New Delhi, June 18 : The Government signed a revised Double Taxation Avoidance Agreement (DTAA) with the Government of the Syrian Arab Republic for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income, here today during the visit of H.E. Bashar Al Assad, President of Syrian Arab Republic to India.
The Agreement was signed by Pranab Mukherjee, External Affairs Minister, on behalf of the Government of India and by Dr. Amer Husni Lutfi, Minister of Economy and Trade, Syrian Arab Republic, on behalf of the Government of Syrian Arab Republic.
This Agreement has revised an earlier Double Taxation Avoidance Agreement between India and Syria which was notified on 25th June 1985.
The revised DTAA will cover all taxes imposed on total income or on elements of income, including taxes on gains from alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises.
The DTAA provides that business profits may be taxed in the source state if the activities of an enterprise constitute a permanent establishment in the source state.
Permanent establishment includes especially: a branch, factory, place of management, sales outlet. Profits of a building site, construction, assembly or installation projects may be taxed in the state of source if the site, project or activities continue in that state for 270 days or more.
Profits from the furnishing of services including consultancy services may also be taxed in the state of source if activities of this nature continue within that state for more than a period of 183 days within any 12-month period.
Profits derived by an enterprise from the operation of ships or aircraft in international traffic shall be taxable in the country of residence of the enterprise.
The Agreement provides for a maximum rate of tax to be charged in the country of source on dividends at five per cent of the gross amount of dividends if the beneficial owner of the dividends is a company which holds at least ten per cent of the share capital of the company paying the dividends and ten per cent of the gross amount of dividends in all other cases.
The Agreement further provides for maximum rate of taxation in the source state at ten per cent in the case of interest and royalties. Capital gains from the sale of shares may be taxed in the country of source.
Besides, the Agreement incorporates provisions for exchange of information between tax authorities of the two countries and incorporates anti-abuse provisions to ensure that the benefits of the Agreement are availed of by the genuine residents of the two countries.
The revised DTAA incorporates improvements over the existing DTAA by including anti-abuse provisions and providing for source based taxation of capital gains from alienation of shares.
This Agreement will provide further impetus to the economic ties between India and Syria by facilitating mutual economic cooperation as well as stimulating the flow of investment, technology and services between the two countries.