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India, Tanzania Sign DTA

by Mary Swire,, Hong Kong

02 June 2011

The Indian government has signed an agreement with Tanzania for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income, in Dar-es-Salaam.

The agreement was signed by Shri K V Bhagirath, High Commissioner of India on behalf of the Indian government, and Pereira Ame Silima, Deputy Minister of Finance, on behalf of the Tanzanian government, in the presence of the Indian Prime Minister, Dr Manmohan Singh and the President of Tanzania, Jakaya Kikwete.

The DTAA will ensure 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 establishments include branches and factories. Profits from a construction, assembly or installation project will be taxed in the state of source if the project continues in that state for more than 270 days.

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 under the treaty. Dividends, interest and royalties will be taxed at a maximum rate of 10%. Capital gains from the sale of shares will be taxable in the country of source.

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

A statement from the Indian government said: “The agreement will provide tax stability to the residents of India and Tanzania and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between India and Tanzania”.

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

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