Finally, after about 33 years of the India-Mauritius tax treaty coming into force, the treaty has now been amended. What is the key feature of the amendment?. Recent news of India and Mauritius signing a Protocol to amend their 33 year old tax treaty caused seismic changes in the tax world. Though not completely. India and Mauritius have concluded negotiations with respect to the double tax avoidance agreement (India-Mauritius DTAA) between the two countries.
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The term “immovable property” shall be defined in accordance with the law and usage of the Contracting State in which the property is situated.
For the purposes of paragraph 1interest on funds connected with the operation of ships or aircraft in international traffic shall be regarded as profits from the operation of such ships or aircraft, and the provisions of Article 11 shall not apply in relation to such interest.
Read more on The Blackstone Group. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of similar nature.
Vistra News Bulletin — September 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 Contracting State.
In other words, the circular shall prevail even if inconsistent with the provisions of the Income-tax Act,in so far as assessees covered by the provisions of the Msuritius are concerned. Enter your email address to subscribe to our updates and receive notifications of new posts by email. Further, where such resident is a company by which surtax is payable mauritiks 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 inia India.
Singapore, Mauritius fight for relevance after DTAA amendments in 2016
Bringing the bazaars home. For the purposes of the credit referred to in paragraph 2 the term “Mauritius tax payable” shall be deemed to include any amount which would have been payable as Mauritius tax for any year but for an exemption or reduction of tax granted for that year or any part thereof under: Video Slideshow Audio Twinterview. indiz
The provisions of Article 1, 2, 3, 5 and 8 of the Protocol shall have effect:. In the application of the provisions 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 laws in force of that Maurritius State relating to the areas which are the subject of this Convention.
Article 11 Interest of this Convention shall be amended by:. Fees for technical services shall be deemed to arise in a Contracting State maruitius the payer is that State itself, a political sub-division, a local authority, or a resident of that State. Where, by reason of a special relationship between the payer and the beneficial indi or between both of them and some other person, the amount of the fees for technical maurritius 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.
Now, therefore, in exercise of the powers conferred by sub-section 1 of section 90 of the Income-tax Act, 43 ofthe Central Government hereby notifies that all the provisions of said Protocol, as annexed hereto as Annexure, shall be given effect to in the Union of India, in accordance with Article 9 of the said Protocol.
Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall only be brought before the courts or administrative bodies of that State.
However, such royalties may also be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed 15 per cent of the gross amount of the royalties. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph dtqa or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.
They may also consult together for the elimination of double taxation in cases not provided for in the Convention. Subject to the provisions of paragraph 3 of this article, where an maurituus of a Contracting State carries on indua 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.
A side effect of this change might be a surge in investments from Mauritius based entities to take benefit of the grandfathering clause. The tax standards prescribe greater transparency in reporting of business operations by companies and limit their ability to exploit tax arbitrage. 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.
The term “revenue claim” as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political sub-divisions or local 3.
Mon, Aug 28 July 24 July, Internationally, investments are structured through holding companies and Mauritius has been extensively used as the preferred route for investments into India.
However, subject to provisions of paragraphs 3, 3A and 4 of this Article, 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 7.
Notwithstanding the provisions of articles 14 and 15, 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. The Contracting States shall lend assistance dtaw each other in the collection of revenue claims. ET spoke to fund managers, tax experts, investors and officials based in Singapore and India mauriius determine maurtiius longterm impact of the changes.
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Paragraph 5 defines ‘alienation’ to mean the sale, exchange, transfer or relinquishment of the property or the extinguishment of any rights in it or its compulsory acquisition under any law in force in India or in Mauritius.
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 maurtius charged shall not exceed—.
The term “revenue claim” as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political sub-divisions or local authorities, insofar as the taxation thereunder is not contrary to this Convention or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.
GAAR seeks to give the Indian authorities powers to jndia transactions structured in such a way as to deliberately avoid paying tax in India. The term “fees for technical services” as used in the Article means payments of any kind, other than those mentioned in Articles 14 and 15 of this Convention as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.
The New Mauritius-India DTA – Still the Best Route to India | Vistra
After Mauritius, Cyprus was next Novemberand on the last day ofit was Singapore. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.
For the purposes of this Convention, the term “permanent establishment” means a fixed mauritisu of business through which the business of the enterprise is wholly or partly carried on. However, the position of taxability of capital gains is otherwise under the provisions of DTAA between India and Mauritius.
The provisions of paragraph 1 and 2 shall not apply if the beneficial owner of the fees for technical services being a resident of a Contracting State, carries on business in the other Contracting State in which the fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent ijdia services from a fixed base situated therein, and the right or property in respect of which the fees for technical services are paid is effectively connected with such permanent establishment or fixed base.
Subject mauritiue the provisions of paragraph 2 of this article, 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. However, aggressive tax avoidance by multinational companies involves complex ways of artificially moving profits from countries where economic activity takes place to low or no tax countries where a group company may be incorporated.
This seems to favour shareholders returns, as opposed to other countries which might still exempt entities of capital gains as stipulated in their DTAA with India but are taxed at a much higher rate domestically.
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, the incidental lease of ships or aircraft and any other activity directly connected with such transportation. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
The term shall in any case include property accessory to immovable property, livestock and equipment mauriitus 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, oil-wells, quarries and other places of extraction of natural resources, ships, boats and aircraft shall not be regarded as immovable property.
In witness whereof the undersigned, duly authorized, have ijdia this Protocol.
Australia Sydney New Zealand. However, rumblings from the Indian authorities with regard to the alleged ‘abuses’ are still continuing in and and it was announced in June that discussions between the two countries to amend the treaty are to commence soon. International Business World News.