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TMI BlogAgreement between the Government of the Republic of India and the Government of the Republic of Bangladesh for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxesX X X X Extracts X X X X X X X X Extracts X X X X ..... BANGLADESH 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 PEOPLE'S REPUBLIC OF BANGLADESH Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have agreed as follows: CHAPTER I SCOPE OF THE CONVENTION 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 existing taxes to which this convention shall apply are (a) in the case of Bangladesh : the income-tax (hereinafter referred to as Bangladesh tax); (b) in the case of India : (i) the income-tax including any surcharge thereon, (ii) the surtax, (hereinafter referred to as Indian tax). (2) This Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting-State after the date of signature of the present Convention in addition to, or in place of, the taxes referred to in paragraph (1). The competent authorities of the Contracting States shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purposes of this Convention, the term resident of a Contracting-State means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. 2. Where by reason of the provisions of paragraph (1) an individual is a resident of both Contracting States, then his case shall be determined in accordance with the following rules : (a) he shall be deemed to be a resident of the Contracting-State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are the closest (centre of vital interests); (b) if the Contracting State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode; (c) if he has an habitual abode in both Contracting States or in neither of them he shall be deemed to be a resident of the Contractin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless his activities are limited to the purchase of goods or merchandise for the enterprise, or (b) he habitually maintains in the first-mentioned State a stock of goods or merchandise belonging to the enterprise from which that person regularly delivers goods or merchandise for or 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 or other enterprises which are controlled by it or have controlling interest in it. 5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business and their activities do not fall within the scope of paragraph (4)(c) above. 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 carries on business in that other State (whether through a permanent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and 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 ascertainment thereof presents exceptional difficulties, the profits attributable to the permanent establishment may be computed 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 purpose 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, but this does not include any expenses which, under the law of that State, would not be allowed to be deducted by an enterprise of that State. 4. Insofar as it has been customary in a Contracting State to determine the profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. ARTICLE 11 Dividends 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting-State may be taxed in that other Contracting State. 2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed : (a) 10 per cent of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 10 per cent of the capital of the company paying the dividends; (b) 15 per cent of the gross amount of the dividends in all other cases. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3. The term div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India or to the Reserve Bank of India shall be exempt from Bangladesh tax. The competent authorities of the Contracting States may determine by mutual agreement any other institution to which this paragraph shall apply. (4) The term "interest" as used in this article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premium 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) to (3) 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 Contracting 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 permanen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de any payments in respect of the operation of mineral deposits, sources and other natural resources. (4) The provisions of paragraphs (1) and (2) shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply. (5) Royalties shall be deemed to arise in a Contracting-State when the payer is the Contracting-State itself, a political sub-division, a local authority or a resident of that Contracting-State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l or teaching activities, as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. Article 16 Dependent personal services (1) Subject to the provisions of Articles 17, 19 and 20 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 Contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised such remuneration as is derived therefrom shall be taxable only in that other Contracting 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 Contracting State, if (a) he is present in that other Contracting State for a period or periods not exceeding in the aggregate 183 days during the "previous year" or "income year" concerned or he is present in that other Contracting State for any period which forms part of a continuous period exceeding 183 days throughout which he is prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derived from sources within a Contracting State by an individual, who is a resident of the other Contracting State, shall be taxable only in the first-mentioned Contracting State. (2) The term "pension" as used in Article 20 and this Article means periodic payments made in consideration for services rendered or by way of compensation for injuries received. (3) The term "annuity" as used in paragraph (1), means a stated sum payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payment in return for adequate and full consideration in money or money's worth. Article 20 Government remuneration and pension (1) Remuneration including pensions paid by or out of funds by a Contracting State or a political sub-division or a local authority thereof, to any individual who is a citizen of that Contracting State in respect of services rendered to that Contracting State or political sub-division or local authority thereof in the discharge of functions of a governmental nature shall be taxable only in that State. (2) The provisions of paragraph (1) shall not apply to remuneration and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adesh currency, during the "previous year" or the "income year", as the case may be. (3) An individual who is a resident of a Contracting State and who is temporarily present in the other Contracting State under arrangements with the Government of that other Contracting State or any agency thereof solely for the purpose of training, study or orientation shall be exempt from tax in that other Contracting State in respect of remuneration received by him on account of such training, study or orientation. Article 22 Professors, teachers and researchers (1) A professor or a teacher who visits a Contracting State for the purposes of teaching or engaging in research, or both, at a university, college, school or other approved institution in that Contracting State and who is, or was immediately before such visit, a resident of the other Contracting State, shall be exempt from tax in the first mentioned Contracting State on any remuneration for such teaching or research for a period not exceeding two years, from the date of his arrival in that Contracting State. (2) This Article shall not apply to income from research if such research is undertaken primarily for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been subjected to tax both in Bangladesh and India shall be allowed as a credit against Indian tax payable in respect of that income. The credit shall not, however, exceed that proportion of Indian tax which the income from sources within Bangladesh bears to the entire income subject to Indian tax : PROVIDED that such credit shall not exceed Indian tax (as computed before allowing any such credit), which is appropriate to the income derived from sources within Bangladesh, so however, that 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. (2) For the purposes of paragraph (1), the term "Bangladesh tax payable" shall be deemed to include the amount of Bangladesh tax which would have been payable if the Bangladesh tax had not been exempted or reduced in accordance with the following provisions of Bangladesh law: (a) clause (x) of section 29(1), section 45 and section 46 of the Income-tax Ordinance, 1984; (b) paragraph 7 of the Third Schedule to the Income-tax Ordinance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h tax. (4) For the purpose of paragraph (3) of this Article the term "Indian tax payable" shall be deemed to include any amount which would have been payable as Indian tax for any year but for an exemption or reduction of tax granted for that year or any part thereof under : (a) any of the following provisions, that is to say, sections 10(4), 10(4A), 10(6)(viia), 10(15)(iv), 10A, 32A, 33A, 35C, 35CC, 54E, 80CC, 80HH, 80HHA, 80-I, 80J, 80K, 80L of the Income Tax Act, 1961; or (b) any other provisions which may subsequently be made granting an exemption or reduction of tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character: PROVIDED that the amount of the tax referred to in this paragraph shall not, however, exceed: (a) in the case of dividends an amount equal to 10 per cent of the gross amount of such dividends in the case of dividends referred to in paragraph 2(a) of Article 11 and 15 per cent of the gross amount of dividends in the case of dividends referred to in paragraph 2(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation not in accordance with this Convention, he may notwithstanding the remedies provided by the national laws of those Contracting States present the case to the competent authority of the Contracting State of which he is a resident. The case must be presented within three years from the date of the assessment or of the withholding of tax at the source whichever is later. (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 natural agreement with the competent authority of the other Contracting State with a view to the avoidance of taxation not in accordance with this Convention. Any agreement reached shall be implemented notwithstanding any time limits in the national laws of the Contracting States. (3) The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Convention. They may also consult together for the elimination of double taxation in cases not provided for in this Convention. (4) The competent authorities of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng State to which the request is made and collected in that Contracting State in accordance with the laws applicable to the enforcement and collection of its own taxes. (3) In the case of Indian tax, the request will be sent by the Central Board of Direct Taxes, Ministry of Finance (Department of Revenue) to the National Board of Revenue of the Government of the People's Republic of Bangladesh and will be accompanied by such certificate as is required by the laws of India to establish that the taxes have been finally determined and are due from the taxpayer. (4) In the case of Bangladesh tax, the request will be sent by the National Board of Revenue of the Government of the People's Republic of Bangladesh to the Central Board of Direct Taxes, Ministry of Finance (Department of Revenue) in India and will be accompanied by such certificate as is required by the laws of Bangladesh to establish that the taxes have been finally determined and are due from the taxpayer. (5) Where the tax claim has not become final by reason of its being subject to appeal or any other proceeding, a Contracting State may, in order to protect its revenues, request the other Contracting-State to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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