Cabinet DecisionsLegislation Updates

The Union Cabinet approved the signing of the Double Taxation Avoidance Agreement (DTAA) and Protocol between the Republic of India and the Republic of Chile for the elimination of double taxation and the prevention of fiscal evasion and avoidance with respect to taxes on income.

Major impact:

The DTAA will facilitate elimination of double taxation. Clear allocation of taxing rights between Contracting States through the Agreement will provide tax certainty to investors & businesses of both countries while augmenting the flow of investment through fixing of tax rates in source State on interest, royalties and fees for technical services. The Agreement and Protocol implements minimum standards and other recommendations of G-20 OECD Base Erosion Profit Shifting (BEPS) Project. Inclusion of Preamble Text, a Principal Purpose Test, a general anti-abuse provision in the Agreement along with a Simplified Limitation of Benefits Clause as per BEPS Project will result in curbing of tax planning strategies which exploit gaps and mismatches in tax rules.

Implementation Strategy and Targets:

After Cabinet approval, necessary formalities for bringing the Agreement and Protocol into force will be completed. Implementation would be watched and reported by the Ministry.


Cabinet

[Press Release dt. 27-11-2019]

[Source: PIB]

Cabinet DecisionsLegislation Updates

Union Cabinet approved the signing of the Protocol amending the Convention between the Government of the Republic of India and the Government of the Federative Republic of Brazil for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

Implementation Strategy and Targets:

After Cabinet approval, necessary formalities for bringing the Protocol into force will be completed. Implementation would be watched and reported by the Ministry.

Major impact:

Through updation of the Double Taxation Avoidance Convention’s (DTAC’s) provisions to international standards, the Amending Protocol between India and the Federative Republic of Brazil will facilitate the elimination of double taxation. Clear allocation of taxing rights between the Contracting States through DTAC will provide tax certainty to investors & businesses of both countries. The Amending Protocol will augment the flow of investment through lowering of tax rates in source State on interest, royalties and fees for technical services. The Amending Protocol implements minimum standards and other recommendations of the G-20 OECD Base Erosion Profit Shifting (BEPS) Project. Inclusion of Preamble Text, a Principal Purpose Test, a general anti-abuse provision in the DTAC along with a Simplified Limitation of Benefits Clause as per BEPS Project will result in curbing of tax planning strategies which exploit gaps and mismatches in tax rules

Point-wise details:

a.  The existing DTAC between India and Brazil was signed on 26th April, 1988 and was amended through a Protocol signed on 15th October 2013 in respect of exchange of information. Through the present Protocol, the DTAC has been amended on various other aspects.

b.  The amended DTAC also implements the minimum standards as well as other recommendations of the G-20 OECD Base Erosion and Profit Shifting (BEPS) Project.

Background:

The existing Double Taxation Avoidance Convention (DTAC) between India and Brazil being very old was required to be amended to bring it in line with international developments and also to implement the recommendations contained in the G20 OECD Base Erosion and Profit Shifting Project (BEPS).


Ministry of Finance

[Press Release dt. 06-11-2019]

NewsTreaties/Conventions/International Agreements

A Protocol was signed to amend the existing Double Taxation Avoidance Agreement (DTAA) between India and Kuwait for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income. The said Protocol was entered into on 26-03-2018 and notified in the Official Gazette on 04-05-2018.

The Protocol updates the provisions in the DTAA for exchange of information as per international standards. Furthermore, it enables sharing of information received from Kuwait for tax purposes with other law enforcement agencies with authorisation of the competent authority of Kuwait and vice versa.

[Press Release no. 1531499]

Ministry of Finance

Cabinet DecisionsLegislation Updates

The Union Cabinet has given approval to accede to the Protocol under World Health Organization (WHO) Framework Convention on Tobacco Control to eliminate illicit trade in tobacco products. It will be applicable to both smoking and chewing or smokeless tobacco (SLT) forms as  negotiated and adopted under Article 15 of the World Health Organization Framework Convention on Tobacco Control (WHO FCTC).  India is a party to WHO FCTC.

Details: The protocol lays down obligations of the parties. It spells out supply chain control measures that must be adopted by the parties viz. licensing of manufacture of tobacco products and machinery for manufacturing of tobacco products, due diligence to be kept by those engaged in production, tracking and tracing regime, record keeping, security; and measures to be taken by those  engaged in e-commerce, manufacturing in free-trade zones and duty free sales.

The protocol lists out offences, enforcement measures such as seizures and disposal of seized products. It calls for international cooperation in information sharing, maintaining confidentiality, training, technical assistance and cooperation in scientific and technical and technological matters.

Impact: Elimination of illicit trade in tobacco products through strengthened regulation will help in strengthening comprehensive tobacco control, leading to reduction in tobacco use which in turn, will result in reduction in disease burden and mortality associated with tobacco use.

Accession to such treaty will provide actionable alternatives against such prevailing practices that are affecting public health at large. India, being at the forefront of tobacco control, would be able to influence the international organizations including World Custom Organization in controlling such illicit trade.

The protocol to eliminate illicit trade in tobacco products is a path breaking initiative in strengthening global action against tobacco and is also a new legal instrument in public health. It is a comprehensive tool to counter and eventually eliminate illicit trade in tobacco products and to strengthen legal dimensions for international health cooperation.

Background: The WHO Framework Convention on Tobacco Control (WHO FCTC) is the first international public health treaty negotiated under the auspices of the WHO. The objective of FCTC is to provide a framework for supply and demand reduction measures for tobacco control at the national, regional and global levels.

One of the key tobacco supply reduction strategies contained in Article 15 of WHO FCTC envisages elimination of all forms of illicit trade and tobacco products, including smuggling, illicit manufacturing and counterfeiting. Accordingly, the said Protocol was developed and adopted by the Conference of Parties (COP) which is the governing body of FCTC. The protocol is divided into 10 parts and contains 47 Articles.

Cabinet

NewsTreaties/Conventions/International Agreements

The Union Cabinet has approved the signing and ratification of protocol amending the double taxation avoidance agreement with China. The Cabinet gave its nod to changes including updating the existing provisions for exchange of information to the latest international standards. Besides minimum standards, the Protocol will also bring in changes as per Base Erosion & Profit Shifting (BEPS) Action reports as agreed upon by two sides. Further the protocol will incorporate changes required to implement treaty related minimum standards under the Action reports of BEPS Project, in which India had participated on an equal footing.

[Source: The Economic Times]