(UNI) Agreement between India and the Republic of Albania was signed for the avoidance of Double Taxation and the Prevention of Fiscal Evasion (DTAA) with Respect to Taxes on Income and on Capital.
Dr Sudha Sharma, Chairperson, Central Board of Direct Taxes (CBDT) and Mr Fatos Kerciku, Albanian Ambassador to India, signed the DTAA providing for avoidance of fiscal evasion with respect to Taxes on Income and on Capital (DTAA).
The agreement provides that business profits will be taxable in the source state if the activities of an enterprise constitute a Permanent Establishment (PE) in the source state. The Agreement provides for fixed place PE, building site, construction & installation PE, service PE and agency PE. It also has a provision in para 2 in Article 9 concerning Associated Enterprises that would enhance recourse to Mutual Agreement Procedure to relieve double taxation in cases involving transfer pricing adjustments.
Dividends, Interest and Royalties and Fees for Technical Services income will be taxed both in the country of residence and in the country of source. The low level of withholding rates of taxation for dividend (10 per cent), interest (10 per cent) and royalties and fees for technical services (10 per cent) will promote greater investments, flow of technology and technical services between the two countries.
The Agreement has provisions for effective exchange of information between tax authorities of the two countries in line with latest international standard, including exchange of banking information and supplying of information without recourse to domestic interest. The article on assistance in collection of taxes also includes provisions for taking measure of conservancy and anti-abuse (limitation of benefits) provisions to ensure that the benefits of the Agreement are availed of by the genuine residents of the two countries.
It also provides for tax stability to the residents of India and Albania and will facilitate mutual economic cooperation between the two countries. It will also stimulate the flow of investment, technology and services between India and Albania, a Finance Ministry release said. UNI