India, Iceland sign double taxation avoidance agreement

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New Delhi, Nov 23 (UNI) India today signed a Double Taxation Avoidance Agreement (DTAA) with the Government of Iceland for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income.

The agreement also aims at promoting economic cooperation between the two countries, said a statement.

Finance Minister P Chidambaram expressed confidence that the agreement would result in high degree of comfort level of investors of both the countries.

The DTAA between two countries will come into force on a date to be notified in due course. For India the agreement covers income-tax including any surcharge thereon and in the case of Iceland, income-tax to the State and to the municipalities.

The DTAA provides for taxation of dividend, interest, royalties and fees for technical services-both in the country of residence as well as the country of source.

However, the rate of tax in the country of source will not exceed ten per cent of the gross amount of payment in case the beneficial owner of the payments is a resident of the contracting State.

The DTAA provides that capital gains from alienation of shares of a company shall be taxable in the country where the company is a resident.

The incidence of double taxation shall be avoided by one country giving credit for taxes paid by its residents in the other country.

There is a provision for exchange of information in cases, which are under investigation in either of the two countries. Both the countries shall assist each other in collection of revenue claims.

There is also a provision for limitation of benefits under the DTAA to prevent misuse of the provisions of the DTAA.

UNI

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