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India, Bhutan Sign Double Tax Avoidance Agreement

by Mike Godfrey, Tax-News.com, Washington

05 March 2013


India and Bhutan have signed a Double Taxation Avoidance Agreement (DTAA) which is to provide reduced rates of withholding tax and is designed to help in the fight against evasion.

Negotiations were completed in 2011, and the deal was formally inked on March 4 by P. Chidambaram, the Indian Finance Minister, and his Bhutanese counterpart Lyonpo Wangdi Norbu. It is Bhutan's first DTAA.

The DTAA stipulates that the maximum rate of tax chargeable in the source country on dividends, interest, royalties and fees for technical services will be 10%. Capital gains from the sale of shares will also be taxable in the source country, as will business profits where business activities are carried out through a permanent establishment.

The Agreement further provides for the effective exchange of information and for assistance in the collection of taxes between tax authorities. It incorporates anti-abuse provisions.

TAGS: Finance | tax | business | Bhutan | India | interest | royalties | banking | fees | withholding tax | dividends | services

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