India signed a revised double taxation avoidance agreement with Syria to ensure that the companies are taxed in countries where they have permanent establishments.
The agreement, signed by External Affairs Minister Pranab Mukherjee and Syrian Minister of Economy and Trade Amer Husni, would cover all taxes imposed on total income, including taxes on gains from selling of movable or immovable property, taxes on wages or salaries paid by enterprises.
As per the agreement permanent establishment includes a branch, factory, place of management and 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, according to the agreement.
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 over 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 would 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 5 per cent of the gross amount of dividends. This tax rate would be applicable if the company getting dividend holds at least 10 per cent of the stake in the firm paying the dividends and 10 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 10 per cent in the case of interest and royalties.
Capital gains from the sale of shares may be taxed in the country of source, as per the agreement. |
