PROTOCOL - Protocol - Iceland

PROTOCOL TO THE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF ICELAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME At the moment of signing the Agreement between the Government of the Republic of India and the Government of Iceland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, the undersigned have agreed that the following provisions shall form an integral part of the Agreement: I. Ad Article 2 Paragraph 2 The Icelandic social security charge Tryggingargjald shall not be regarded as taxes on the total amounts of wages or salaries paid by enterprises. II. Ad Article 8 For the purposes of this Article and within the meaning of paragraph 14 of the OECD Commentary (2005) on Article 8, interest on investments directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft if they are integral to the carrying on of such business, and the provisions of Article 11 shall not apply in relation to such interest. III. Ad Article 10 (Dividends), 11 (Interest), 12 (Royalties and Fees for Technical Services), or 13 (Capital Gains) A corporation of one of the Contracting States deriving dividends, interest, royalties, or capital gains from sources within the other Contracting States shall not be entitled to the benefits of Article 10 (Dividends), 11 (Interest), 12 (Royalties and Fees for Technical Services), or 13 (Capital Gains) if: a) By reason of special measures the tax imposed on such corporation by the first-mentioned Contracting State with respect to such dividends, interest, royalties, or capital gains is substantially less than the tax generally imposed by such Contracting State on corporate profits; and b) 25 percent or more of the capital of such corporation is held of record or is otherwise determined, after consultation between the competent authorities of the Contracting States, to be owned directly or indirectly, by one or more persons who are not individual residents of the first-mentioned Contracting State. IV. Ad Article 25 Paragraph 2 The provisions of paragraph 2 of Article 25 of this Agreement, shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first-mentioned State at a rate of tax which is higher than that imposed on the profits of a similar company of the first-mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7. It is also provided that in no case the differences in the two rates, referred to above will exceed 10 percentage points. IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Protocol. DONE in duplicate at New Delhi on this Twenty-third day of November 2007, each in the Hindi, Icelandic and English languages, all texts being equally authentic. In case of divergence of interpretation, the English text shall prevail. For the Government of the Republic of India: For the Government of Iceland: (P. CHIDAMBARAM) (ARNI MATHIESEN) (Anita Kapur) Joint Secretary, Government of India