Agreement between the
Republic of India and the Socialist Republic of Vietnam for the avoidance of
double taxation and the prevention of fiscal evasion with respect to taxes on
income
Notification No. 9758 [F.
No. 503/7/91-FTD], dated 28-4-1995
Whereas the annexed
Agreement between the Government of the Republic of India and the Government of
the Socialist Republic of Vietnam for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income has come into force
on the 2nd day of February, 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 Agreement in accordance with 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), the Central Government hereby directs that all the provisions of the
said Agreement shall be given effect to in the Union of India.
The Government of the
Republic of India and The Government of the Socialist Republic of Vietnam,
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:
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 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 all taxes imposed on total income or on elements of income,
including taxes on gains from the alienation of movable or immovable property,
taxes on the total amounts of wages or salaries paid by enterprises.
3. The existing taxes to
which the Agreement shall apply are:
(a) in India:
the income-tax including any surcharge
thereon;
(hereinafter referred to as "Indian
tax");
(b) in Vietnam:
(i) the personal income-tax;
(ii) the
profit tax; and
(iii) the
profit remittance tax;
(hereinafter referred to
as" Vietnamese tax").
4. The Agreement shall
also apply to any identical or substantially similar taxes which are 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
notify each other of 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 or the U.N. Convention on the Law of the Sea;
(b) the term "Vietnam" means the Socialist Republic of
Vietnam; when used in a geographical sense, it means all its national
territory, including its territorial sea and any area beyond and adjacent to
its territorial sea, within which Vietnam, by Vietnamese legislation and in
accordance with international law, has sovereign rights of exploration for and
exploitation of natural resources of the sea bed and its sub-soil and
superjacent watermass;
(c) the terms "a Contracting State" and "the other
Contracting State" mean India or Vietnam as the context requires;
(d) the term "company" means any body corporate or any
entity which is treated as a company or body corporate under the taxation law
in force in the respective Contracting States;
(e) the term "competent authority" means:
(i) in the case of India, the Central
Government in the Ministry of Finance (Department of Revenue) or their
authorized representative, and
(ii) in the
case of Vietnam, the Minister of Finance or his authorized representative;
(f) 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;
(g) the term "fiscal year" means:
(i) in the case of India, "previous
year" as defined under section 3 of the Income-tax Act, 1961, and
(ii) in the
case of Vietnam, the accounting year comprising of a twelve-month period;
(h) 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;
(i) the term "national" means any individual,
possessing the nationality of a Contracting State and any legal person,
partnership or association deriving its status from the laws in force in the
Contracting State;
(j) the term "persons" includes an individual, a
company, a body of persons and any other entity which is treated as a taxable
unit under the taxation laws in force in the respective Contracting States;
(k) the term "tax" means Indian tax or Vietnamese 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.
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 liable to
tax therein by reason of his domicile, residence, place of management, place of
registration 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 of vital interests);
(b) if the State in which he has his centre of vital interests
cannot be determined, or if he has no 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 be 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 Agreement, the term "permanent
establishment" means a fixed place of business through which the business
of the 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; and
(h) a building site or construction or
assembly project or supervisory activities in connection therewith; but only
where such site, project or activity continues for a 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, display or occasional 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,
display or occasional delivery;
(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 paragraph 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 Contacting 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 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, 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, 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 2 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 also be taxed in the other State but only so much of them as is
attributable directly or indirectly to that permanent establishment.
The words "directly
or indirectly" mean, for the purposes of this Article, that where a
permanent establishment takes an active part in negotiating, concluding or
fulfilling contracts entered into by the enterprise, then notwithstanding that
other parts of the enterprise have also participated in those transactions,
there shall be attributed to the permanent establishment that proportion of
profits of the enterprise arising out of those contracts as the contribution of
the permanent establishment to those transactions bears to that of the enterprise
as a whole.
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 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
limitations of the tax laws of that State.
4. Nothing in this Article
shall affect the application of any law of a Contracting State relating to the
determining of the tax liability of a person in cases where information is not
available to the competent authority of that State in order to determine the
profits to be attributed to a permanent establishment, provided that law shall
be applied consistently with the principles of this Article.
5. 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 contained in this Article.
6. 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.
7. 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.
8. 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. Profits derived by an enterprise of a Contracting State from
the operation of ships or aircraft in international traffic shall be taxable
only in that State.
2. For the purposes of
this Article, profits from the operation of ships or aircraft in international
traffic include:
(a) income from the lease of ships or aircraft; and
(b) profits from the use, maintenance or
rental of containers (including trailers and related equipment for the
transport of containers);
where such lease or such
use, maintenance or rental, as the case may be, is incidental to the operation
of ships or aircraft in international traffic.
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. For the purposes of
this Article, interest on funds connected with the operation of ships or
aircraft in international traffic earmarked for the purpose of payments of all
kinds of wages and maintenance of ships or aircraft and their crew shall be
regarded as income or profits derived from the operation of such ships or
aircraft and the provisions of Article 11 shall not apply in relation to such
interest.
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 enterprise, but, by the 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
the beneficial owner of the dividends, the tax so charged shall not exceed 10
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 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 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 the 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 such
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;
(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 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.
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 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.--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 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
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.
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 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
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 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 Agreement.
ARTICLE 13: Technical
fees.--1. Technical fees arising in a Contracting State which are derived by a
resident of the other Contracting State may be taxed in that other State.
2. However, such technical
fees 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 technical fees, the tax so charged shall not exceed 10 per cent of
the gross amount of the technical fees.
3. The term
"technical fees" as used in this Article means payments of any kind
to any person, other than to an employee of the person making the payments, in
consideration for any services of a technical, managerial or consultancy
nature.
4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the technical
fees, being a resident of a Contracting State carries on business in the other
Contracting State in which the technical fees arise through a permanent
establishment situated therein, or performs in that other State independent
personal services, and the technical fees are effectively connected with such
permanent establishment or such services. In such case, the provisions of
Article 7 or Article 15, as the case may be, shall apply.
5. Technical fees 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 statutory body thereof, or a
resident of that State. Where, however, the person paying the technical fees,
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 technical fees was incurred, and such technical fees are borne by that
permanent establishment, then such technical fees shall be deemed to arise in
the Contracting State in which the permanent establishment is situated.
6. Where, by reason of a
special relationship between the payer and the recipient or between both of
them and some other person, the amount of the technical fees paid, exceeds for
whatever reason, 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 law of each
Contracting State due regard being had to the other provisions of this
Agreement.
ARTICLE 14: 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 share 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 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 15: Independent
personal services.--1. Income derived by a resident of a Contracting State in
respect 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 Contracting 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
fiscal year concerned; 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 16: 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 fiscal year; 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 shall be taxable only in that
State.
ARTICLE 17: Directors'
fees.--Directors' 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 may be taxed in that
other State.
ARTICLE 18: 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 artists, 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. While 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. 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 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 the other State, including any of its political
sub-divisions or local authorities.
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-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 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 sub-division or a local authority thereof.
ARTICLE 20: 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 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's worth.
ARTICLE 21: 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 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, in an
amount not exceeding US $2000 or its equivalent in respective currencies during
any fiscal year, as the case may be, 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 22: 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 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
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: Other income.--1.
Subject to the provisions of paragraph 2, items of income of a resident of a
Contracting State, wherever arising, which are not expressly dealt with in the
foregoing Articles of this Agreement, shall be taxable only in that Contracting
State.
2. The provisions of
paragraph 1 shall not apply to the 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 Agreement
and arising in other Contracting State may also be taxed in that other State.
ARTICLE 24: Avoidance of
double taxation.--1. The laws in force in either of the Contracting States will
continue to govern the taxation of income in the respective Contracting States
except where provisions to the contrary are made in this Agreement.
2. Where a resident of a
Contracting State derives income which, in accordance with the provisions of
this Agreement, may be taxed in the other Contracting State, the
first-mentioned Contracting State shall allow as a deduction from the tax on
the income of that resident an amount equal to the income-tax paid in the other
Contracting State whether directly or by deduction. Such deduction shall not,
however, exceed that part of the income-tax (as computed before the deduction
is given) in the first-mentioned Contracting State which is attributable to the
income which may be taxed in the other Contracting State.
3. The tax paid in the other
Contracting State mentioned in paragraph 2 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 that Contracting State and which are designed to
promote economic development.
ARTICLE 25:
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 in the same circumstances. 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 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 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.
5. The provisions of
paragraphs 2 and 4 of this Article shall not apply to the Vietnamese profit
remittance tax, which in any case shall not exceed 10 per cent of the gross
amount of profits remitted, and the Vietnamese taxation in respect of
agricultural production activities.
6. In this Article, the
term "taxation" means taxes which are the subject of this Agreement.
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, 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 three years of the date of receipt of notice
of the action which gives rise to taxation not in accordance with 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 not in accordance with the Agreement.
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 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 agreement to have an oral
exchange of opinions, such exchange may take place through a Commission
consisting of representative of the competent authorities of the Contracting
State.
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 the Agreement or of the domestic laws of the Contracting
States concerning taxes covered by the Agreement, in so far as the taxation
thereunder is not contrary to the Agreement, 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 the 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 exchange or information shall be made,
including, where appropriate, exchange or 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 cases 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.
ARTICLE 28: Diplomatic
agents and consular officers.--Nothing in this Agreement shall affect the
fiscal privileges of diplomatic or consular officers under the general rules of
international law or under the provisions of special agreements.
ARTICLE 29: 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
Agreement. This Agreement shall enter into force on the date of the latter 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 latter of the notifications is given;
(b) in
Vietnam:
(i) in respect of taxes withheld at source,
in relation to taxable amount paid on or after 1 January following the calendar
year in which the Agreement enters into force;
(ii) in respect of other Vietnamese taxes, in
relation to income, profits or gains arising in the calendar year following the
calendar year in which the Agreement enters into force, and in subsequent
calendar years.
ARTICLE 30:
Termination.--This Agreement shall remain in force indefinitely but 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, this
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 is given:
(b) in
Vietnam:
(i) in respect of taxes withheld at source,
in relation to taxable amount paid on or after 1 January following the calendar
year in which the notice of termination is given;
(ii) in respect of other Vietnamese taxes, in
relation to income, profits or gains arising in the calendar year following the
calendar year in which the notice of termination is given, and in subsequent
calendar years.
IN WITNESS WHEREOF the
undersigned, being duly authorized thereto by their respective Governments,
have signed the present Agreement.
DONE in duplicate at Hanoi
this 7th day of September one thousand nine hundred and ninety-four in Hindi,
Vietnamese and English languages. In case of divergence of interpretation, the
English text shall prevail.
For the Government of For
the Government of
The Republic of India The
Socialist Republic of Vietnam
H.E. Mr. Bhuvnesh
Chaturvedi H.E.
Mr. Ho Te
Minister of State Minister
of Finance
Prime Minister's Office
(V.B. Srinivasan)
Joint Secretary to the
Government of India