Indo Us Double Taxation Avoidance Agreement
The petitioner argued that the transaction was not on its face, which was made to avoid tax. It is not the structure of the holding company, but this specific transaction that defines the intention to avoid taxes or not, which the authorities have not demonstrated. In addition, it was suggested that all decisions and board meetings were made on behalf of the Mauritian company and its directors. In addition, it was argued that limited access to the company`s bank accounts did not show that Mauritius` board did not have financial control over the company. International double taxation has a negative impact on trade and services, as well as on capital and the transportation of people. Taxation of the same income by two or more countries would be a prohibitive burden on the taxpayer. The national laws of most countries, including India, alleviate this difficulty by providing unilateral relief to these double-taxed incomes (Section 91 of the Income Tax Act). However, since this solution is not satisfactory, given the diversity of rules governing the determination of sources of income in different countries, tax treaties seek to remove tax barriers to trade and services, as well as capital movements and the movement of people between the countries concerned. It contributes to the improvement of the overall investment climate. 4. The competent authorities of the contracting states may, by mutual agreement, increase the dollar amounts covered in paragraph 1 of this article to take account of economic or monetary developments.
In the current situation where there is economic instability in the market, this is a major setback for investors, where each country is trying to create a friendly market for investment and where judgments like AAR will remove investors from the country. First, the effects of such an order are expected to be colossal. Investors were protected under the grandfather`s general rule, i.e. investments before April 1, 2017, will not be taxable, but after changing the rules of the agreement between the Government of the Republic of India and the Government of Mauritius to avoid double taxation, exit plans have been strengthened2. The impact would also be visible in the process, as there is considerable uncertainty about the resignations of private equity firms and the DBAA signed by India with Mauritius. This is not the first time AAR has ruled against the normal course of the contract. On a few occasions, it has been found that investors and companies derive their money from Mauritius and Singapore, primarily to take advantage of DTAA`s advantage between India and Mauritius. 3. The term „dividends“ used in this article refers to income from shares or other rights that are not claims that participate in profits, income from other business rights that are subject to the same tax treatment under the tax laws of the state in which the distribution company is the same tax treatment as income from shares subject to the tax legislation of the State of which the distribution company is resident; and income from arrangements, including bonds, which have the right to participate in profits, to the extent that state party legislation where income is collected justifies it.
3. Notwithstanding any provision of the Convention except paragraph 4, a contracting state may tax its residents (in accordance with Article 4 (domicile) and tax its citizens on the basis of their nationality, as if the convention had not entered into force. To this end, the term „citizen“ covers a former citizen whose loss of nationality was one of his main objectives: tax evasion, but only for a period of ten years after that loss. 7. Application of the provisions on the elimination of double taxation: each of the material items must be taken into account with Article 23, which defines the methods for eliminating double taxation. (6) Periodic payments in support of a minor child, made on the basis of a written separation agreement or divorce decision,