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India-Colombia Double Taxation Avoidance Agreement (DTAA)

The Double Taxation Avoidance Agreement (DTAA) between the government of the Republic of India and the government of the Republic of Colombia aims to provide a framework for the avoidance of double taxation and the prevention of fiscal evasion concerning taxes on income. This significant agreement was signed in India on May 13, 2011, and was ratified by both countries on July 7, 2014. It is a crucial instrument entered into by the contracting states to offer tax stability to the residents of India and Colombia.

Applicability

The agreement applies to residents of either or both countries and deals with the following taxes:

  • In India: Income tax, including any surcharge
  • In Colombia: Income tax and its complementary tax

Key Highlights

Here are key highlights of the India-Colombia DTAA:

  1. Permanent Establishment Taxation: If an enterprise’s operations create a permanent establishment in the source state, business profits will be taxable in that source state.
  2. Project Profits Taxation: Profits from a construction, assembly, or installation project shall be subject to taxation in the source state if the project continues for more than six months in that state.
  3. Taxation of International Traffic: Profits earned by a business from operating ships or aircraft in international traffic are subject to taxation in the jurisdiction where the company is located.
  4. Capital Gains Taxation: Capital gains from the sale of shares may be taxable in the country of source.
  5. Dividends, Interest, and Royalties: Dividends, interest, and royalties are subject to taxation in both the country where they are earned and the country where they are received. They are further subject to withholding tax at a rate of 5% on dividends and 10% on royalties and interest.
  6. Tax Credit: A deduction for taxes paid in the other contracting state is available to eliminate double taxation.
  7. Exchange of Information: The DTAA incorporates provisions for the effective exchange of information and assistance in the collection of taxes between the tax authorities of both countries, aligning with internationally accepted standards.
  8. Anti-Abuse Provisions: To prevent the misuse of the DTAA, anti-abuse provisions have been included to ensure that only genuine residents can derive treaty benefits.

Inference

The India-Colombia DTAA plays a pivotal role in facilitating bilateral economic cooperation between the two countries. It provides fiscal stability to residents of both India and Colombia and encourages the exchange of services, technology, and capital. The anti-abuse clauses in the DTAA help guarantee that only legitimate residents can benefit from the tax treaty.

Additionally, the provisions in the DTAA have been instrumental in addressing tax-related offences and preventing money laundering. They also enable effective monitoring of tax evaders. This agreement is a testament to the commitment of both India and Colombia to enhance their economic and tax cooperation while ensuring transparency and fairness in the taxation of income.

For comprehensive legal guidance and assistance regarding the India-Colombia Double Taxation Avoidance Agreement or any other legal matters, please do not hesitate to contact Chandrawat & Partners. We specialize in international tax agreements and are dedicated to providing expert legal assistance for all your needs.

We are committed to offering professional legal services, and we look forward to assisting you with any legal concerns or inquiries you may have. Your satisfaction and peace of mind are our top priorities.

For more information or to seek our expertise on this agreement or other legal matters, please don’t hesitate to reach out to us. We are here to serve your legal needs with the utmost professionalism and diligence.

To know more about DTAA relations between India and Columbia, please download our Guide.

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