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TMI BlogConvention between the Government of the Republic of India and the Government of the Socialist Republic of Romania for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on incomeX X X X Extracts X X X X X X X X Extracts X X X X ..... ofits) Surtax Act, 1964 (7 of 1964), the Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. ANNEXURE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF ROMANIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government of the Republic of India and the Government of the Socialist Republic of Romania desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to promote and strengthen the economic relations between the two countries on the basis of equality in rights and reciprocal advantage. Have agreed as follows: Article 1 PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1. The taxes to which this Convention shall apply are: (a) In the case of India: (1) Income-tax and any surcharge thereon; and (2) Surtax; (hereinafter referred to as " Indian tax "). (b) In the case of Romania ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law or any entity which is treated as a company under the taxation laws of the respective Contracting States; (g) the term " enterprise of a Contracting State " and " enterprise of the other Contracting State " mean, respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting States; (h) the term " competent authority " means in the case of India the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative, and in the case of Romania the Ministry of Finance or its authorised representative; (i) the term " national " means:-- in the case of India, any individual possessing the nationality of India and any legal person, partnership or association deriving its status from the laws in force in India; in the case of Romania, any individual possessing the citizenship of Romania and any legal person, partnership or association deriving its status from the laws in force in Romania; (j) the term " a political sub-division " means a political sub-division in India; (k) the term " an administrative territorial unit " means an administrative territ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed place of business through which the business of the enterprise is wholly or partly carried on. 2. The term " permanent establishment " includes especially: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; (g) a warehouse in relation to a person providing storage facilities for others; (h) a farm, plantation or other place where agriculture, forestry, plantation or related activities are carried on; (i) a premises used as a sales outlet or for receiving or soliciting orders; (j) an installation or structure used for the exploration of natural resources; (k) a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or supervisory activity (together with other such sites, projects or activities, if any) continues for a period of more than six months, or where such project or supervisory activity, being incidental to the sale of machinery or equipment, continues for a period not exceeding six months and the charges payable for the project or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the enterprise; or (c) he habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself or for the enterprise and other enterprises controlling, controlled by, or subject to the same common control as, that enterprise. 5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carried on business in that other State through a broker, general commission agent or any other agent of an independent status provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise itself or on behalf of that enterprise and other enterprises controlling, controlled by, or subject to the same common control as, that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph. 6. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carried on business in that other Contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. In any case where the correct amount of profits attributable to a permanent establishment is incapable of determination or the determination thereof presents exceptional difficulties, the profits attributable to the permanent establishment may be estimated on a reasonable basis. 3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incurred whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of the taxation laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... craft and any other activity directly connected with such transportation. Article 9 SHIPPING 1. Profits derived by an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable only in that State. 2. Notwithstanding the provisions of paragraph 1, such profits may also be taxed in the other Contracting State if the shipping activities connected with the operation of ships in international traffic are carried on in that other State, but the tax so charged shall not exceed 2.50 per cent. of the gross amount payable in respect of operation of ships in that other State. 3. 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 engaged in the operation of ships. 4. For the purposes of this article, the gross amount payable in respect of operation of ships in a Contracting State shall mean the aggregate of the following amounts, namely:-- (a) the gross amount payable on account of carriage of passengers, livestock, mail or goods shipped at a port or ports in that Contracting State; (b) interest arising in that Contracting State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividends are paid. 3. The term " dividends " as used in this article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. In this context, the profits distributed by Romanian Joint Companies to the capital subscribers are assimilated to dividends. 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such cases, the provisions of article 7 or article 16, as the case may be, shall apply. 5. Where a company which is a resident of a Contracting State derives profits or inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this article. 5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such cases, the provisions of article 7 or article 16, as the case may be, shall apply. 6. Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division, an administrative territorial unit, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in a Contracting State a permanent establishment in connection with which the activities for which the payment is made was incurred, and such commission is borne by such permanent establishment, then such commission shall be deemed to arise in the Contracting State in which the permanent establishment is situated. 6. Where by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the commission, having regard to the transaction for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such cases, the excess part of the payment shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Article 14 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such royalties and fees for technical service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7. Where, by reason of special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of royalties or fees for technical services paid exceeds the amount which would have been paid in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such cases, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Article 15 CAPITAL GAINS 1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in article 6 and situated in the other Contracting State may be taxed in that other State. 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 DEPENDENT PERSONAL SERVICES 1. Subject to the provisions of article 18, 19, 20, 21, 22 and 23, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant " previous year " or " calendar year ", as the case may be; and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this article, remuneration derived in respect of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported wholly or substantially from the public funds of that other State, including any of its political sub-divisions, administrative territorial units or local authorities. Article 20 REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1. (a) Remuneration, other than a pension, paid by a Contracting State, a political sub-division, an administrative territorial unit or a local authority thereof to an individual in respect of services rendered to that State, sub-division, unit or authority shall be taxable only in that State. (b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who: (i) is a national of that State; or (ii) did not become a resident of that State solely for the purpose of rendering the services. 2. (a) Any pension paid by, or out of funds created by a Contracting State, a political sub-division, an administrative territorial unit or a local authority thereof to an individual in respect of services rendered to that State, sub-division, unit or authority shall be taxable only in that State. (b) However, such pension ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts with the Government of that other State or any agency or instrumentality thereof solely for the purpose of training, study or orientation shall be exempt from tax for a period not exceeding two years from his arrival in that other Contracting State in respect of remuneration received by him on account of such training or study. 4. For the purposes of paragraph 1, the term " recognised university, college or school " means a university, college or school which has been recognised in this regard by the competent authority of the concerned Contracting State. Article 23 PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1. A professor or teacher who is or was a resident of one of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State. 2. This article shall not apply to income from research if such research is undertaken p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come provided that such credit shall not exceed Indian tax (as computed before allowing any such credit) which is appropriate to the profits or income arising in Romania. Further, where such resident is a company by which surtax is payable in India, the credit aforesaid shall be allowed in the first instance against income-tax payable by the company in India and as to the balance, if any, against surtax payable by it in India. 3. The amount of Indian tax payable under the laws of India and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of Romania, in respect of profits or income arising in India, which has been subjected to tax both in India and in Romania, shall be allowed as a credit against Romanian tax payable in respect of such profits or income provided that such credit shall not exceed Romanian tax (as computed before allowing any such credit) which is appropriate to the profits or income arising in India. For the purposes of this paragraph, profits paid by the Romanian State enterprises to the State budget shall be deemed to be Romanian tax. 4. For the purposes of the credit referred to in paragraph 3, the term " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjected in the same circumstances and under the same conditions. 5. In this article, the term " taxation " means taxes which are the subject of this Convention. Article 27 MUTUAL AGREEMENT PROCEDURE 1. Where a resident of a Contracting State considers that the actions of one or both of the Contracting State result or will result for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the national laws of those States present his case to the competent authority of the Contracting State of which he is a resident. This case must be presented within three years of the date of receipt of notice of the action which gives rise to taxation not in accordance with the Convention. 2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to avoidance of taxation not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the national laws of the Contracting Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which shall be furnished on a routine basis. 3. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: (a) to carry out administrative measures at variance with the laws or administrative practice of that or of the other Contracting State; (b) to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; (c) to supply information or documents which would disclose any trade, business, industrial, commercial or professional secret or trade process or information the disclosure of which would be contrary to public policy. Article 29 ASSISTANCE IN COLLECTION 1. The Contracting State undertake to lend assistance and support to each other, in the collection of the taxes to which this Convention relates, in the cases where the taxes are definitely due according to the laws of the State making the request. 2. In the case of a request for enforcement of collection, tax claims of either of the Contracting State which have been finally determined will be accepted for enforcement by the other Contracting State to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the calendar year in which the instruments of ratification are exchanged; (b) in Romania, in respect of income arising in any calendar year beginning on or after the first day of January next following the calendar year in which the instruments of ratification are exchanged. 3. The existing Agreement for the avoidance of double taxation of income of enterprises operating aircraft and ships in international traffic dated the 25th September, 1968, shall cease to have effect upon the entry into force of this Convention. Article 32 TERMINATION This Convention shall remain in force indefinitely but either of the Contracting State may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give the other Contracting State through diplomatic channels, written notice of termination and, in such event, this Convention shall cease to have effect: (a) in India, in respect of income arising in any previous year beginning on or after the first day of April next following the calendar year in which the notice is given; (b) in Romania, in respect of income arising in any c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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