India and Myanmar on Thursday signed a Double Taxation Avoidance Agreement (DTAA) in New Delhi.
The agreement was signed between P.K. Misra, Chairman, Central Board of Direct Taxes, India and Kyi Thein, Ambassador Extraordinary and Plenipotentiary of the Union of Myanmar to India.
The agreement aims at avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
The signing of agreement coincides 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 surcharge in the case of India and the income tax and profit tax in the case of Myanmar. The agreement provides business profits 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. 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 five per cent in the case of dividends and 10 per cent 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.
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