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India Signs Tax Agreement With Uruguay

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

12 September 2011


The Government of India has signed an agreement with Uruguay for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital (DTAA).

The agreement was signed by M C Joshi, Chairman of the Central Board of Direct Taxes, on behalf of the Government of India and by Cesar Ferrer, Ambassador of Uruguay to India, on behalf of Uruguay.

The DTAA states that business profits will be taxable in the source state if the activities of an enterprise constitute a permanent establishment such as a branch or factory in that state. Profits of a construction, assembly or installation projects will be taxed in the state of source if the project continues in that state for more than six months.

Profits derived by an enterprise from the operation of ships or aircraft in international traffic will be taxable in the country of residence of the enterprise.

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, and tax credit will be given in the country of residence.

The agreement further incorporates provisions for effective exchange of information including banking information and assistance in the collection of taxes between the tax authorities of the two countries in line with internationally accepted standards. This includes anti-abuse provisions to ensure that the benefits of the agreement are availed of by the genuine residents of the two countries.

The agreement should provide tax stability to the residents of India and Uruguay and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between the two countries, the Indian government said.

TAGS: tax | investment | business | double tax agreement (DTA) | India | Uruguay | interest | royalties | banking | dividends | construction | standards

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