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India-S Korea Double Tax Deal To Lower WHT Rates

by Mary Swire, Tax-News.com, Hong Kong

27 October 2016


India has released details about its new double tax agreement with South Korea, which will be effective for Indian taxpayers from April 2017.

The revised treaty contains a new Article 9(2) to enable taxpayers to resolve disputes under the mutual agreement procedure (MAP) in transfer pricing disputes and in respect of bilateral advance pricing agreements. Under the revised text, MAP requests in transfer pricing cases can be considered if the request is presented after September 12, 2016, and within three years from the date of receipt of notice of action giving rise to taxation not in accordance with the tax treaty.

Next, the revised treaty inserts a new Article on limitation of benefits to ensure that the benefits of the treaty are given only to genuine residents of both countries, to prevent treaty shopping.

The revised treaty also provides for source-based taxation of capital gains arising from the alienation of shares under certain conditions. It provides for a reduction in withholding tax rates from 15 percent to ten percent on royalties, fees for technical services, and interest income.

Last, the Article on the exchange of information is updated in line with the latest international standard to provide for exchange of information to the widest possible extent.

TAGS: tax | business | double tax agreement (DTA) | India | interest | royalties | law | fees | ministry of finance | tax authority | agreements | multinationals | tax planning | transfer pricing | advance pricing agreement (APA) | tax rates | withholding tax | Korea, South | tax reform | services

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