Honey the Hamster

Indeed, the Court has accepted that there can be no interruption between the date on which the tax treaty is concluded with the country and the date on which that country becomes a member of the OECD. The double taxation treaty is a convention signed by two countries. The agreement is signed to make a country an attractive destination and to allow NRIs to be exempt from multiple tax payments. DTAA does not mean that the NRI can completely avoid taxes, but it does mean that the NRI can avoid paying higher taxes in both countries. DTAA allows an NRI to reduce its tax impact on income earned in India. DTAA also reduces cases of tax evasion. Consequently, in the event of acceptance, the limited scope or reduced rate of withholding tax agreed by the legal systems applies under the tax convention which enters into force from the date of entry into force of the tax treaty with that OECD Member State. As regards taxation, the tax must be levied on: taxpayers have applied to the Court of Justice recognising the decree of the Kingdom of the Netherlands arguing that the benefit of the most-favoured-nation clause is automatic and effective in nature once India has concluded an advantageous tax agreement with an OECD Member State. without any special obligation to declare in order to be entitled to an advantageous tax rate on dividend income. The taxpayers argued that the share dividends paid by the Indian subsidiaries to the Netherlands residents were entitled to the reduced withholding tax rate of 5%. The issue of taxation in a country in the context of corporate residency controls, particularly in the context of administration and control, is a fact-based decision that is a widely debated issue and is being examined by many courts.

In this case, the court provides valid guidelines for accepting or rejecting the principle of screening when applying for contractual benefits, not only because the owner or key management personnel is located in another jurisdiction. The Court pointed out that, since the literal wording of the most-favoured-nation clause of the tax agreement uses clear conditions, any subsequent tax treaty concluded with the OECD member at any given time allows for the benefit of the most-favoured-nation clause. In another case, Dr Rajnikant Bhatt, Thane V Assessee, A, was resident in the United Arab Emirates, so that, according to the DBAA, all income which does not fall within the scope of Article 22 of the Treaty, which deals with the effects of the contract on income other than those mentioned in the preceding Articles, are subject to tax. The court`s decision offers interesting information on the subject of preferential withholding tax using the most-favoured-nation clause, which is particularly important when converting the taxation of dividends to the conventional system from 1 April 2020. The use of the term “is” in the phrase “which is a member of the OECD” in the most-favoured-nation clause requires that countries be members of the OECD when withholding tax is triggered in India, and not necessarily at the time of implementation of the tax treaty. The Court recognized that the most-favoured-nation clause contained in the Protocol to the Tax Convention is applicable only if the country fulfils its accession to the OECD Member. In addition, the advantage of the reduced withholding tax rate or the narrower scope of the tax treaty between India and the other country can only apply if that country fulfils the condition of being a member of the OECD. Consequently, the tax authorities refused the benefit of the tax treaty claimed by the taxpayer, arguing that the maritime transport activity was not managed or controlled exclusively from the United Arab Emirates, but was essentially carried out by a Greek national. The taxpayer who challenged the tax order submitted additional details to the Dispute Resolution Committee (DRP), which in turn confirmed the income`s unfavourable position. The taxpayer aggrieved by the DRP`s order then appealed to the Tribunal.

In the present case, the Netherlands reads the Protocol in accordance with the principle of common interpretation in order to apply consistency and equal distribution of tax claims between countries. Therefore, the Court rejected the income argument that the reduced rate of withholding tax on participating dividends could not be applied to taxpayers, given that Slovenia, Lithuania and Colombia had become members of the OECD not only after the entry into force of the tax treaty, but also after the entry into force of their own tax treaty. Consequently, the court confirmed that the taxable company is established in the United Arab Emirates in accordance with Article 4(1)(b) of the Tax Convention and that the provisions limiting the benefits of Article 29 of the Tax Convention cannot be relied on in the present case. Given the bona fide claim to be resident in the UAE, the taxpayer is entitled to contractual protection in respect of his business income earned in India. The Court relied on the Decree issued by the Kingdom of the Netherlands in 2012, annexed to the Tax Convention, and interpreted the Protocol annexed to the Tax Convention as meaning that the reduced rate of withholding tax provided for in the Indo-Slovenian Tax Convention is applicable on the date on which Slovenia became a member of the OECD, even though this tax treaty was already in force. In support of the argument, the Court relied on the supreme court`s decision of Azadi Bachao Andolan to understand that, when interpreting international tax treaties, the rules of interpretation that apply to national or municipal law cannot be applied, since international tax treaties, treaties and treaties are negotiated by diplomats. Countries with a housing tax system generally allow deductions or credits for tax that residents already pay to other countries for their foreign income. Many countries also sign tax treaties among themselves to eliminate or reduce double taxation. The Court concluded that under Article 10 of the Tax Convention, taxpayers provide the beneficiaries of dividend income as beneficial owners with a gross withholding tax of 10%. However, the Protocol to the Tax Convention, which prescribes certain advantages or advantages, is still an integral part of the tax treaty and does not require specific communication in order to benefit from such an advantage, based on its own decision in the case of Steria (India) Ltd., which takes into account the Indo-French tax treaty. In addition, the most-favoured-nation clause imposed in the Protocol to the Tax Agreement contains a uniform principle to meet the following conditions: Dutch tax resident companies Concentrix Services Netherlands BV and Optum Global Solutions International BV (taxpayers) in the Delhi High Court case were considered entitled to a reduced tax rate of 5% on dividend income from their Indian income Subsidiaries.

applying the concept of the most-favoured-nation (most-favoured-nation) clause under the Protocol to the Indo-Dutch Tax Convention (Tax Treaties) for the equal distribution of tax assets, applying the rules of interpretation. Income tax is used in most countries of the world. Tax systems vary considerably and can be progressive, proportional or regressive, depending on the type of tax. Comparing tax rates around the world is a difficult and somewhat subjective undertaking. In most countries, tax legislation is extremely complex and the tax burden depends differently on the different groups in each country and subnational entity. Of course, the services provided by governments against taxes also vary, making comparisons all the more difficult. The 2020-2021 budget raised the threshold above which Indians acquire NRI status abroad, thus avoiding double taxation of their income abroad. Under the new regulations, an Indian citizen who has resided outside India for more than 240 days automatically acquires non-resident status. The previous threshold for NRI status was 182 days.

Since it is a company registered in the United Arab Emirates (UAE) that operates a shipping business with control and administration in the United Arab Emirates, the taxpayer is considered a tax resident in the United Arab Emirates under Article 4 of the Indo-Emirati Tax Convention (Tax Convention) and has its office and business activity in the United Arab Emirates since 2000 would entitle it to: benefit from an advantage under Article 8 of the Tax Convention. The Court held that the “common interpretation” rule is used to allocate taxes fairly and equally between the two countries, and the courts are required to ensure that the tax treaty is applied effectively and fairly in order to ensure consistency in the interpretation of the provisions by the tax authorities and courts of the respective countries. However, the rule of common interpretation must be applied with caution and prudence, taking into account that the point of view expressed is unique and/or personal to the income or to a court […].