Agreement for avoidance of double taxation between India and Romania: Commencement of - PRESS RELEASE - Income Tax

Agreement for avoidance of double taxation between India and Romania : Commencement of Notification Number: PRESS RELEASE Dated 09-02-1988 India and Romania have entered into a convention for the avoidance of double taxation and the prevention of fiscal evasion with respect of taxes on income. The convention has entered into force on the 14th November, 1987 and shall have effect in India in respect of income arising in any previous year beginning on or after the first day of April, 1988. Under this convention, business profits of an enterprise of one country shall be taxable in the other country only if it maintains a permanent establishment like a branch, office, factory, a workshop, an oil or gas well or other place of extraction of natural resources or a building site or construction, installation or assembly project or supervisory activities in connection therewith, in that other country. It has also been provided that in the determination of profits of a permanent establishment, expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses, wherever incurred, as are in accordance with the provisions of the taxation laws of that State, would be allowed as deduction. Aircraft profits will be completely exempt in the country of source and shall be taxable only by the country of residence of the enterprise. Source country tax rates on shipping profits will not exceed 2.50 per cent. of the gross amount payable on account of carriage of passengers, etc. With regard to dividends, interest and royalties, and fees for technical services, primary right to tax these incomes has been given to the country of residence. The country of source will limit its tax on these incomes to certain specified percentages.