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News & Press: International News

UK, India DTA Protocol Adjusts Dividend Taxes

12 November 2012   (0 Comments)
Posted by: SAIT Technical
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By Robert Lee (Tax Talk) http://www.tax-news.com/

Executive summary (SAIT Technical)

India and the UK have added an amending protocol to their DTA in respect of partnerships and dividends. The protocol stipulates that the benefits of the DTA will now be available to partners of UK partnerships, providing that the income of the UK partnership is taxed in their hands. The withholding tax rate for dividends will be either 10% or 15%, depending on circumstance, but will be equally applicable in both the UK and in India.The original convention was signed in 1993.

Full article

India and the UK have inked an amending protocol to their existing double tax agreement (DTA), altering the provisions relating to partnerships and the taxation of dividends.

The protocol was signed in London by Dr Jaimini Bhagwati, High Commissioner of India to the UK and by the UK's Exchequer Secretary to the Treasury David Gauke. It amends the original convention signed in January, 1993.

The protocol stipulates that the benefits of the DTA will now be available to partners of UK partnerships, providing that the income of the UK partnership is taxed in their hands. The withholding tax rate for dividends will be either 10% or 15%, depending on circumstance, but will be equally applicable in both the UK and in India.

Also incorporated in the protocol are provisions for the effective exchange of information, in line with the latest international standards. Banking information will become exchangeable, and information will be supplied irrespective of domestic interest. Information may also be shared with agencies other than tax authorities, on the consent of the supplying jurisdiction. Further stipulations have been inserted in the DTA on assistance in the collection of taxes and to ensure that its benefits are not misused.

According to the Indian Finance Ministry, the DTA will provide tax stability to the residents of India and the UK and will facilitate mutual economic cooperation between the two countries. It is also intended to stimulate the bilateral flow of investment, technology and services.


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