TMI BlogAgreement for Avoidance of double taxation and prevention of fiscal evasion with foreign countries - LatviaX X X X Extracts X X X X X X X X Extracts X X X X ..... the calendar year in which the said Agreement enters into force; 4. Now, therefore, in exercise of the powers conferred by section 90 of the Income- tax Act, 1961 (43 of 1961) , the Central Government hereby notifies that all the provisions of said Agreement between the Government of the Republic of India and the Government of the Republic of Latvia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, as set out in the Annexure hereto, shall be given effect to in the Union of India with effect from the l st day of April, 2014. ANNEXURE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF LATVIA 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 Republic of Latvia, desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and with a view to promoting economic cooperation between the two countries, have agreed as follows: ARTICLE 1 PERSONS COVERED This Agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is treated as a taxable unit under the taxation laws in force in the respective Contracting State; (e) the term company means any body corporate or any entity that is treated as a body corporate for tax purposes; (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 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; (h) the term competent authority means: (i) in India, the Finance Minister, Government of India, or his authorised representative; (ii) in Latvia, the Ministry of Finance 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; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a national of both States or of neither of them, the competent authorities of the Contracting States shall endeavour to 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, the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement having regard to the person's place of effective management, the place where it is incorporated and any other relevant factors. In the absence of such agreement, such person shall not be considered to be a resident of either Contracting State for the purposes of enjoying benefits under the 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 sales outlet; (g) a warehouse in relation to a person provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aracter. 5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 6 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 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 4 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; or (c) habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself. 6. An enterprise shall not be deemed to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erprise 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 establishment, there shall be allowed as deductions expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the use, maintenance, or rental of containers (including trailers, barges and related equipment for the transport of containers) used for the transport of goods or merchandise in international traffic shall be taxable only in that State. 3. For the purposes of this Article interest on investments which are made in a Contracting State as integral part of carrying on the business of 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. The provisions of paragraphs 1, 2 and 3 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. ARTICLE 9 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 ei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, 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. . 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 taxe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 6. Interest shall be deemed to arise in a Contracting State when the payer is 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 amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 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.(a) Royalties or fees for technical services shall be deemed to arise in a Contracting State when the payer is 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. (b) Where under sub-paragraph (a) royalties or fees for technical services do not arise in one of the Contracting States, and the royalties relate to the use of, or the right to use, the right or property, or the fees for technical services relate to services performed, in one of the Contracting States, the royalties or fees for technical service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARTICLE 14 INDEPENDENT PERSONAL SERVICES 1. Income derived by an individual who is 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 he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to that fixed base. For this purpose, where an individual who is a resident of a Contracting State stays in the other Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, he shall be deemed to have a fixed base regularly available to him in that other State and the income that is derived from his activities referred to above that are performed in that other State shall be attributable to that fixed base. 2. The term professional services includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 activities are substantially supported by public funds of one or both of the Contracting States or of political subdivisions or local authorities thereof. In such case, the income shall be taxable only in the Contracting State of which the entertainer or sportsperson is a resident ARTICLE 18 PENSIONS 1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. 2. Notwithstanding the provisions OT paragraph 1 of this Article and paragraph 2 of Article 19, pensions and other similar remuneration paid under the social security legislation of a Contracting State shall be taxable only in that State. ARTICLE 19 GOVERNMENT SERVICE 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a polit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that State, provided that such payments arise from sources outside that State. 2. Notwithstanding the provisions of Article 15, remuneration which a student, or an apprentice or trainee 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 dependent personal services rendered in that first-mentioned State shall not be taxable in that State, provided that such services are directly related, and incidental, to his education or training or the remuneration for those services is necessary to supplement the resources for his maintenance. However, in any case the benefits of this paragraph shall not be granted for a period of more than five consecutive years from the date of his first arrival in the first-mentioned State. 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the deduction is given, which is attributable to the income which may be taxed in India. (c) Where in accordance with any provision of the Agreement income derived by a resident of Latvia is exempt from tax in Latvia, Latvia may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income. 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, in particular with respect to residence, are or may be subjected. 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. Stateless persons who are residents of a Contracting State shall not be subjected in either 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 the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 three 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (ordre public). 3. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 2 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 4. In no case shall the provisions of paragraph 2 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. ARTICLE 27 ASSISTANCE IN COLLECTION 1. The Contracting States undertake to lend assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o advise the other Contracting State and indicate the estimated amount of such costs. 8. In this Article, the term taxes means taxes to which the paragraph 1 of Article 26 applies and includes any interest and penalties relating thereto. 9. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation: (a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; (b) to carry out measures which would be contrary to public policy (ordre public); (c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice; (d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State. ARTICLE 28 LIMITATION OF BENEFITS 1. The competent authorities upon their mutual agreement, may deny the benefits of this Agreement to a resident of a Contracting State, or with respect to any trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of taxes withheld at source, on income derived on or after the first day of January in the calendar year next following the year in which the notice has been given; (ii) in respect of other taxes on income for taxes chargeable for any fiscal year beginning on or after the first day of January in the calendar year next following the year in which the notice has been given. In witness whereof, the undersigned, duly authorised thereto, have signed this Agreement. Done in duplicate at New Delhi this 18th day of September, 2013, each in the Hindi, Latvian and English languages, all texts being equally authentic. In the case of divergence of interpretation, the English text shall prevail. AGREED NOTE At the signing of the Agreement between the Government of the Republic of India and the Government of the Republic of Latvia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (hereinafter referred to as the Agreement ) the undersigned have agreed upon the following provisions with purpose to clarify the application of the Agreement. 1. With reference to Article 5: It is understood that on the date of signa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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