India inks tax treaty with Georgia

India and Georgia on Wednesday signed a double taxation avoidance agreement (DTAA) for exchange of banking information and to prevent tax evasion.

The DTAA with Georgia, a former Soviet Republic located south of Russia, provides for taxing business profits in the source state if the activities of an enterprise constitute a permanent establishment (PE) there. It also provides for sharing information with other agencies with the consent of the supplying state.

“The agreement incorporates provisions for effective exchange of information between tax authorities of the two countries in line with best international standards, including exchange of banking information and supplying of information without recourse to domestic interest,” a Finance Ministry statement said here.

The India-Georgia DTAA, inked by CBDT (Central Board of Direct Taxes) Chairman M.C. Joshi and Georgia's Ambassador Zurab Katchkatchishvili, also incorporates anti-abuse (limitation of benefits) provisions to ensure that the benefits of the pact are availed of by genuine residents of the two countries. “The Agreement will provide tax stability to the residents of India and Georgia and will facilitate mutual economic cooperation between the two countries,” the statement said.

According to the statement, while enhancing recourse to mutual agreement procedure to relieve double taxation in cases involving transfer pricing pacts, the low level of withholding rates of taxation for dividend, interest and royalties and fees for technical services at 10 per cent, as agreed to in the DTAA, would promote greater investments, flow of technology and technical services between the two countries.

However, dividends, interest and royalties and fees for technical services income would be taxed both in Georgia and India, it said.

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