Indian Consultant's Site

Tax Treaties

India has entered Double Tax Avoidance Treaty with many countries.Below is the heightlight of some of the provisions: Before taking any decision on the basis of the following details ,please check the latest provisions.We will try to incorporate all latest changes but still we are not responsible for any decisions taken on the basis of following details.
DOUBLE TAX AVOIDANCE AGREEMENTS

Sl. No.	Country DTAA between India and	Effective date in India	Dividend (other than u/s. 115O) (%)	Interest (%)	Tax rate on Royalties (%)	Technical Service Fees(%)	Remarks
1	Australia 194 ITR 241	01.04.92 A.Y.1993-94	15 @	15 @	[See Note 2]		[See Note 1]
2	Austria 56 ITR 17	01.04.62 A.Y. 1963-64	* +	* +	* +	Taxable only in Source country at prevailing rates.	Expenses incurred are deductible from technical service fees.
3	Bangladesh 198 ITR 99	01.04.92 A.Y.1993-94	10 @ 15 @	10 @	10 @	As per domestic law	10% tax on dividends if at least 10% of the capital is owned by Company ; in other cases 15%.
4	Belgium 228 ITR 79	01.04.98 A.Y.1999-2000	15 @	10 @ 15 @	20 @	20 @	10% tax on interest if loan granted by bank, other cases 15%
5	Brazil 195 ITR 73	01.04.93 A.Y.1994-95	15 @	15 @	25 @ 15 @	As per domestic law	Royalties arising from use or right to use trade marks taxable at 25%, in other cases tax rate is 15%
6	Bulgaria 220 ITR 30	01.04.96 A.Y.1997-98	15 @	15 @	15 @ 20 @	20%	Royalties relating to Copyrights etc. taxable at 15%, in other cases 20%
7	Canada 229 ITR 44	01.04.98 A.Y.1999-2000	15 @ 25 @	15 @	[See Note 2]		15% tax on dividends if atleast 10% of Capital is owned by a Co., in other cases 25%. Under Old Treaty Royalty for agreement signed after 12.12.88 is taxable at 20%. In respect of agreement signed after 26th Oct. 1996, for technical services fees & Royalty rate of tax 10%, due to Indo-German D.T.A.A. However under New Treaty Taxation of Royalty is as per Note 2.
8	China 214 ITR 160	01.04.95 A.Y.1996-97	10 @	10 @	10 @	10 @
9	Cyprus 218 ITR 70	01.04.93 A.Y.1994-95	10 @ 15 @	10 @	15 @	10 @	10% Tax on dividends if at least 10% of the capital isowned by Company; in other cases 15%. Article 13 deals with Technical Fees, Article 12 deals with Royalties and Fees for Included Services.
10	Czechoslovak Socialist Republic 167 ITR 23	01.04.85 A.Y.1986-87	15 @ 25 @	15 @	30 @	30 @	15% tax on dividends if at least 25% of the capital is owned by Company ; in other cases 25%
11	Denmark 180 ITR 1	01.04.90 A.Y.1991-92	15 @ 25 @	10+ 15+	20 @	20 @	15% tax on dividends if at least 25% of the capital is owned by Company; in other cases 25%. Interest is taxable at 10% on loan from bank, in other cases it is taxable at 15%.
12	Finland 152 ITR 57	01.04.84 A.Y.1985-86	15+ 25+	15+	30 @	30 @	15% tax on dividends if at least 10% of the capital is owned by Company; in other cases 25%.
13	French Republic 209 ITR 130	01.04.95 A.Y.1996-97	15 @	10 @ 15 @	20 @	20 @	Interest is taxable at 10% on loan from bank or financial institution or from enterprise holding atleast 10% of capital of Interest paying company. 15% in other cases. Since lower tax rate of 10% is prescribed on interest, dividend, royalty and technical service fees, under Indo-German Treaty; the same rate will be applicable as per Protocol w.e.f. 26.10.96
14	Germany (Federal Republic of Germany) 223 ITR 130	01.04.97 A.Y.1998-99	10 @	10 @	10 @	10 @	Treaty has some of the lowest withholding rates. It also effectively lowers from 29.10.96, withholding rates of India's Treaties with other OECD Countries such as France, Netherlands, Norway, Spain etc.
15	Greece 64 ITR 86	01.04.63 A.Y.1964-65	*	*	*	*	* Dividend, interest & royalty income is chargeable as per domestic law in source country only.
16	Hungary 167 ITR 4 & 187 ITR 58	01.04.88 A.Y.1989-90	15 @	15 @	40 @	20 @	15% tax on dividends if at least 10% of the capital is owned by Company and dividend relates to a new contribution after 1.4.88.
17	Indonesia 171 ITR 27	01.04.88 A.Y.1989-90	10 @ 15 @	10 @	15 @	As per domestic law	10% tax on dividends if at least 25% of the capital is owned by Company; in other cases 15%.
18	Israel 222 ITR 10	1.6.96 / 1.4.94	10 @	10 @	10 @	10 @	For TDS on dividend, interest, royalties & technical service fees effective date is 1.6.96, for taxes on Income & Capital effective date is 1.4.94
19	Italy 220 ITR 3	01.04.96 A.Y.1997-98	15 @ 25 @	15+	20 @	20 @	15% tax on dividends if at least 10% of the capital is owned by Company; in other cases 25%.
20	Japan 182 ITR 380	01.04.90 A.Y.1991-92	15 @	10 @ 15 @	20 @	20 @	Interest taxable at 10% if beneficial owner is a bank and 15% in all other cases.
21	Kazakstan 228 ITR 162	01.04.98 A.Y.1999-2000	10 @	10 @	10 @	10 @
22	Kenya 157 ITR 8	01.04.84 A.Y.1985-86	15 @	15+	20+	As per domestic law
23	Korea (South) 165 ITR 191	01.04.86 A.Y.1987-88	15 @ 20 @	15 @ 10 @	15 @	15 @	15% on dividend if at least 20% of capital is owned by co, other cases 20%. For interest at 10% if recd. by bank or govt, other cases it is 15%.
24	Libya 137 ITR 27	01.04.83 A.Y.1984-85	* +	* +	* +	No separate provision	* Dividend, interest royalty will be taxable as per domestic law of source country.
25	Malaysia 107 ITR 36	01.04.72 A.Y.1973-74	* +	* +	* +	No separate provision	* Taxable as per domestic law applicable. Special treatment provided to dividends paid by Companies resident in both Malaysia and Singapore.
26	Malta 218 ITR 13	01.04.96 A.Y.1997-98	10 @ 15 @	10 @	15 @	10 @	10% tax on dividends if at least 25% of the capital is owned by Company ; in other cases 15%. Article 13 deals with Technical Fees, Article 12 deals with Royalties and Fees for Included Services.
27	Mauritius 146 ITR 214	01.04.82 A.Y.1983-84	5 @ 15 @	* @	15+	Taxable in country of residence as per domestic law	5% tax on dividends if at least 10% of the capital is owned by Company; in other cases 15%. * Interest exempt if beneficially owned by Govt. or bank carrying bonafide banking business, in other cases rate as per domestic laws.
28	Mongolia 222 ITR 44	01.04.94 A.Y.1995-96	15 @	15 @	15 @	15 @
29	Nepal 175 ITR 33	01.04.89 A.Y.1990-91	10 @ 15 @	10 @ 15 @	15 @	In country of residence as per domestic law	10% tax on dividends if at least 10% of the capital is owned by Company ; in other cases 15%. Interest taxable @ 10% if recipient is bank carrying on bonafide banking business, otherwise 15%.
30	Netherlands 177 ITR 72	01.04.90 [01.04.87 for Air transport] A.Y.1991-92	15 @	10 @ 15 @	20 @	20 @	Interest taxable at 10% in the case of banks or financial institutions carrying on bonafide banking or financing business or enterprise holding more than 10% of Capital of payer company and at 15% in all other cases.
31	New Zealand 166 ITR 90 225 ITR 15	01.04.87 A.Y.1988-89	20 @	15 @	30 @	30 @	Protocol restricting treaty benefits to Indian or New Zealand residents. 225 ITR 15.
32	Norway 169 ITR 15	01.04.87 A.Y.1988-89	15 @ 25 @	15 @	+ rate not prescribed	10+	15% tax on dividend if at least 25% of the capital is owned by company and the dividends are attributable to new contribution; in other cases, dividend will be taxable at 25%. Technical services fees taxable at 10%, as per lower rate specified in Indo-German DTAA w.e.f. 26.10.1996.
33	Oman (Sultanate of) 228 ITR 21	01.04.98 A.Y.1998-99	10 @ 12.5 @	10 @	15 @	15 @	10% tax on dividends if beneficial owner is company owning atleast 10% of capital in payer company. 12.5% in all other cases.
34	Philippines 219 ITR 60	01.04.95 A.Y.1996-97	15 @ 20 @	10 @ 15 @	15 @	In country of residence	15% tax on dividends if at least 10% of the capital is owned by Company; in other cases 20%. Interest at 10% in hands of financial institutions,Insurance Company and also on public issues of bond, debentures, etc., and at 15% in all other cases.
35	Poland 182 ITR 147	01.04.90 A.Y.1991-92	15 @ *	15 @	22.5 @	22.5 @	* Dividend should relate to new contribution after 1.4.90.
36	Romania 171 ITR 170	01.04.88 A.Y.1989-90	15 @ 20 @	15 @	22.5 @	22.5 @	15% tax on dividend if at least 25% of capital is owned by company, 20% in other cases.
37	Russian Federation 179 ITR 89	01.04.90 A.Y.1991-92	15 @	15 @	15 @ 20 @	20 @	Royalty relating to copyrights literacy artistic or scientific work other than cinematographic film, tapes etc. at 15%. Other royalty at 20%.
38	Singapore 209 ITR 1	01.04.94 A.Y.1995-96	10 @ 15 @	10 @ 15 @	15 @ 10 @	15 @ 10 @	10% tax on dividend if at least 25% of capital is owned by co. In other cases 15%. Interest at 10% if recipient is bank, insurance co. or similar financial institution. In other cases 15%. Royalty payment for use of equipment and ancillary technical services at 10%, in other cases 15%.
39	South Africa 98 TAXMAN 4	01.04.98 A.Y.1999-2000	10 @	10 @	10 @	10 @
40	Spain 214 ITR 197	01.04.96 A.Y.1997-98	15 @	15 @	10 @ 20 @	20 @	Royalty payment for use of or right to use equipment is taxable at 10%, in other cases it is 20%.
41	Sri Lanka 143 ITR 7	01.04.81 A.Y.1982-83	15+	10 @	10 @	In country of residence as per domestic law
42	Sweden 229 ITR 11	01.04.98 A.Y.1999-2000	10 @	10 @	10 @	10 @
43	Swiss Confederation 214 ITR 223	01.04.95 A.Y.1996-97	15 @	15 @ 10 @	[See Note 2]		Interest is taxable at 10% if recipient is bank, or enterprise holding 20% of capital, otherwise it is 15%
44	Syria 155 ITR 93	01.04.83 (1.4.75 for operation of aircraft) A.Y.1984-85	*	7.5+	10+	Taxable in country of residence as per domestic law	* Dividend is taxable only in country of residence as per domestic law.
45	Tanzania 132 ITR 35	01.01.82 A.Y.1983-84	10+ 15+	12.5+	20+	Taxable in country of resid- ence as per domestic law	Dividends taxable at 10% if the recipient is a company which holds at least 10% of the shares during atleast 6 months preceding the date of payment of dividend; tax on dividend at 15% in all other cases.
46	Thailand 161 ITR 82	01.01.87 A.Y.1988-89	15 @ 20 @ *	10+ 25+	15+	As per domestic law of both countries	* Dividend taxable at 15% if payer is industrial co. and payee co. is holding at least 10% of voting shares in it. Taxable at 20% if payee is industrial co. or recipient co. is beneficial owner holding atleast 25% of voting shares. In other cases as per domestic law. Interest taxable at 10% if recipient is financial institution including insurance co., otherwise at 25%.
47	Turkmenistan 228 ITR 44	01.04.98 A.Y.1999-2000	10 @	10 @	10 @	10 @
48	Turkey 224 ITR 145	01.04.94 (notified on 03.02.97) A.Y.1995-96.	15 @	10 @ 15 @	15 @	15 @	Interest is taxable at 10% if recipient is a bank or a financial institution, in other cases 15%.
49	United Arab Emirates 205 ITR 49	01.04.94 A.Y.1995-96	5 @ 15 @	5 @ 12.5 @	10 @	In country of residence as per domestic law	Dividend taxable at 5% if the beneficial owner is a Co. which holds at least 10% of the shares and at 15% in all other cases. Tax on interest at 5% in cases of banks, etc., and at 12.5% in all other cases.
50	United Arab Republic 74 ITR 11	01.01.70 A.Y.1971-72 (01.01.61 operation of aircraft)	*	*	Taxable only in source country	As per domestic Laws of both countries	* For rate of tax & basis of taxation refer to the DTAA Provision.
51	United Kingdom 206 ITR 235	01.04.94 A.Y.1995-96	15 @	15 @ 10 @	[See Note 2]		Interest taxable at 10% if beneficial owner is bank which is resident, in other case at 15%
52	United States of America 187 ITR 102	01.04.91 A.Y.1992-93	15 @ 25 @	10 @ 15 @	[See Note 2]		15% tax on dividends if at least 10% of the capital is owned by Co; in other cases 25%. Interest taxable at 10% if recipient is bonafide bank or financial institution, in other cases 15%. Technical Services termed as Included Services. Treaty has Limitation of Benefits and P.E. Tax Articles. Protocol is very important.
53	Uzbekistan 223 ITR 60	01.04.93 A.Y.1994-95	15 @	*	15 @	15 @	* Interest received from transaction approved by source country's govt. will be exempt. In other cases normal provision of domestic tax will apply.
54	Vietnam (Socialist Republic of Vietnam) 214 ITR 137	01.04.96 A.Y.1997-98	10 @	10 @	10 @	10 @
55	Zambia 146 ITR 233	A.Y.1979-80	5+ 15+	10+	10+	As per domestic law of both countries	Dividend taxable at 5% if the recipient is a Co. which holds at least 25% of the shares during at least 6 months before the date of payment and at 15% in all other cases.

Notes :

1 In most cases the aforesaid rates of tax are on gross income but in some cases, tax is levied on the net income and, hence, each article of the respective agreement/s must be carefully analysed and applied.

2 In the Country of Source, Royalties and Fees for Technical Services are taxed at following rates :

10% for Equipment Rental and for Services ancillary or subsidary thereto.

for other Cases.

during 1st five years of Agreement
- 15% if Govt. or Specified Organisation is payer
- 20% for other payers

subsequent years, 15% in all cases
Income of Government/Govt. Organisations exempt from Taxation in Country of Source.

3 Pages referred to in citation are statute page nos.

@ - Beneficial Ownership required

+ - Beneficial Ownership may not be required

For agreement made after 31st May, 1997, the rate of tax on royalty or fees for technical services receivable by a foreign company is reduced from 30% to 20% by Finance Act 1997.

GO TO TOP

Notes :
1	In most cases the aforesaid rates of tax are on gross income but in some cases, tax is levied on the net income and, hence, each article of the respective agreement/s must be carefully analysed and applied.
2	In the Country of Source, Royalties and Fees for Technical Services are taxed at following rates : 10% for Equipment Rental and for Services ancillary or subsidary thereto. for other Cases. during 1st five years of Agreement - 15% if Govt. or Specified Organisation is payer - 20% for other payers subsequent years, 15% in all cases Income of Government/Govt. Organisations exempt from Taxation in Country of Source.
3	Pages referred to in citation are statute page nos.
@	- Beneficial Ownership required
+	- Beneficial Ownership may not be required
For agreement made after 31st May, 1997, the rate of tax on royalty or fees for technical services receivable by a foreign company is reduced from 30% to 20% by Finance Act 1997.