Article 8 - International Shipping and Air Transport - International Taxation - Income Tax

Article 8 - International Shipping and Air Transport As Per OECD Model Tax Convention Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. [ Para 1 of Article 8 ] The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. [ Para 2 of Article 8 ] As per UN Model Tax Convention Article 8 ( Alternative A ) Article 8 (Alternative A) of the United Nations Model Convention reproduces Article 8 of the OECD Model Convention. Article 8 ( Alternative B ) ​ Profits of an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that State. [ Para 1 of Article 8( Alternative B ) ] Profits of an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable only in that State unless the shipping activities arising from such operation in the other Contracting State are more than casual. If such activities are more than casual, such profits may be taxed in that other State. The profits to be taxed in that other State shall be determined on the basis of an appropriate allocation of the overall net profits derived by the enterprise from its shipping operations. The tax computed in accordance with such allocation shall then be reduced by ___ per cent. (The percentage is to be established through bilateral negotiations.). [ Para 2 of Article 8( Alternative B ) ] The provisions of paragraphs 1 and 2 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. [ Para 3 of Article 8 (Alternative B) ] As per Indian Income tax Act, 1961 deal with according provision mentioned mentioned below Special-Provision for computing the profits and gains of shipping business in the case of non-residents Section 44B . [ For More Detail refer this chapter - Click on this Link ] Special provision for computing profits and gains of the Business of Operation of Aircraft In the case of Non-Residents Section 44BBA [ For More Detail refer this chapter - Click on this Link ]