India And Myanmar Sign DTA

by Lorys Charalambous, Tax-News.com, Cyprus

07 April 2008

It was announced last week that India has signed a Double Taxation Avoidance Agreement (DTAA) with the Government of Myanmar.

The agreement signed on April 2nd aims at the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

The Agreement was signed by P.K. Misra, Chairman of the Central Board of Direct Taxes on behalf of India, and by Kyi Thein, Myanmar's Ambassador Extraordinary to India, on behalf of the Government of the Union of Myanmar.

The signing of agreement coincided with the visit of Maung Aye, Vice Senior General and Vice Chairman, State Peace and Development Council of Myanmar to India.

The DTAA will cover income tax and surcharges in the case of India, and income tax and profit tax in the case of Myanmar.

According to the Indian Government:

"The Agreement provides that business profits will be taxable in the source state if the activities of an enterprise constitute a permanent establishment in the source state. Examples of permanent establishment include a branch, factory, place of management, sales outlet etc."

"Profits of a construction, assembly or installation projects will be taxed in the state of source if the project continues in that state for 270 days or more. Profits derived by an enterprise from the operation of ships or aircraft in international traffic shall be taxable in the country of residence of the enterprise."

" Dividends, interest and royalty income will be taxed both in the country of residence and in the country of source. However, the maximum rate of tax to be charged in the country of source will not exceed 5% in the case of dividends and 10% in the case of interest and royalties."

"Capital gains from the sale of shares will be taxable in the country of source. The Agreement also incorporates provisions for exchange of information between tax authorities of the two countries and incorporates anti-abuse provisions to ensure that the benefits of the Agreement are availed of by the genuine residents of the two countries."

The Indian authorities concluded by observing that:

"Double Taxation Avoidance Agreement with Myanmar is expected to provide tax stability to the residents both the countries and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between India and Myanmar."

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