration, alimony and annuities may also be taxed in the other Contracting
State if the payment is made by a resident of that other State or a permanent
establishment situated therein.
(3) Notwithstanding the provisions of
Paragraphs 1 and 2, Pensions paid and other payments made under a public scheme
which is part of the social security system of a Contracting State or a
political sub-division or a local authority thereof shall be taxable only in
that State.
(4) As used in the Article:
(a) the term "pensions and other
similar remuneration" means periodic payments made in consideration of
past employment or by way of compensation for injuries in connection with past
employment;
(b) the term "annuities" means
stated sums payable periodically at stated times during life, or during a
specified or ascertainable period of time, under an obligation to make the payments
in return for adequate and full consideration in money or money's worth.
ARTICLE 19: Governmental
payments.—
(1) Remuneration not including pensions, paid
by a Contracting State, a political sub-division or a local authority thereof
to an individual in respect of service rendered to that State, to a political
sub-division or local authority shall be taxable only in that State.
However, such remuneration
shall be taxable only in the Contracting State of which the recipient is a
resident if the services are rendered in that State and the recipient of the
remuneration is a resident of that State who--
(a) is a national of that State, or
(b) did not
become a resident of that State solely for the purpose of performing the
services.
(2) Pensions paid by, or out of funds created
by, a Contracting State, a political sub-division or a local authority thereof
to an individual in respect of services rendered to that State, to a political
sub-division or a local authority thereof may be taxed in that State.
(3) The provisions of Articles 15, 16 and 18
shall apply to remuneration and pensions paid in respect of services rendered
in connection with any business carried on by a Contracting State, a political
sub-division or a local authority thereof.
ARTICLE 20: Teachers and
researchers.—
(1) An individual who is or was immediately
before visiting a Contracting State a resident of the other Contracting State
and who, at the invitation of the Government of the first-mentioned State or of
a university, college, school, museum or other cultural institution of that
first-mentioned State or under an official programme of cultural exchange, is
present in that State for a period not exceeding two consecutive years solely
for the purpose of teaching, giving lectures or carrying out research at such
institution shall be exempt from tax in that State on his remuneration for such
activity, provided that the payment of such remuneration is derived by him from
outside that State.
(2) This Article shall not apply to income
from research if such research is undertaken primarily for the private benefit
of a specific person or persons.
ARTICLE 21: Students and
apprentices.—
(1) Payments which a student or business
apprentice who is or was immediately before visiting a Contracting State a
resident of the other Contracting State and who is present in the
first-mentioned State solely for the purpose of his education or training
receives for the purpose of his maintenance, education or training shall not be
taxed in that State, provided that such payments arise from sources outside
that State.
(2) In respect of grants, scholarships and
remuneration from employment not covered by Paragraph 1, a student or business
apprentice described in Paragraph 1 shall, in addition, be entitled during such
education or training to the same exemptions, reliefs or reductions in respect
of taxes available to residents of the State which he is visiting.
(3) The benefits of this Article shall extend
only for such period of time as may be reasonably or customarily required to
complete the education or training undertaken, but in no event shall any
individual have the benefits of this Article, for more than five consecutive
years from the date of his first arrival in that State.
ARTICLE 22: Other income.--Items
of income of a resident of a Contracting State, arising in the other
Contracting State and not dealt with in the foregoing Articles of this
Convention, may be taxed in that other State.
ARTICLE 23: Methods for
the elimination or double taxation.—
(1) Subject to the provisions of Paragraphs 3
and 4, where a resident of a Contracting State derives income which, in
accordance with the provisions of this Convention, may be taxed in the other
Contracting State, the first-mentioned State shall allow as a deduction from
the tax on the income of that resident an amount equal to the tax paid in that
other State.
Such deduction shall not,
however, exceed that part of the tax, as computed before the deduction is
given, which is attributable to the income which may be taxed in that other
State.
(2) For the deduction mentioned in Paragraph
1, the tax paid in that other State shall always be deemed to have been paid at
the rate of 25 per cent of the gross amount of interest referred to in
paragraph 2 of Article 11 and of royalties referred to in Paragraph 2(b) of
Article 12, provided, however, that the tax so deemed to have been paid shall
not exceed the tax leviable on that income in the first-mentioned State.
(3) Where a company which is a resident of a
Contracting State derives dividends which, in accordance with the provisions of
Paragraph 2 of Article 10, may be taxed in the other Contracting State, the
first-mentioned State shall exempt such dividends from tax.
(4) Where a resident of India derives profits
which, in accordance with the provisions of paragraph 5 of Article 10 may be
taxed in Brazil, India, shall exempt such profits from tax.
ARTICLE 24:
Non-discrimination.—
(1) Nationals of a Contracting State shall
not be subjected in the other Contracting State to any taxation or any
requirement connected therewith, which is other or more burdensome than the
taxation and connected requirements to which nationals of that other State in
the same circumstances are or may be subjected.
(2) The taxation on a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State
shall not be less favourably levied in that other State than the taxation
levied on enterprises of that other State carrying on the same activities. This
provision shall not be construed as obliging a Contracting State to grant to
residents of the other Contracting State any personal allowances, reliefs and
reductions for taxation purposes on account of civil status or family
responsibilities which it grants to its own residents.
(3) Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and
connected requirements to which other similar enterprises of the
first-mentioned State, the capital of which is wholly or partly owned or
controlled, directly or indirectly, by one or more residents of a third State,
are or may be subjected.
(4) In this Article, the term
"taxation" means taxes to which this Convention applies.
ARTICLE 25: Mutual
agreement procedure.—
(1) Where a resident of a Contracting State
considers that the actions of one or both of the Contracting States result or
will result for him in taxation not in accordance with this Convention, he may,
notwithstanding the remedies provided by the national laws of those States,
present his case to the competent authority of the Contracting State of which
he is a resident. This case must be presented within five years of the date of
receipt of notice of the action which gives rise to taxation not in accordance with this Convention.
(2) The competent authority shall endeavour,
if the objection appears to it to be justified and if it is not itself able to
arrive at an appropriate solution, to resolve the case by mutual agreement with
the competent authority of the other Contracting State, with a view to
avoidance of taxation not in accordance with the Convention. Any agreement
reached shall be implemented notwithstanding any time limits in the national
laws of the Contracting States.
(3) 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. They may also consult together for the elimination of double
taxation in cases not provided for in the Convention.
(4) The competent authorities of the
Contracting States may communicate with each other directly for the purpose of
reaching an agreement in the sense of the preceding paragraphs. When it seems
advisable in order to reach agreement to have an oral exchange of opinions,
such exchange may take place through a commission consisting of representatives
of the competent authorities of the Contracting States.
ARTICLE 26: Exchange of
information.—
(1) The competent authorities of the Contracting
State shall exchange such information (including documents) as is necessary for
carrying out the provisions of the Convention or of the domestic laws of the
Contracting States concerning taxes covered by the Convention, in so far as the
taxation there under is not contrary to the Convention in particular for the
prevention of fraud or evasion of such taxes. Any information received by a
Contracting State shall be treated as secret in the same manner as information
obtained under the domestic laws of that State. However, if the information is
originally regarded as secret in the transmitting State, it shall be disclosed
only to persons or authorities (including courts and administrative bodies)
involved in the assessment or collection of, the enforcement or prosecution in
respect of, or the determination of appeals in relation to, the taxes which are
the subject of the Convention. Such persons or authorities shall use the
information only for such purposes but may disclose the information in public court
proceedings or in judicial decisions. The competent authorities shall, through
consultation, develop appropriate conditions, methods and techniques concerning
the matters in respect of which such exchange of information shall be made,
including where appropriate, exchange of information regarding tax avoidance.
(2) In no case shall the provisions of
Paragraph 1 be construed so as to impose on a Contracting State, the
obligation:
(a) to carry out administrative measures at
variance with the laws or administrative practice of that or of the other
Contracting State;
(b) to supply information or documents which
are not obtainable under the laws or in the normal course of the administration
of that and of the other Contracting State;
(c) to supply information or documents which
would disclose any trade, business, industrial, commercial or professional
secret or trade process or information the disclosure of which would be
contrary to public policy.
ARTICLE 27: Diplomatic
agents and consular officers.--Nothing in this Convention shall affect the
fiscal privileges of diplomatic agents or consular officers under the general
rules of international law or under the provisions of special agreements.
ARTICLE 28: Entry into
force.—
(1) This Convention shall be ratified and the
instruments of ratification shall be exchanged at Brasilia as soon as possible.
(2) This Convention shall enter into force
upon the exchange of instruments of ratification and its provisions shall have
effect for the first time.
(a) in Brazil:
I. in respect of taxes withheld at
source, to amounts paid or credited on or after the first day of January of the
calendar year immediately following that in which the Convention enters into
force;
II. in respect of other taxes covered by the
Convention, for the taxable year beginning on or after the first day of January
of the calendar year immediately following that in which the Convention enters
into force.
(b) in India:
in respect of income
arising in any previous year beginning on or after the first day of April
immediately following the calendar year in which the Convention enters into
force.
ARTICLE 29:
Termination.--Either Contracting State may terminate this Convention after a
period of five years from the dare on which the Convention enters into force by
giving to the other Contracting State, through diplomatic channels, a written
notice of termination, provided that any such notice shall be given only on or
before the thirtieth day of June in any calendar year.
In such case, the Convention
shall cease to have effect:
(a) in Brazil:
I in respect of taxes withheld at
source, to amounts paid or credited on or after the first day of January of the
calendar year immediately following that in which the notice of termination is
given;
II in respect of other taxes, for taxable
years beginning on or after the first day of January of the calendar year
immediately following that in which the notice of termination is given.
(b) in India:
in respect of income
arising in any previous year beginning on or after first day of April
immediately following the calendar year in which the notice is given.
In witness whereof the
undersigned being duly authorised thereto have signed this Convention.
Done at New Delhi this
26th day of April, 1988, in duplicate in Hindi, Portuguese and English
languages, all three texts being equally authentic. In case of any divergence
of interpretation the English text shall prevail.
For the Government of the For the
Government of the
Republic of India Federative
Republic of Brazil
PROTOCOL
At the moment of the
signature of the Convention between the Republic of India and the Federative
Republic of Brazil for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income the undersigned, being duly
authorised thereto, have agreed upon the following provisions which constitute
an integral part of the Convention.
1. With reference to Article 3, Paragraph
1, item (q):It is understood that the terms "tax" shall not include any
amount which is payable in respect of any default or omission in relation to
the taxes to which this Convention applies or which represents a penalty
imposed relating to those taxes.
2. With reference to Article 12, Paragraph
3: It is understood that the provisions of Paragraph 3 of Article 12 shall
apply to payments of any kind to any person, other than payments to an employee
of a person making such payments, in consideration for the rendering of
assistance or services of a managerial, administrative, scientific, technical
or consultancy nature.
3. With reference to Article 20: It is
understood that the terms "museum or other cultural institution"
shall refer only to such organisations which have been approved in this regard
by the competent authority of the Contracting State concerned.
4. With reference to Article 24, Paragraph
2: It is understood that the provisions of Paragraph 5 of Article 10 are not in
conflict with the provisions of Paragraph 2 of Article 24.
5. It is understood that either Contracting
State may, at any time not earlier than ten years from the date on which the
Convention enters into force, seek to review any or all of its provisions, by
notice in writing through competent authority thereof to the competent
authority of the other Contracting State. The competent authorities shall,
within a period of six months thereafter, initiate appropriate proceedings for
such review.
In witness whereof the
undersigned being duly authorised thereto have signed this Protocol.
Done at New Delhi this,
26th day of April, 1988, in duplicate in Hindi, Portuguese and English
languages, all three texts being equally authentic. In case of any divergence
of interpretation, the English text shall prevail.
For the Government of the For
the Government of the
Republic of India, Federative
Republic of Brazil,
Joint Secretary to theGovernment of India
Agreement between the
Government of India and the Government of People's Republic of Bulgaria for the
avoidance of double taxation in respect of
taxes on income of merchant shipping
Notification No. 1727 [F.
No. 145/25/71-FTD], dated 15 April, 1977
G.S.R. 184(E).--Whereas
the annexed Agreement on Merchant Shipping has been concluded between the
Government of the Republic of India and the Government of the People's Republic
of Bulgaria;
And whereas Article 10 of
the said Agreement provides for the avoidance of double taxation in respect of
taxes on income derived from the carriage of cargo;
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961) and section 24A of the Companies (Profits) Sur-tax Act, 1964 (7 of
1964), the Central Government hereby directs that the provisions of the said
Article of the said Agreement shall be given effect to in the Union of India.
ANNEXURE
The Government of the
Republic of India and the Government of the People's Republic of Bulgaria,
inspired by the desire to develop the maritime
relations between the two countries, have agreed as follows:
ARTICLE I:
1. The co-operation between the two
countries in the field of maritime navigation shall be based on the principles
of sovereign equality, national interests and mutual advantage and assistance.
2. The provisions of this Agreement shall
be applicable to bilateral shipping between the two Contracting Parties.
ARTICLE II: In accordance
with Article 1 of this Agreement both parties shall contribute to the
establishment of a regular liner shipping service between the ports of the two
countries and develop mutual contacts among their organisation responsible for
shipping activities.
ARTICLE III: 1. The term
"vessel" of each party
indicates the vessel of
the mercantile marine sailing under the flag of that country in accordance with
its laws.
This term would exclude
the warships of both the parties.
2. The term "member
of the crew" of a merchant vessel indicates any person entered in its crew
list.
ARTICLE IV:
1. The parties agree to promote the
participation of their vessels in the carriage of all commercial cargoes
between the ports of the two countries on the principle of equality in all
matters, including the distribution of cargo, its transportation and freight
earnings over specified periods.
2. In case the shipping companies of one of
the Contracting Parties are not able to undertake the carriage in accordance
with paragraph 1, such carriage will be offered to the vessels of the other
Contracting Party. If the required tonnage is not available with the other
Contracting Party, the first party may use vessels of third countries for the
carriage of the share of agro of the Contracting Party.
3. The provisions of this Article do not
concern the right of the vessels, sailing under the flag of third countries to
participate in the sea traffic between the ports of the Contracting Parties.
ARTICLE V: Each party will
avoid competition with the fleet of the other in its trade with third countries
and desist from such activities as would prejudice the growth and utilisation
of the merchant fleet of the other party.
ARTICLE VI: Each party may
establish a general agency for its shipping companies in the territory of the
other party in accordance with the laws of that country.
ARTICLE VII:
1. The vessels of either party, their
crews, passengers and cargoes shall be admitted to the territorial waters and
the ports of the other party and shall be accorded the most-favoured-nation
treatment relating to their entry, stay and leaving of the ports and all the
facilities for maritime commercial navigation.
2. The provisions of the preceding
paragraph shall not apply to maritime activities legally protected for each
country such as coastal shipping, pilotage, seas fishing as well as to the
regulations regarding the entry and stay of foreigners.
ARTICLE VIII: The parties
shall endeavour to adopt, within the limits of their laws and port regulations,
all appropriate measures to facilitate and expedite maritime traffic, to
prevent delays to vessels and to expedite the carrying out of customs and other
formalities applicable at the ports.
ARTICLE IX: All ship
documents including those relating to nationality, registration, tonnage and
survey issued or recognised by one party shall be recognised by the other
party.
ARTICLE X:
1. All port dues and charges for services
rendered to the vessels operating under the provisions of the present Agreement
shall be regulated in accordance with the relevant laws applicable at the ports
of India and Bulgaria from time to time.
2. The parties agree not to collect
income-tax on the freight earnings on
cargoes carried by vessels from ports of one Contracting Party to the
ports of the other contracting party.
ARTICLE XI:
1. Each of the parties shall recognise the
seaman"s identity documents issued by the appropriate authorities of the
other party.
2. Holders of Seaman's identity documents
specified above shall be permitted to land on temporary shore leave without
visa during the stay of the vessel in the port of the other party, provided
that the crew list has been submitted to the concerned authorities in
accordance, with the laws and regulations in force in that port.
3. From the time of their landing to the
time of their returning to the vessel, the said persons shall be subject to
frontier and customs control and the laws and regulations for foreigners'
traffic in force in that port.
4. When a member of the crew possessing an
identity document and the prescribed permission, disembarks in the port of the
other party, due to illness, official reasons or other reasons, the latter
shall allow his being putting up at a hospital, his being repatriated or his
being moved to another port in order to be accommodated in another ship.
5. Holders of the seaman's identity
documents shall be permitted to enter, move through or leave by any means of
transport the territory of the other country in order to be able to join a
vessel of his country in a port of the other party or on way to his home
country with the approval of the appropriate authorities of the other party. In
all such cases, the seaman shall be required to have proper visa of the other
party which shall be granted by the concerned authorities within the shortest
possible time.
6. For the purpose of navigation, the
captain of the vessel staying in the port of the other party or a person
authorised by him shall be permitted to contact or visit the diplomatic or
consular official, or the representative of the shipping company by observing
the laws and regulations of the other country regarding the port regime and
foreigners' entry into that country.
ARTICLE XII: If a vessel
of one of the parties suffers shipwreck, runs a ground, is cast ashore or
suffers any other accident off the coast of the other party, the vessel, the
cargo, the crew and the passengers shall receive in the territory of the other
party the same assistance which is accorded to a national vessel, its cargo,
crew, and passengers. This will be subject to the respective laws and
international obligations of each of parties.
The loads, freight and
repairing of a vessel which has been damaged shall not be subject to customs
duties and taxes provided the same are taken out of the country within a
reasonable period or are not handed over for local consumption.
ARTICLE XIII: All payments
and expenses relating to sea transport between the two countries shall be
effected in accordance with the provisions of the payments, agreement in force
between the two countries from time to time.
ARTICLE XIV: Any
difficulty arising in the working of this Agreement shall be settled by
negotiation.
ARTICLE XV:
1. For the purpose of evaluating,
supervising and reviewing the overall working of this Agreement and resolving
any outstanding issues, the Contracting Parties agree to set up a Joint
Committee on shipping which will meet periodically. The Parties will nominate
their representatives to the Joint Committee.
2. State Shipping Corporation, "Water
Transport" Varna, from the Bulgarian side and Shipping Corporation of
India Limited, Bombay, from the Indian side are the organisations which are
authorised to solve the questions such as distribution of cargoes, fixation of
sailings and tariff and similar other questions for implementing the present
Agreement.
Each Party may, if
necessary, nominate any other organisation in place of above by notifying to
the other Party.
ARTICLE XVI: The present
Agreement shall be applicable in the territory of the Republic of India on the
one hand and in the territory of the People's Republic of Bulgaria on the other
hand.
ARTICLE XVII:
1. This Agreement shall take effect from
the date on which instruments of ratification are exchanged in New Delhi and
shall remain in force for a period of five years.
2. After the expiration of this period the
Agreement shall be automatically renewed for a one year period at a time unless
either of the Contracting Parties expresses its desire to renegotiate the
Agreement or any of its provisions by giving a written notice to the other party to that effect six months prior to the
expiry of any of the above-mentioned periods.
Done in New Delhi on this
the Eighteenth day of November, 1976 in two original copies in English, both
the texts being equally authentic.
For the Government of the
Republic of India For
the Government of the People's
(Sd.) Dr. G.S. Dhillon Republic
of Bulgaria
(Sd.) Ivan
Nedev.
Convention between the
Government of the Republic of India and the Government of the Republic of
Bulgaria for the avoidance
of double taxation and the prevention of fiscal evasion with respect to taxes
on income and on capital
Notification No. 10082 [F.
No. 503/2/87-FTD], dated 9-5-1996
Whereas the annexed
Convention between the Government of the Republic of India and the Government
of the Republic of Bulgaria for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and on capital has
come into force on the 23rd June, 1995, after the notification by both the
Contracting States to each other of the completion of the procedures required
under their laws for bringing into force of the said Convention in accordance
with Article 30 of the said Convention;
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961), the Central Government hereby directs that all the provisions of the
said Convention shall be given effect to in the Union of India.
The Government of the
Republic of India and the Government of the Republic of Bulgaria
Desiring to further expand
and facilitate mutual economic relations,
Have Resolved to conclude
a Convention for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income and on capital
and Have Agreed As
Follows:
Article 1
Personal scope
This Convention shall
apply to persons who are residents of one or both of the Contracting States.
Article 2
1. The taxes to which this Convention shall apply are:
(a) In India:
(i) the income-tax, including any surcharge thereon; and
(ii) the
wealth-tax;
(hereinafter referred to
as "Indian tax");
(b) In Bulgaria:
(i) the tax on total income;
(ii) the tax on profits; and
(iii) the tax
on buildings;
(hereinafter referred to
as "Bulgarian tax'").
2. This Convention shall also apply to any
identical or substantially similar taxes which are imposed by either
Contracting State after the date of signature of this Convention in addition
to, or in place of, the taxes of that Contracting State referred to in
paragraph 1 of this Article. The competent authorities of the Contracting States
shall notify each other of any substantial changes which are made in their
respective laws.
General definitions
1. In this Convention, unless the context otherwise requires:
(a) the term "India" means the
territory of India and includes the territorial sea and airspace above it, as
well as any other maritime zone in which India has sovereign rights, other
rights and jurisdiction, according to the Indian laws and in accordance with
International law;
(b) the term "Bulgaria" means, the
Republic of Bulgaria, and, when used in a geographical sense means the
territory over which it excercises its State sovereignty, as well as the
continental shelf and exclusive economic zone over which it exercises sovereign
rights and jurisdiction according to International law;
(c) the terms "Contracting State"
and "the other Contracting State" mean India or Bulgaria, as the
context requires;
(d) the term "tax" means Indian
tax or Bulgarian tax, as the context requires, but shall not include any amount
which is payable in respect of any default or omission in relation to the taxes
to which this Convention applies or which represents a penalty imposed relating
to those taxes;
(e) the term "person" shall have
the meaning assigned to it in the taxation laws in force in the respective
Contracting State;
(f) the term "company" means any
body corporate or any entity which is treated as a company or body corporate
under the taxation laws in force in the respective Contracting States;
(g) the terms "enterprise of a Contracting
State" and "enterprise of the other Contracting State" mean
respectively an enterprise carried on by a resident of a Contracting State and
an enterprise carried on by a resident of the other Contracting State;
(h) the term "competent authority"
means in the case of India, the Central Government in the Ministry of Finance
(Department of Revenue) or their authorized representative; and in the case of
Bulgaria -- the Minister of Finance or his authorized representative;
(i) the term "international traffic"
means any transport by a ship or aircraft operated by an enterprise of a
Contracting State, except when the ship or aircraft is operated solely between
places in the other Contracting State.
2. As regards the application of this
Convention by a Contracting State, any term not defined therein shall, unless
the context otherwise requires, have the meaning which it has under the law of
that State concerning the taxes to which the Convention applies.
Resident
1. For the purposes of this Convention, the term "resident
of a Contracting State" means:
(a) in the case of India, any person who,
under the laws of India, is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a similar nature;
(b) in the case of Bulgaria, any individual
who is national of Bulgaria, as well as any legal person which has its head
office in Bulgaria or is registered therein.
2.
(a) where by reason of the provisions of
paragraph 1 of this Article an individual is a resident of both Contracting
States, then he shall be deemed to be a resident of the State with which his
personal and economic relations are closer (centre of vital interests);
(b) if the Contracting State in which he has
his centre of vital interest cannot be determined, the competent authorities of
the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of
paragraph 1 of this Article, a person other than an individual is a resident of
both Contracting States, then it shall be deemed to be a resident of the State
in which its place of effective management is situated.
Permanent establishment
1. 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,
separately or together with other persons.
2. The term "permanent establishment" includes
especially:
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a factory;
(e) a
workshop;
(f) a mine,
an oil or gas well, a quarry or any other place of extraction of natural
resources;
(g) a
warehouse in relation to a person providing storage facilities for others;
(h) an
installation or structure used for the exploration or exploitation of natural
resources;
(i) a building site or construction,
installation or assembly project or supervisory activities in connection
therewith, where such site, projects or activities (together with other such
sites, projects or activities, if any) continue for a period of more than six
months:
Provided that for the
purpose of this paragraph an enterprise shall be deemed to have a permanent
establishment in a Contracting State and to carry on business through that
permanent establishment if it provides services or facilities in connection
with or supplies plant and machinery on hire, used or to be used in the
prospecting for, or extraction or production of mineral oils in the State.
3. Notwithstanding the preceding provisions
of this Article, the term "permanent establishment" shall not be
deemed to include:
(a) the use of facilities solely for the
purpose of storage, or display of goods or merchandise belonging to the
enterprise;
(b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display;
(c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;
(d) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise, or of
collecting information, for the enterprise;
(e) the maintenance of a fixed place of
business solely for the purpose of advertising, for the supply of information,
for scientific research, or for similar activities which have a preparatory or
auxiliary character, for the enterprise;
(f) the selling of goods or merchandise
belonging to the enterprises displayed in an occasional temporary fair or
exhibition in the process of closing down of such fair or exhibition;
(g) the maintenance of a fixed place of
business solely for any combination of activities mentioned in sub-paragraphs
(a) to (f), provided that overall activity of the fixed place of business
resulting from this combination is of a preparatory or auxiliary character.
However, the provisions of
sub-paragraphs (a) to (g) shall not be applicable where the enterprise
maintains any other fixed place of business in the other Contracting State for
any purposes other than the purposes specified in the said sub-paragraphs.
4. Notwithstanding the provisions of
paragraphs 1 and 2, where a person -- other than an agent of an independent
status to whom paragraph 5 applies -- is acting in a Contracting State on
behalf of an enterprise of the other Contracting State, that enterprise shall
be deemed to have a permanent establishment in the first-mentioned Contracting
State, if:
(a) he has, and habitually exercises in that
State an authority to conclude contracts on behalf of the enterprise, unless
his activities are limited to the purchase of goods or merchandise for the
enterprise;
(b) he has no such authority, but habitually
maintains in the first-mentioned State a stock of goods or merchandise from
which he regularly delivers goods or merchandise on behalf of the enterprise;
(c) he habitually secures orders in the
first-mentioned State wholly or almost wholly for the enterprise itself or for
the enterprise and other enterprises in which the first-mentioned enterprises
has a majority participation, or for the enterprise and other enterprises which
have a majority participation in the first-mentioned enterprise.
5. An enterprise of a Contracting State
shall not be deemed to have a permanent establishment in the other Contracting
State merely because it carries on business in that other State through a
broker, a general commission agent or any other agent of an independent status,
provided that such persons are acting in the ordinary course of their business.
6. The fact that a company which is a
resident of a Contracting State controls or is controlled by a company which is
a resident of the other Contracting State, or which carries on business in the
other State (whether through a permanent establishment or otherwise), shall not
of itself constitute either company a permanent establishment of the other.
Income from immovable
property
1. Income, derived by a resident of a
Contracting State from immovable property (including income from agriculture or
forestry) situated in the other Contracting State may be taxed in that other
State.
2. The term "immovable property"
shall have the meaning which it has under the laws of the Contracting State in
which the property in question is situated. The term shall in any case include
property accessory to immovable property, usufruct of immovable property and
rights to variable or fixed payments as consideration for the working of, or
the right to work, mineral deposits, sources and other natural resources.
Ships, boats and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall also
apply to income derived from the direct use, letting or use in any other form
of immovable property.
4. The provisions of paragraphs 1 and 3
shall also apply to the income from immovable property of an enterprise and to
income from immovable property used for the performance of independent personal
services.
Business profits
1. The profits of an enterprise of a
Contracting State shall be taxable only in that State unless the enterprise
carries on business in the other Contracting State through a permanent
establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State, as is
attributable to that permanent establishment.
2. Subject to the provisions of paragraph
3, where an enterprise of a Contracting 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.
3. In the determination of the profits of a
permanent establishment, there shall be allowed as deductions expenses which
are incurred for the purposes of the business of the permanent establishment
including executive and general administrative expenses so incurred, whether in
the State in which the permanent establishment is situated or elsewhere, in
accordance with the provisions of and subject to the limitation of the taxation
laws of that State.
4. No profits shall be attributed to a
permanent establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
5. For the purposes of the preceding
paragraphs, the profits to be attributed to the permanent establishment shall
be determined by the same method year by year unless there is good and
sufficient reason to the contrary.
6. Where profits include items of income
which are dealt with separately in other Articles of this Convention, then the
provisions of those Articles shall not be affected by the provisions of this
Article.
Air transport
1. Profits derived by an enterprise of a
Contracting State from the operation of aircraft in international traffic shall
be taxable only in that State.
2. The provisions of paragraph 1 shall also
apply to profits from the participation in a pool, a joint business or an
international operating agency.
3. The provisions of paragraphs 1 and 2
shall also apply where the enterprise has an office or agency in the other
State for the transportation of goods or persons. However, this shall apply
only to activities directly connected with the business of the operation of
aircraft in international traffic.
4. For the purposes of this Article,
interest on funds connected with the operation of aircraft in international
traffic shall be regarded as profits derived from the operation of such
aircraft, and the provisions of Article 12 shall not apply in relation to such
interest.
5. The term "operation of
aircraft" shall mean business of transportation by air of passengers,
mail, livestock or goods carried on by the owners or lessees or charterers of
aircraft, including the sale of tickets for such transportation on behalf of
other enterprises, the incidental lease of aircraft and any other activity
directly connected with such transportation.
Shipping
1. Income derived by an enterprise of a
Contracting State from the operation of ships in international traffic shall be
taxable only in that State.
2. Notwithstanding anything contained in
paragraph 1 of this Article and paragraph 2 of Article 10 of the Agreement on
merchant shipping, dated 18-11-1976 between the Government of the Republic of
India and the Government of the People's Republic of Bulgaria, income derived
by an enterprise of a Contracting State from the operation of ships in
international traffic from the ports of the other Contracting State to the
ports of third countries and from the ports of third countries to the ports of
the other Contracting State may be taxed in the other Contracting State, but
the tax imposed in that other Contracting State shall not exceed:
(a) 50 per cent of the tax otherwise imposed
by the taxation law of that other Contracting State; or
(b) 2.50 per
cent of the gross amount payable in respect of such operation of ships,
whichever is lower.
3. For the purposes of clause (b) of
paragraph 2 of this Article, the gross amount payable in respect of the
operation of ships shall mean the aggregate of the following amounts, namely:
(a) the gross amount paid or payable on
account of the carriage of passengers, livestock, mail or goods shipped at a
port or ports in the other Contracting State;
(b) the gross amount received in the other
Contracting State on account of carriage of passengers, livestock, mail or
goods shipped at a port of the third country;
(c) interest arising in the other
Contracting State on funds connected with the operation of ships in
international traffic;
(d) the gross amount payable on account of
the use, maintenance or rent of containers (including trailers and related
equipments for the transport of containers) in connection with the transport of
goods or merchandise in international traffic.
4. The provisions of paragraphs 1 and 2
shall also apply to profits from the participation in a pool, a joint business
or an international operating agency engaged in the operation of ships.
5. For the purposes of this Article:
(a) interest on funds connected with the operation
of ships in international traffic shall be regarded as income from the
operation of such ships and the provisions of Article 12 shall not apply in
relation to such interest; and
(b) income form the operation of ships
includes income derived from the use, maintenance or rental of containers
(including trailers and related equipments for the transport of containers) in
connection with the transport of goods or merchandise in international traffic.
Associated enterprises
1. Where:
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, than any profits which would, but for those
conditions, have accrued to one of the enterprises, but by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
Dividends
1. Dividends paid by a company which is
resident of a Contracting State to a resident of the other Contracting State
may be taxed in that other State.
2. However, such dividends may also be
taxed in the Contracting State of which the company paying the dividends is a
resident and according to the laws of that State, but if the recipient is the
beneficial owner of the dividends, the tax so charged shall not exceed 15 per
cent of the gross amount of the dividends.
This parargaph shall not
affect the taxation of the company in respect of the profits out of which the
dividends are paid.
3. The term "dividends" as used
in this Article means income from shares or other rights, not being
debt-claims, participating in profits, as well as income from corporate rights
which is subjected to the same taxation treatment as income from shares by the
laws of the State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishenmt situated therein or performs in that other State independent
personal services from a fixed base situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Article
7, or Article 15, as the case may be shall apply.
5. Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company,
except in so far as such dividends are paid to a resident of that other State
or so far as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated
in that other State, nor subject the company's undistributed profits to a tax
on the company's undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in
such other State.
Interest
1. Interest arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other State.
2. However, such interest may also be taxed
in the Contracting State in which it arises and according to the laws of that
State, if the recipient is the beneficial owner of the interest, the tax so
charged shall not exceed 15 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2,
(a) interest arising in a Contracting State
shall be exempt from tax in that State provided it is derived and beneficially
owned by:
(i) the Government, a political subdivision or a local authority
of the other Contracting State; or
(ii) the
Central Bank of the other Contracting State;
(b) interest arising in a Contracting State
shall be exempt from tax in that State if it is beneficially owned by a
resident of the other Contracting State and it is derived in connection with a
loan or credit extended or endorsed by:
(i) in the case of Bulgaria, the Foreign
Trade Bank to the extent such interest is attributable to financing of exports
and imports only;
(ii) in the case of India, the Export-Import
Bank of India (Exim Bank), to the extent such interest is attributable to
financing of exports and imports only;
(iii) any
institution of a Contracting State in charge of public financing of external
trade;
(iv) any other person provided that the loan
or credit is approved by the Government of the first-mentioned Contracting
State.
4. The term "interest" as used in
this Article means income form debt-claims of every kind, whether or not
secured by mortgage and whether or not carrying a right to participate in the
debtor's profits, and in particular, income from government securities and
income from bonds or debentures, including premiums and prizes attaching to
such securities, bonds or debentures. Penalty charges for late payments shall
not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner 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 case. In
such a base the provisions of Article 7 or Article 15, as the case may be,
shall apply.
6. Interest shall be deemed to arise in a
Contracting State when the payer is that Contracting State itself, a political
subdivision, a local authority thereof or a resident of that State. Where,
however, the person paying the interest, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the indebtedness on which the interest
is paid was incurred, and such interest is borne by such permanent
establishment or fixed base, then such interest shall be deemed to arise in the
Contracting State in which the permanent establishment or fixed base is
situated.
7. Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the interest, 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 beneficial owner in the absence of such
relationship, the provisions of this Article shall apply to the last-mentioned
amount. In such case, the excess part of the payments shall remain taxable
according to the laws of each Contracting State, due regard being had to the
other provisions of this Convention.
Royalties and fees for
technical services
1. Royalties and fees for technical
services arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such royalties and fees for
technical services may also be taxed in the Contracting State in which they
arise, and according to the laws of that State, but if the recipient is the
beneficial owner of the royalties, or fees for technical services, the tax so
charged shall not exceed:
(a) 15 per cent of the gross amount of the
royalties relating to copyrights of literary, artistic or scientific works,
other than cinematograph films or films or tapes used for radio or television
broadcasting; and
(b) 20 per cent of the gross amount of the
royalties in all other cases or fees for technical services.
3. The term "royalties" as used
in this Article means payments of any kind received as a consideration for the
use of, or the right to use, any copyright of literary, artistic or scientific
work including cinematograph films or films or tapes used for radio or
television broadcasting, any patent, trademark, design or model, plan, secret
formula or process, or for the use of, or the right to use, industrial,
commercial or scientific equipment, or for information concerning industrial,
commercial or scientific experience.
4. The term "fees for technical
services" as used in this Article means payments of any amount to any
person other than payments to an employee of a person making payments, in
consideration for the services of a managerial, technical or consultancy
nature, including the provision of services of technical or other personnel.
5. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the royalties or fees for technical
services, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical services
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the right, property or contract in respect of which the royalties or fees
for technical services are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or
Article 15, as the case may be, shall apply.
6. Royalties and fees for technical
services shall be deemed to arise in a Contracting State when the payer is that
State itself, a political subdivision, a local authority thereof, or a resident
of that State. Where, however, the person paying the royalties or fees for
technical services, whether he is a resident of a Contracting State or not, has
in a Contracting State a permanent establishment or a fixed base in connection
with which the liability to pay the royalties or fees for technical services
was incurred, and such royalties or fees for technical services are borne by
such permanent establishment or fixed base, then such royalties or fees for
technical service shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
Capital gains
1. Gains derived by a resident of a
Contracting State from the alienation of immovable property referred to in
Article 6 and situated in the other Contracting State may be taxed in that
other State.
2. 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 such
a permanent establishment (alone or together with the whole enterprise) or of
such fixed base, may be taxed in that other State.
3. Gains from the alienation of ships or
aircraft operated in international traffic, or movable property pertaining to
the operation of such ships or aircraft, shall be taxable only in the
Contracting State of which the alienator is resident.
4. Gains from the alienation of shares of
the capital stock of a company the property of which consists directly or
indirectly principally of immovable property situated in a Contracting State
may be taxed in that State.
5. Gains from the alienation of shares
other than those mentioned in paragraph 4 of a company which is a resident of a
Contracting State may be taxed in that State.
6. Gains from the alienation of any
property other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be
taxable only in the Contracting State of which the alienator is a resident.
Independent personal
services
1. Income derived by an individual, who is
a resident of a Contracting State from the performance of professional services
or other independent activities of a similar character shall be taxable only in
that State except in the following circumstances when such income may also be
taxed in the other Contracting State:
(a) if he has a fixed base regularly
available to him in the other Contracting State for the purpose of performing
his activities; in that case only so much of the income as is attributable to
that fixed base may be taxed in that other State; or
(b) if his stay in the other Contracting
State is for a period or periods amounting to or exceeding in the aggregate 183
days in the relevant "previous year" or "year of income",
as the case may be; in that case, only so much of the income as is derived from
his activities performed in that other State may be taxed in that other State.
2. The term "professional
services" includes independent scientific, literary, artistic, educational
or teaching activities as well as the independent activities of physicians,
surgeons, lawyers, engineers, architects, dentists and accountants.
Dependent personal
services
1. Subject to the provisions of Articles
17, 18, 19, 20, 21 and 22, 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 the employment is exercised in the other
Contracting State. If the employment is so exercised, such remuneration as is
derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of
paragraph 1, remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting State shall be
taxable only in the first-mentioned State if:
(a) the recipient is present in the other
State for a period or periods not exceeding in the aggregate 183 days in the
relevant "previous year" or "year of income", as the case
may be; and
(b) the remuneration is paid by, or on
behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a
permanent establishment or a fixed base which the employer has in the other
State.
3. Notwithstanding the preceding provisions
of this Article, remuneration derived in respect of an employment exercised
aboard a ship or aircraft operated in international traffic by an enterprise of
a Contracting State may be taxed in that State.
Directors' fees
Directors' fees and
similar payments derived by a resident of a Contracting State in his capacity
as member of the Board of Directors of a company which is a resident of the
other Contracting State may be taxed in that other State.
Income earned by
entertainers and athletes
1. Notwithstanding the provisions of
Articles 15 and 16, income derived by a resident of a Contracting State as an
entertainer such as a theatre, motion picture, radio or television artiste or a
musician or as an athlete, from his personal activities as such exercised in
the other Contracting State may be taxed in that other State.
2. Where income in respect of personal
activities exercised by an entertainer or athlete in his capacity as such
accrues not to the entertainer or athlete himself but to another person, that
income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed
in the Contracting State in which the activities of the entertainer or athlete
are exercised.
3. Notwithstanding the provisions of
paragraph 1, income derived by an entertainer or an athlete who is a resident
of a Contracting State, from his personal activities as such, exercised in the
other Contracting State, shall be taxable only in the first-mentioned
Contracting State, if the activities in the other Contracting State are
performed within the framework of cultural exchange between the two Contracting
States, or are supported wholly or substantially, from the public funds of the
first-mentioned Contracting State, including any of its political subdivisions
or local authorities.
4. Notwithstanding the provisions of
paragraph 2 and Articles 7, 15 and 16, where income in respect of personal
activities exercised by an entertainer or an athlete in his capacity as such in
a Contracting State accrues not to the entertainer or athlete himself but to
another person, that income shall be taxable only in the other Contracting
State, if that other person is supported wholly or substantially from the
public funds of that other State, including any of its political subdivisions
or local authorities.
Remuneration and pensions
in respect of Government Service
1. (a) Remuneration, other than a pension, paid by a Contracting
State or a political
subdivision or a local
authority thereof to an individual in respect to services rendered to that
State or subdivision or authority shall be taxable only in that State.
(b) However, such remuneration shall be
taxable only in the other Contracting State if the services are rendered in
that other State and the individual is a resident of that State, who:
(i) is a national of that State; or
(ii) did not
become a resident of that State solely for the purpose of rendering the
services.
2. (a) Any
pension paid by, or out of funds created by, a Contracting State or a political
subdivision or a local authority thereof to an individual in respect of
services rendered to that State or subdivision or authority shall be taxable
only in that State.
(b) However, such pension shall be taxable
only in the other Contracting State if the individual is a resident of, and a
national of that other State.
3. The provisions of Articles 16, 17 and 20
shall apply to remuneration and pensions in respect of services rendered in
connection with a business carried on by a Contracting State or a political
subdivision or local authority thereof.
Non-Government pensions
and annuities
1. Any pension, other than a pension
referred to in Article 19, or any annuity derived by a resident of a
Contracting State from sources within the other Contracting State may be taxed
only in the first-mentioned Contracting State.
2. The term "pension" means a
periodic payment made in consideration of past services or by way of
compensation for injuries received in the course of performance of services.
3. The term "annuity" means a
stated sum payable periodically at stated times during life or during a
specified or ascertainable period of time, under an obligation to make the
payments in return for adequate and full consideration in money or money's
worth.
Payments received by
students and apprentices
1. A student or business apprentice who is
or was a resident of one of the Contracting States immediately before visiting
the other Contracting State and who is present in that State solely for the
purpose of his education or training, shall be exempt from tax in that other
State on:--
(a) payments made to him by persons residing
outside that other State for the purposes of his maintenance, education or
training; and
(b) remuneration from employment in that
other State, in an amount not exceeding Lv. 1500 or its equivalent in Indian
currency during any "previous year" or "year of income", as
the case may be, provided that such employment is directly related to his
studies or is undertaken for the purposes of his maintenance.
2. The benefits of this Article shall
extend only for such period of time as may be reasonable or customarily
required to complete the education or training undertaken, but in no event
shall any individual have the benefits of this Article, for more than five
consecutive years from the date of his first arrival in that other Contracting
State.
Payments received by
professors, teachers and research scholars
1. A professor or teacher who is or was a
resident of one of the Contracting States immediately before visiting the other
Contracting State for the purpose of teaching or engaging in research, or both,
at a university, college, school or other approved institution in that other
Contracting State shall be exempt from tax in that other State on any remuneration
for such teaching or research for a period not exceeding two years from the
date of his arrival in that other State.
2. This paragraph shall not apply to income
from research if such research is undertaken primarily for the private benefit
of a specific person or persons.
3. For the purpose of this Article and
Article 21, an individual shall be deemed to be a resident of a Contracting
State if he is 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 "year of income".
4. For the purposes of paragraph 1,
"approved institution" means an institution which has been approved
or established by the competent authority of the concerned Contracting State.
Other income
1. Subject to the provisions of paragraphs
2 and 3 items of income of a resident of a Contracting State, wherever arising,
which are not expressly dealt with in the foregoing Articles of this Convention
shall, be taxable only in that Contracting State.
2. The provisions of paragraph 1 shall not
apply to income, other than income from immovable property as defined in
paragraph 2 of Article 6, if the recipient of such income, being a resident of
a Contracting State, carries on business in the other Contracting State through
a permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the right
or property in respect of which the income is paid is effectively connected
with such permanent establishment or fixed base. In such case, the provisions
of Article 7 or Article 15, as the case may be, shall apply.
3. Notwithstanding the provisions of
paragraphs 1 and 2, items of income of a resident of a Contracting State not
dealt with in the foregoing Articles of this Convention and arising in the
other Contracting State may be taxed in that other State.
Capital
1. Capital represented by immovable
property referred to in Article 6, owned by a resident of a Contracting State
and situated in the other Contracting State, may be taxed in that other State.
2. Capital represented by 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 by
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, may be taxed in that other State.
3. Capital represented by ships or aircraft
operated in international traffic and by movable property pertaining to the
operation of such ships or aircraft, shall be taxable only in the Contracting
State of which the enterprise owning such property is a resident.
4. All other elements of capital of a
resident of a Contracting State may be taxed in the Contracting State in which
such elements of capital are situated.
Elimination of double
taxation
1. The laws in force in either of the
Contracting States shall continue to govern the taxation of income or capital
in the respective Contracting State except where provisions to the contrary are
made in this Convention.
2. In both the Contracting States, double taxation shall be
avoided in the following manner:
(a) where a resident of a Contracting State
derives income or owns capital which, in accordance with the provisions of this
Convention, may be taxed in the other Contracting State, the first-mentioned
State shall, subject to the provisions of sub-paragraph (b) of this paragraph,
exempt such income or capital from tax but may, in calculating tax on the
remaining income or capital of that person, apply the rate of tax which would
have been applicable if the exempted income or capital had not been so
exempted;
(b) either of the Contracting States when
imposing taxes on its residents may include in the tax base upon which such
taxes are imposed the items of income which according to the provisions of
Articles 9, 11, 12 and 13 of this Convention may also be taxed in the other
State but shall allow as a deduction from the amount of tax computed on such a
base an amount equal to the tax paid in the other Contracting State. Such deduction
shall not, however, exceed that part of tax, leviable by the first-mentioned
State, as computed before the deduction is given, which is appropriate to the
income which, in accordance with the provisions of Articles 9, 11, 12 and 13 of
this Convention may be taxed in the other State.
3. For the purposes of sub-paragraph (b) of
paragarph 2 the term "tax paid in the other Contracting State" shall
be deemed to include any amount which would have been payable as tax but for
any relief by way of deduction allowed in computing the taxable income or an
exemption or a reduction of tax or otherwise under the laws relating to
taxation of income in force in that other Contracting State.
Non-discrimination
1. The nationals of a Contracting State
shall not be subjected in the other Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which nationals of that other State in
the same circumstances and under the same conditions are or may be subjected.
2. The term "nationals" means:
(a) All individuals possessing the nationality of a Contracting
State;
(b) All legal persons, partnerships and
associations deriving their status as such from the laws in force in a
Contracting State.
3. The taxaton on a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State
shall not be less favourably levied in that other State than the taxation
levied on enterprises of that other State carrying on the same activities in
the same circumstances or under the same conditions. This provision shall not
be construed as preventing a Contracting State from charging the profits of a
permanent establishment which an enterprise of the other Contracting State has
in the first-mentioned State at a rate of tax which is higher than that imposed
on the profits of a similar enterprise of the first-mentioned Contracting
State, nor as being not in accordance with the provisions of paragraph 3 of Article
7 of this Convention.
4. Nothing in this Article shall be
construed as obliging a Contracting State to grant to non-residents of that
State any personal allowances, reliefs, reductions and deductions for taxation
purposes which are by law available only to persons who are so resident.
5. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of that
first-mentioned State are or may be subjected in the same circumstances and
under the same conditions.
6. In this Article the term "taxation" means taxes
which are subject of this Convention.
Mutual agreement procedure
1. Where a resident of a Contracting State
considers that the actions of one or both of the Contracting States result or
will result for him in taxation not in accordance with this Convention, he may,
notwithstanding the remedies provided by the national laws of these States,
present his case to the competent authority of the Contracting State of which
he is a resident. This case must be presented within three years of the date of
receipt of notice of the action which gives rise to taxation, not in accordance
with the Convention.
2. The competent authority shall endeavour,
if the objection appears to it to be justified and if it is not itself able to
arrive at an appropriate solution, to resolve the case by mutual agreement with
the competent authority of the other Contracting State with a view to avoidance
of taxation not in accordance with the Convention. Any agreement reached shall
be implemented notwithstanding any time limits in the national laws of the
Contracting States.
3. 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. They may also consult together for the elimination of double
taxation in cases not provided for in this Convention.
4. The competent authorities of the Contracting
States may communicate with each other directly for the purpose of reaching an
agreement in the sense of the preceding paragraphs. When it seems advisable in
order to reach agreement to have an oral exchange of opinions, such exchange
may take place through a Commission consisting of representatives of the
competent authorities of the Contracting States.
Exchange of information
1. The competent authorities of the
Contracting States shall exchange such information (including documents) as is
necessary for carrying out the provisions of the Convention or of the domestic
laws of the Contracting States concerning taxes covered by the Convention
insofar as the taxation there under is not contrary to the Convention, in
particular for the prevention of fraud or evasion of such taxes. Any
information received by a Contracting State shall be treated as secret in the
same manner as information obtained under the domestic laws of that State.
However, if the information is originally regarded as secret in the
transmitting State, it shall be disclosed only to persons or authorities
(including courts and administrative bodies) involve in the assessment or
collection of, the enforcement or prosecution in respect of, or the
determination of appeals in relation to, the taxes which are subject of the
Convention. Such persons or authorities shall use the information only for such
purposes but may disclose the information in public court proceedings or in
judicial decisions. The competent authorities shall, through consultation,
develop appropriate conditions, methods and techniques concerning the matters
in respect of which such exchange of information shall be made, including,
where appropriate, exchange of information regarding tax avoidance.
2. The exchange of information or documents
shall be either on a routine basis or on request with reference to particular
case or both. The competent authorities of the Contracting States shall agree
from time to time on the list of the information or documents which shall be
furnished on a routine basis.
3. In no case shall the provisions of
paragraph 1 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at
variance with the laws or administrative practice of that or of the other
Contracting State;
(b) to supply information or documents which
are not obtainable under the laws or in the normal course of the administration
of that or of the other Contracting State;
(c) to supply information or documents which
would disclose any trade, business, industrial, commercial or professional
secret or trade process, or information, the disclosure of which would be
contrary to public policy (ordre public).
Diplomatic and consular
officials
Nothing in this Convention
shall affect the fiscal privileges of diplomatic or consular officials under
the general rules of international law or under the provisions of special
agreements.
Entry into force
Each of the Contracting
States shall notify to the other the completion of the procedures required by
its law for the bringing into force of this Convention. This Convention shall
enter into force on the date of the latter of these notifications and shall
thereupon have effect:
(a) In India:
(i) in respect of income arising in any
previous year beginning on or after the first day of April next following the
calendar year in which the Convention enters into force; and
(ii) in respect of capital which is held on
the last day of any previous year beginning on or after the first day of April
next following the calendar year in which the Convention enter into force; and
(b) In Bulgaria:
(i) in respect of income arising in any
year of income beginning on or after the first day of January next following
the calendar year in which the Convention enters into force; and
(ii) in respect of capital which is held on
the last day of any year of income beginning on or after the first day of
January next following the calendar year in which the Convention enters into
force.
Termination
This Convention shall
remain in force indefinitely but either of the Contracting State may, on or
before the thirtieth day of June in any calendar year beginning after the
expiration of a period of five years from the date of its entry into force,
give to the other Contracting State through diplomatic channels, written notice
of termination. In such event, the Convention shall cease to have effect:
(a) In India:
(i) in respect of income arising in any
previous year beginning on or after the first day of April next following the
calendar year in which the notice of termination is given; and
(ii) in respect of capital which is held on
the last day of any previous year beginning on or after the first day of April
next following the calendar year in which the notice of termination is given.
(b) In Bulgaria:
(i) in respect of income arising in any
year of income beginning on or after the first day of January next following
the calendar year in which the notice of termination is given; and
(ii) in respect of capital which is held on
the last day of any year of income beginning on or after the first day of
January next following the calendar year in which the notice of termination is
given.
In witness whereof the
undersigned, being duly authorised thereto, have signed the present Convention.
Done in duplicate at Sofia
on this 26th day of May of one thousand nine hundred and ninety four in Hindi,
Bulgarian and English languages, all the texts being equally authentic. In case
of divergence between any of the two texts, the English text shall prevail.
Sd/- Sd/-
For the Government of the For the
Government of the
Republic of
India Republic
of Bulgaria
PROTOCOL
At the signing today of
the Convention between the Government of the Republic of India and the
Government of the Republic of Bulgaria for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income and on
capital, the undersigned have agreed upon the following provisions which shall
form an integral part of the Convention:
1. To Article 7 (Business
Profits):
(a) In respect of paragraph 1, the profits
attributable to a permanent establishment which an enterprise of a Contracting
State has in the other Contracting State shall include profits directly or
indirectly attributable to the permanent establishment and in particular shall
include profits of the enterprise from the sales in that other State of goods
or merchandise of the same or similar kind as those sold through the permanent
establishment.
(b) In respect of paragraph 3, it is agreed
that while determining the profits of a permanent establishment, no deduction
shall be allowed in respect of amounts, if any, paid (otherwise than towards
reimbursement of actual expenses) by the permanent establishment to the head
office of the enterprise or any of its other offices, by way of royalties, fees
or other similar payments in return for the use of patents, know-how or other
rights, or by way of commission or other charges for specific services
performed or for management or, except in the case of a banking enterprise, by
way of interest on money lent to the permanent establishment. Likewise, no
account shall be taken, in the determination of the profits of a permanent
establishment, for amounts charged (otherwise that towards reimbursement of
actual expenses), by the permanent establishment to the head office of the
enterprise or any other of its offices, by way of royalties, fees or other
similar payments in return for the use of patents , know-how or other rights,
or by way of commission or other charges, for specific services performed or
for the management or, except in the case of a banking enterprise, by way of
interest on money lent to the head office of the enterprise or any of its other
offices.
2. To Article 12
(Interest):
In respect of paragraph
3(a)(ii), it is understood that the Central Bank in the case of India means the
Reserve Bank of India.
3. To Article 26
(Non-discrimination):
In respect of paragraph 3,
it is understood that a Contracting State may not exercise in respect of a
resident of the other Contracting State a higher or more burdensome taxation
that the taxation which that State would exercise in respect of a resident of a
third State.
In witness whereof the
undersigned being duly authorized thereto, have singed the present Protocol.
Done in duplicate at Sofia
on this 26th day of May of one thousand nine hundred and ninety-four in the
Hindi, Bulgarian and English languages, all the texts being equally authentic.
In case of divergence between any of the two texts, the English text shall
prevail.