TMI BlogCONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE KINGDOM OF SAUDI ARABIA FOR THE AVOIDANCE OF DOUBLE TAXATION-DTAA COMES INTO EFFECT FROM 1-11-06X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. [F. No. 501/7/91-FTD] ANNEXURE Convention between the Government of the republic of India and the Government of the kingdom of Saudi Arabia for the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income The Government of the Republic of India and the Government of the Kingdom of Saudi Arabia, desiring to conclude a Convention for the avoidance of double taxation and the prevention of tax 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 Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1. This Convention shall apply to taxes on income imposed on behalf of a ContractingState 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 inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sident 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 ContractingState, except when the ship or aircraft is operated solely between places in the other ContractingState; ( h ) the term competent authority means: ( i ) In the case of India: The Finance Minister, Government of India or his authorized representative; ( ii ) In the case of the Kingdom of Saudi Arabia, the Ministry of Finance represented by the Minister of Finance or his authorized representative; ( i ) the term national means: ( i ) any individual possessing the nationality of a ContractingState; ( ii ) any legal person, partnership or association deriving its status as such from the laws in force in a ContractingState; 2. As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which this Convention applies, any meaning under the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : ( a ) a place of management; ( b ) a branch; ( c ) an office; ( d ) a factory; ( e ) a workshop; ( f ) a mine, a gas well, a quarry or any other place of extraction of natural resources. 3. The term permanent establishment also includes: ( a ) A building site, a construction, assembly or installation project, or supervisory activities, in connection therewith, but only where such site, project or activities continue for a period of more than 182 days; ( b ) The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the country for a period or periods aggregating more than 182 days within any 12-Month Period. 4. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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, he will not be considered an agent of an independent status within the meaning of this paragraph. 8. 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 Contracting State. 2. The term immovable property shall have the meaning provided for in the laws of the Contracting State in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmanent 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 income from debt-claim with regard to 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 for specific services performed or for management, or, except in the case of a banking enterprise, by way of income from debt-claim with regard to moneys lent to the head office of the enterprise or any of its other offices. 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 ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent 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. 2. Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits - which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other. 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 Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from debt-claims may also be taxed in the Contracting State in which it arises and according to the laws of that Contracting State, but if the beneficial owner of the income from debt-claims is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the income from debt-claims. 3. Notwithstanding the provisions of paragraph 2, income from debt-claims arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned by: ( a ) the Government, a political sub-division or a local authority of the other Contracting State; or ( b ) ( i ) in the case of India, the Reserve Bank of India, the Export-Import Bank of India, the National Housing Bank; and ( ii ) in the case of the Kingdom of Saudi Arabia, the Saudi Arabian Monetary Agency; or ( c ) any other financial institution wholly owned directly, and controlled by the Government of the other Contracting State. 4. The term Income from Debt-Claims as used in this Article means income from government securities and bonds or debentures, including premiums and prizes attaching to such securities, bonds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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 beneficial owner of the royalties is a resident of the other Contracting State 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 tape used for radio or television broadcasting, any patent, trade mark, design or mode, 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 there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 an individual who is a resident of a Contracting State in respect of professional services or other activities of a independent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding 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, oras 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, 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 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 sub-divisions or local authorities thereof or takes place under a cultural agreement or arrangement between the Governments of the Contracting States. In such a case, the income shall be taxable only in the Contracting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the first mentioned Contracting State solely for the purpose of his education or training and which constitute remuneration in respect of services performed in that other Contracting State are not taxable in that other State, provided the services are connected with education or training and are necessary for maintenance purposes. 3. 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 six consecutive years from the date of his first arrival in that other State. Article 21 TEACHERS AND RESEARCHERS 1. A teacher or researcher who is or was a resident of the Contracting State immediately before being invited to or 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a resident. 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 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 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 this Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3. The competent authorities of both 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 purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Article. Article 27 MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements. Article 28 ENTRY INTO FORCE 1. The Contracting States shall notify each other in writing, through diplomatic channels, of the completion of the procedures required by the respective laws for the entry into force of this Convention. 2. This Convention shall enter into force on the first day of the second month following the month in which the later of these notifications was received. 3. The provisions of this Convention shall have effect: (a) In India, in respect of income derived in any fiscal year beginning on or after the first day of April next following the calendar year in which the Convention enters into force; and (b) In Saudi Arabia: (i) with regard to taxes withheld at source, in respect of amounts paid or credited on or after the first day of January next following the Calendar Year in which the Convention enters into force; and (ii) wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia: the financial year beginning on the 1st day of April; (ii) in the case of Saudi Arabia: taxable year as determined in the law and regulation of the Kingdom of Saudi Arabia. 4. It is understood that for the purposes of para 1(b) Article 4, the term 'resident' shall include: (a) the legal institutions and agencies of the Government, wholly owned directly, and controlled by the Government. (b) In the case of the Kingdom of Saudi Arabia, an individual who is an Indian national and is present in the Kingdom of Saudi Arabia for a period or periods totaling in the aggregate at least 183 days in the fiscal year concerned. ( c ) A legal person organized under the laws of a Contracting State and that is generally exempt from tax in that State and is established and maintained in that State either: ( i ) Exclusively for a religious, charitable, educational, scientific, or other similar purpose; or ( ii ) To provide pensions to employees pursuant to a plan. 5. For the purposes of para 2 of Article 5, Permanent Establishment shall include the following: ( a ) a sales outlet; ( b ) a farm, plantation or other place where agricultural, forestry, pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al shall be deemed to be a resident of a Contracting State if he is resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year. 11. For the purposes of this Convention, the Zakat shall be treated as a tax on income. 12. In the case of the Kingdom of Saudi Arabia, the methods for elimination of double taxation in Article will not prejudice the provisions of the Zakat collection regime with regard to Saudi nationals. 13. It is understood that information referred to in Article 25, will include evidence available with a Contracting State, requested by the other Contracting State. 14. When Saudi Arabia introduces a provision in its domestic law regarding assistance in collection of taxes to other treaty partners or agrees to extend such assistance to any other treaty partner, then the competent authorities of the two Contracting States shall by mutual agreement settle the mode of application for extending assistance in the collection of tax to each other. 15. It is understood that the two Contracting States will review the provisions of this Convention after a period of 5 years from the date on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
