It emerged on Friday that India has signed a Double Taxation Avoidance Agreement
(DTAA) with the Government of Iceland, for the avoidance of double taxation,
and for the prevention of fiscal evasion with respect to taxes on income.
The Agreement also aims to promote economic cooperation between the two countries.
The Agreement was signed by P. Chidambaram, Finance Minister on behalf of the
Government of India and Arni Mathiesen, the Minister of Finance of Iceland on
behalf of the Government of Iceland.
According to the Indian government:
"The DTAA between India and Iceland which will come into force on a date
to be notified in due course, covers in the case of India, income-tax including
any surcharge thereon and in the case of Iceland, income-tax to the State and
to the municipalities. The DTAA provides for taxation of dividend, interest,
royalties and fees for technical services-both in the country of residence as
well as the country of source."
"However, the rate of tax in the country of source shall not exceed ten
percent of the gross amount of payment in case the beneficial owner of the payments
is a resident of the Contracting State."
"The DTAA provides that capital gains from alienation of shares of a company
shall be taxable in the country where the company is a resident. The incidence
of double taxation shall be avoided by one country giving credit for taxes paid
by its residents in the other country. There is a provision for exchange of
information in cases, which are under investigation in either of the two countries.
Both the countries shall assist each other in collection of revenue claims.
There is also a provision for limitation of benefits under the DTAA to prevent
misuse of the provisions of the DTAA."
"The Agreement will further stimulate the flow of capital, technology
and personnel between the two countries. It will also contribute to the tax
stability and facilitate mutual cooperation."
TAX-NEWS.COM
Free Tax-News Feed