TMI BlogAgreement between the Government of India and the Government of the United Arab Republic for the avoidance of double taxationX X X X Extracts X X X X X X X X Extracts X X X X ..... c for the avoidance of double taxation with respect to taxes on income. The Government of India and the Government of the United Arab Republic, Desiring to conclude a Convention for avoidance of double taxation with respect to taxes on income, Have agreed as follows: CHAPTER I-Scope of the Convention ARTICLE 1 Personal scope This Convention shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 Taxes covered 1. This Convention shall apply to taxes on income imposed on behalf of each Contracting State or of its political sub-divisions or local authorities, where they have the authority, 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 all elements of income including taxes on gains from the sale, exchange or transfer of movable or immovable property and taxes on the total amounts of wages or salaries paid by enterprises. 3. The existing taxes to which the Convention shall apply are, in particular: (a) In the case of India: (1) the income-tax, including super-tax and the surcharge, imposed under the Income-tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority " means in the case of India the Central Government in the Ministry of Finance (Department of Revenue and Insurance), and in the case of the United Arab Republic, the Minister of Treasury or his authorised representative. 2. In the application of the provisions of this Convention by one of the Contracting States any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws in force in that State relating to the taxes which are the subject of this Convention. ARTICLE 4 Fiscal domicile 1. For the purposes of this Convention, the term " resident of a Contracting State " means any person who, under the law of that State, is resident of that State for the purpose of taxation therein by reason of his domicile, residence, place of management or any other criterion applied under the tax laws of that State. 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his case shall be determined in accordance with the following rules: (a) He shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of an enterprise of the other Contracting State shall be deemed to be a permanent establishment of that enterprise in the first mentioned State if: (i) he has and habitually exercises in that State a general authority to negotitate and enter into contracts for or on behalf of the enterprise, unless the activities of the person are limited to the purchase of goods or merchandise for the enterprise, or (ii) he habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise belonging to the enterprise from which the person regularly delivers goods or merchandise or on behalf of the enterprise, or (iii) he habitually secures orders in the first-mentioned Contracting State exclusively or almost exclusively, for the enterprise itself or for the enterprise and other enterprises which are controlled by it or have a controlling interest in it. 5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker of a genuinely independent status. 6. The fact that a company, which is a resident of one of the Contracti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rise of which it is a permanent establishment. 3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purpose of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. 4. In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles laid down in this Article. 5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the purpose of export to the enterprise of which it is the permanent establishment. 6. Where profits include items of income which are de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the amount so determined or the estimate so made may be amended or revised when adequate information is furnished to the taxation authority concerned. ARTICLE 11 Dividends 1. Dividends paid by a company which is a resident of India to a resident of the United Arab Republic may be taxed in India. 2. Dividends paid by a company which is a resident of the United Arab Republic to a resident of India may be taxed in the United Arab Republic. But such dividends shall only be subject to the tax on income derived from movable capital, the defence tax, the national security tax and the supplementary taxes (which taxes shall be deducted at the source). If paid to a natural person, the general income-tax levied on the net total income may also be imposed. Dividends paid shall be deducted from the amount of the distributing company's taxable income or profits subject to the tax chargeable in respect of its industrial and commercial profits if such dividends are distributed out of the taxable profits of the same taxable year but not distributed out of accumulated reserves or other assets. 3. Dividends paid by a company which is a resident of India whose activities lie solely o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the United Arab Republic. But such interest shall only be subject to the tax on income derived from movable capital, the defence tax, the national security tax and the supplementary taxes (which taxes shall be deducted at the source). If paid to a natural person, the general income-tax levied on the net total income may also be imposed. 3. The term " interest " as used in this Article includes income from Government securities, bonds or debentures (exclusive of interest on debts secured by mortgages on real estate, in which case Article 6 shall apply) and whether or not carrying a right to participate in profits, and debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the State in which the income arises. 4. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a company shall be deemed to be in the Contracting State where the company is incorporated. 3. Capital gains derived from the sale, exchange or transfer of a capital asset being a ship or aircraft shall be taxable only in the Contracting State in which such ship or aircraft is registered. ARTICLE 15 Independent personal services 1. Income derived by a resident of the United Arab Republic in respect of professional services rendered or other independent activities of a similar character performed in India may be taxed in India only if he is present in India for a period or periods exceeding in the aggregate 183 days during the relevant " previous year ", and only to the extent the income is attributable to such services or activities in India. 2. Income derived by a resident of India in respect of professional services rendered or other independent activities of a similar character performed in the United Arab Republic may be taxed in the United Arab Republic only if he is present in the United Arab Republic for a period or periods exceeding in the aggregate 183 days during the relevant " fiscal year ", and only to the extent the income is attributable to such servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Artistes and Athletes 1. Notwithstanding anything contained in Articles 15 and 16, income derived by public entertainers, such as theatre, motion picture, radio or television artistes, and musicians, and by athletes, from their personal activities as such may be taxed in the Contracting State in which these activities are exercised. 2. The provisions of paragraph 1 shall apply only if the personal activities are exercised in the Contracting State for a period or periods in the aggregate exceeding 15 days during the relevant " previous year " or, as the case may be " fiscal year ", and only in respect of the income attributable to the personal activities exercised in that State. ARTICLE 19 Pensions Subject to the provisions of paragraph 1 of Article 20, 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. ARTICLE 20 Governmental functions 1. Remuneration, including pensions, paid by, or out of funds created by, a Contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Contracting States except where express provision to the contrary is made in this Convention. CHAPTER IV-Method for elimination of double taxation ARTICLE 24 Exemption and credit methods 1. Where a person being a resident of a Contracting State derives income from the other Contracting State and that income, in accordance with the provisions of this Convention, shall be taxable only in that other Contracting State, or may be taxed in that other Contracting State, the first-mentioned State shall, subject to the provisions of paragraph 2, exempt such income from tax but may, in calculating tax on the remaining income of that person, apply the rate of tax which would have been applicable if the exempted income had not been so exempted. 2. Where a person being a resident of a Contracting State derives income from the other Contracting State and that income, in accordance with the provisions of Articles 11 and 12 may be taxed in that other Contracting State, the first-mentioned State shall allow as a deduction from the tax on the income of that person an amount equal to the tax paid in that other Contracting State. Such deduction shall not, however, exceed that part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with this Convention, he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident. 2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Convention. 3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention. 4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through representatives of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic: (i) in the case of income from operation of aircraft (referred to in article 8), as respects such income derived during any accounting period ending on or after the first day of January, 1961; (ii) in the case of any other income,- (1) as respects tax on income from movable capital and tax on wages, salaries, indemnities and pensions, which taxes are due on or after the date on which the exchange of the instruments of ratification takes place; (2) as respects tax on commercial and industrial profits for any accounting period ending on or after the date on which the exchange of the instruments of ratification takes place; (3) as respects tax on income derived from immovable property (including the land tax, the building tax and the ghaffir tax), tax on profits from liberal professions and all other non-commercial professions and the general income-tax for the calendar year in which the exchange of the instruments of ratification takes place. The rules in sub-paragraph (b) of this paragraph shall be correspondingly applicable respectively to the defence tax, national security tax and to the supplementary taxes. ARTICLE 30 Termination Either of the Contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention being operative under the terms of article 29 (Entry into force) of the Convention, in the case of India, as respects income derived from operation of aircraft during any " previous year " beginning on or after the first day of January, 1961, and in the case of the United Arab Republic, as respects such income derived during any accounting period ending on or after the first day of January, 1961: Where any taxes covered by this Convention have been paid or are payable in one of the Contracting States by a designated airline of the other Contracting State as respects such income derived by it during any " previous year " or accounting period aforesaid, the first-mentioned Contracting State shall refund such taxes to or, as the case may be, refrain from charging such taxes from the designated airline. The designated airline aforesaid shall, in the case of India, be the Air India, and in the case of the United Arab Republic, be the United Arab Airlines. 2. I should be grateful if you confirm your agreement to the above understanding of the provisions of article 8 read with article 29 of the said Convention, and that in such case, this note and your reply thereto shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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