Article 23 - Elimination of Double Taxation - Belgium

CHAPTER 4 METHODS FOR ELIMINATION OF DOUBLE TAXATION ARTICLE 23 ELIMINATION OF DOUBLE TAXATION 1. The laws in force in either of the Contracting States will continue to govern the assessment and taxation of income in the respective Contracting States except where express provision to the contrary is made in this Agreement. 2. In the case of India, double taxation shall be avoided as follows :- (a) Where a resident of India derives income which, in accordance with the provisions of the Agreement, may be taxed in Belgium, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in Belgium whether directly or by deduction. Such deduction shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable to the income which may be taxed in Belgium. Further, where such resident is a company by which surtax is payable in India, the deduction in respect of income-tax paid in Belgium shall be allowed in the first instance from income-tax payable by the company in India and as to the balance, if any, from surtax payable by it in India. (b) Where a resident of India derives income which, in accordance with the provisions of the Agreement, shall be taxable only in Belgium, India may include this income in the tax base but shall allow as a deduction from the income-tax that part of the income-tax which is attributable to the income derived from Belgium. 3. In the case of Belgium, double taxation shall be avoided as follows :- (a) Where a resident of Belgium derives income which may be taxed in India in accordance with the provisions of the Agreement, other than those of paragraph 2 of Article 10, of paragraphs 2 and 6 of Article 11 and of paragraphs 2 and 6 of Article 12, Belgium shall exempt such income from tax but may, in calculating the amount of tax on the remaining income of that resident, apply the rate of tax which would have been applicable if such income had not been exempted. (b) (i) Where a resident of Belgium derives items of his aggregate income for Belgian tax purposes which are dividends taxable in accordance with paragraph 2 of Article 10, and not exempt from Belgian tax according to sub-paragraph (c), interest taxable in accordance with paragraph 2 or 6 of Article 11, or royalties taxable in accordance with paragraph 2 or 6 of Article 12, the Indian tax levied on that income shall be allowed as a credit against Belgian tax relating to such income in accordance with the existing provisions of Belgian law regarding the deduction from Belgian tax of taxes paid abroad. (ii) Where a resident of Belgium derives fees for technical services which have been taxed in India in accordance with paragraph 2 or 6 of Article 12, the provisions of Belgian tax law with respect to earned income derived from sources outside Belgium and subject to foreign tax shall apply. (c) Where a company which is a resident of Belgium owns shares in a company which is a resident of India, the dividends which are paid to it by the latter company and which may be taxed in India in accordance with paragraph 2 of Article 10, shall be exempt from the corporate income-tax in Belgium under the conditions and limits provided for in Belgian law. (d) Where in accordance with Belgian law, losses incurred by an enterprise carried on by a resident of Belgium in a permanent establishment situated in India have been effectively deducted from the profits of that enterprise for its taxation in Belgium, the exemption provided for in sub-paragraph (a) shall not apply in Belgium to the profits of other taxable periods attributable to that establishment to the extent that those profits have been exempted from tax in India by reason of compensation for the said losses. (e) For the purposes of sub-paragraph (b)(i), the term Indian tax levied shall be deemed to include any amount which would have been payable as Indian tax under the laws of India and in accordance with the provisions of the Agreement for any year but for a deduction allowed in computing the taxable income or an exemption from or a reduction of tax granted for that year under : (i) sections 10(4), 10(4B), 10(15)(iv) and 80L of the Income-tax Act, 1961 (43 of 1961), so far as they were in force on, and have not been modified since, the date of the signature of the Agreement, or have been modified only in minor respects so as not to affect their general character; or (ii) any other provision which may be enacted after the Agreement enters into force granting a deduction in computing the taxable income or an exemption from or a reduction of tax and which the competent authorities of the Contracting States agree to be for the purposes of economic development of India, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character; the competent authorities may in such a case decide as to the period for which the benefit of this clause shall apply.