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TMI BlogAgreement between the Government of the Republic of India and Government of the United Arab Emirates and the Government of the Republic of India 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 ..... ct, 1957 (27 of 1957), the Central Government hereby directs that all the provisions of the said agreement shall be given effect to in the Union of India. ANNEXURE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNITED ARAB EMIRATES FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL The Government of the Republic of India and the Government of the United Arab Emirates. Desiring to promote mutual economic relations by concluding an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital. Have agreed as follows : ARTICLE 1 PERSONAL SCOPE This Agreement shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 TAXES COVERED 1. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital including taxes on gains from alienation of movable or immovable property as well as on capital appreciation. 2. The existing taxes to which the Agreement shall apply are: (a) In United Arab Emirates: ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; (h) the term national means: (i) in the case of U.A.E. all individuals possessing the nationality of U.A.E. in accordance with U.A.E. laws and any legal person, partnership and other body corporate deriving its status as such from U.A.E. laws; (ii) in the case of India, any individual possessing the nationality of India and any legal person, partnership, or association deriving its status as such from the laws in force in India; (i) the term international traffic means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in a Contracting State except when the ship or aircraft is operated solely between places in the other Contracting State; (j) the term competent authority means: (i) in the case of U.A.E., the Minister of Finance and Industry of his authorised representative; and (ii) in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative. 2. As regards the application of the Agreement by a Contracting State, any term not defined therein shall, unless t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing consultancy services by an enterprise of a Contracting State through employees or other personnel in the other Contracting State, provided that such activities continue for the same project or connected project for a period or periods aggregating more than 9 months within any twelve-month period. 3. Notwithstanding the preceding provisions of this Article, the term permanent establishment shall be deemed not to include: (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise; (e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character. 4. Notwithstanding the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. 2 . Subject to the provisions of paragraph ( 3 ), where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, 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. 3 . In determining 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g agency. ARTICLE 9 ASSOCIATED ENTERPRISES Where: (a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial 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 10 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 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 State, but if the recipient is the benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is paid on a loan granted by a bank carrying on a bona fide banking business or by a similar financial institution; and (b) 12.5 per cent of the gross amount of the interest in all other cases. 3. Notwithstanding the provisions of paragraph (2) interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by: (i) the Government, a political sub-division or a local authority of the other Contracting State; or (ii) the Central Bank of the other Contracting State. 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 debtors 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 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience but do not include royalties or other payments in respect of the operation of mines or quarries or exploitation of petroleum or 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 14, as the case may be, shall apply. 5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or (b) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant previous year or year of income, as the case may be; in that case only so much of the income as is derived from his activities performed in that other State may be taxed in that other State. 2. The term professional services includes independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. ARTICLE 15 DEPENDENT PERSONAL SERVICES 1. Subject to the provisions of Articles 16, 17, 18, 19, 20 and 21, 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litical sub-divisions or local authorities. 4 . Notwithstanding the provisions of paragraph ( 2 ) and Articles 7, 14 and 15, where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such in a Contracting State accrues not to the entertainer or athlete himself but to another person, that income shall be taxable only in the other Contracting State, if that other person is supported wholly or substantially from the public funds of that other State, including any of its political sub-divisions or local authorities. ARTICLE 18 REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1. (a) Remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her Contracting State for the purpose of study, research or training solely as a recipient of a grant, allowance or award from the Government of either of the Contracting States or from a scientific, educational, religious or charitable organisation or under a technical assistance programme entered into by the Government of either of the Contracting States for a period not exceeding three years from the date of his first arrival in that other Contracting State in connection with that visit shall be exempt from tax in that other Contracting State on (a) the amount of such grant, allowance or award; (b) all remittances from the first-mentioned Contracting State for the purposes of his maintenance, education or training; and (c) any remuneration (not exceeding 20,000 Indian rupees or its equivalent sum in U.A.E. currency per annum) in respect of services in that other Contracting State if the services are performed in connection with his study, research, training or are incidental thereto. 3 . An individual who is a resident of a Contracting State and who is temporarily present in the other Contracting State solely as an employee of, or under contract with an enterprise of the first-m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply to income from research if such research is undertaken primarily for the private benefit of a specific person or persons. ARTICLE 22 OTHER INCOME 1 . Subject to the provisions of paragraph ( 2 ), items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing articles of this Agreement, shall be taxable only in that Contracting State. 2 . The provisions of paragraph ( 1 ) shall not apply to income, other than income from immovable property as defined in paragraph ( 2 ) of Article 6, if the recipient of such income, being a resident of a Contacting State, carries on business in the other Contracting State 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 income is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply. ARTICLE 23 CAPITAL 1 . Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion from the tax on the capital of that resident an amount equal to the capital tax paid in U.A.E. Such deduction in either case shall not, however, exceed that part of the income-tax or capital tax (as computed before the deduction is given) which is attributable, as the case may be, to the income or the capital which may be taxed in U.A.E. Further, when such resident is a company by which surtax is payable in India, the deduction in respect of income-tax paid in U.A.E. shall be allowed in the first instance from income-tax payable by the company in India and as to the balance, if any, from the surtax payable by it in India. 3 . Subject to the laws of the U.A.E. where a resident of the U.A.E. derives income which in accordance with the provisions of this Agreement may be taxed in India, the U.A.E. shall allow as a deduction from the tax on income of that person an amount equal to the tax on income paid in India. Such deduction shall not, however, exceed that part of income-tax as computed before the deduction is given, which is attributable to the income which may be taxed in the U.A.E. 4 . For the purpose of paragraph ( 3 ), the term 'tax paid in India' shall be deemed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubjected in the same circumstances and under the same conditions. 5 . In this Article, the term taxation means taxes which are the subject of this Agreement. ARTICLE 27 MUTUAL AGREEMENT PROCEDURE 1 . Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Agreement, 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 two years of the date of receipt of notice of the action which gives rise to taxation not in accordance with the Agreement. 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 Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the national laws of the Contracting States. 3 . The compete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required by its law for the bringing into force this Agreement. The Agreement shall enter into force on the date of the later of these notifications and shall thereupon have effect: (a) In the United Arab Emirates: In respect of income derived on or after the 1st January next following the calendar year in which the Agreement enters into force and in respect of capital which is held at the expiry of the calendar year next following that in which the Agreement enters into force or subsequent years; (b) in India: in respect of income arising in any 'previous year' in beginning on or after 1st April next following the calendar year in which the Agreement enters into force and in respect of capital which is held at the expiry of any previous year' beginning on or after 1st April next following the calendar year in which the Agreement enters into force. ARTICLE 31 TERMINATION This Agreement shall remain in force indefinitely, but either of the Contracting States may, on or before 30th June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give to the other Contracting State, through diplomatic channels writt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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