Agreement To Avoid Double Taxation

Posted by: In: Ikke kategoriseret 10 sep 2021 Comments: 0

Double taxation is common because companies are considered to be separate legal persons from their shareholders. As a result, companies pay taxes on their annual income, just like individuals. When companies pay dividends to shareholders, these dividends are subject to income tax on the shareholders who receive them, while the profits that the money has brought for the payment of dividends have already been taxed at the company level. The Protocol amending the India-Mauritius Agreement, signed on 10 May 2016, provides for source-based taxation on capital gains resulting from the sale of shares acquired from 1 April 2017 in a company established in India. At the same time, investments made before April 1, 2017 were made by grandfathers and are not subject to capital gains tax in India. If such capital gains arise during the transitional period between 1 April 2017 and 31 March 2019, the tax rate is limited to 50% of India`s national rate. However, the 50% reduction in the tax rate during the transitional period is subject to the article on the limitation of benefits. Tax in India at the total domestic tax rate will be applied from the 2019-2020 fiscal year. The term “double taxation” may also refer to the double taxation of income or activity. For example, corporate profits may be taxed first if they are earned by the entity (corporation tax) and, in turn, when the profits are distributed to shareholders in the form of dividends or other distributions (dividend tax).

In particular, interest, royalties, pensions, dividends are subject to these double taxation conventions. There are two possibilities to benefit from exemptions through double taxation treaties: without tax deduction or tax deduction at a reduced rate, as agreed in the double taxation convention. There are two types of double taxation: judicial double taxation and economic double taxation. In the first, where the source rule overlaps, the tax is levied by two or more countries in accordance with their national laws concerning the same transaction, the income is collected or is considered to be collected in their respective jurisdictions. . . .

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