India and Kazakhstan on Friday, January 6, signed an agreement to amend a 20 year old bilateral tax treaty, under which information exchanged between the two countries can be shared with other law enforcement agencies.
The protocol to amend the existing tax treaty between the two countries provides internationally-accepted standards for effective exchange of information on tax matters. "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," Ministry of Finance said in a statement.
The Double Taxation Avoidance Convention (DTAC) was signed in December 1996 for avoiding double taxation and preventing fiscal evasion with respect to taxes on income.
The revised tax treaty will provide for a Limitation of Benefits clause to prevent misuse of DTAC and would allow application of domestic law and measures against tax evasion. The protocol inserts specific provisions to facilitate relieving of economic double taxation in transfer pricing cases.
"This is a tax-payer friendly measure and is in line with India's commitment under 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 ministry's statement added.
Additionally, the protocol also includes service permanent establishment (PE) provisions 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.
