India and Kazakhstan signed in New Delhi today a Protocol to amend the existing Double Taxation Avoidance Convention (DTAC) between the two countries, renewing the earlier pact signed on 9th December, 1996 for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income.
The new protocol provides for internationally accepted standards for effective exchange of information on tax matters. Further, the information received from Kazakhstan for tax purposes can be shared with other law enforcement agencies with authorisation of the competent authority of Kazakhstan and vice versa.
The Protocol this time included a Limitation of Benefits clause, to provide a main purpose test to prevent misuse of the DTAC and to allow application of domestic law and measures against tax avoidance or evasion.
It provides for specific provisions to facilitate relieving of economic double taxation in transfer pricing cases, which is considered a taxpayer-friendly measure and in line with the Base Erosion and Profit Shifting (BEPS) Action Plan to meet the minimum standard of providing Mutual Agreement Procedure (MAP) access in transfer pricing cases.
The bilateral Protocol inserts service PE provisions with a threshold and also provides that the profits to be attributed to PE will be determined on the basis of apportionment of total profits of the enterprise.
The new Protocol replaces existing Article on Assistance in Collection of Taxes with a new Article to align it with international standards, said a statement from the Finance Ministry.