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INDIA- KUWAIT DOUBLE TAXATION AVOIDANCE AGREEMENT

The governments of India and Kuwait on 15 June, 2006, signed a Double Taxation Avoidance Agreement (“DTAA”) for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income. Both the countries had later on 15 January, 2017, signed a protocol to amend the tax treaty. Information obtained from Kuwait for tax purposes may be shared with other law enforcement agencies with permission from Kuwait’s responsible authorities, and vice versa.

Applicability

The existing taxes to which the DTAA shall apply to in particular are:

a. In India:

  • the income-tax, including any surcharge thereon;

b. In Kuwait:

  • the corporate income-tax;
  • the income tax; and
  • the taxes subjected according to the Supporting of National Employees law.

Key highlights

  1. Income derived by a resident of a state from the immovable property situated in the other state, may be taxed in that other state.
  2. Profits derived by an enterprise of a state from the operation of ships or aircrafts in international traffic, shall be taxed only in that state.
  3. Interest arising in a one state and paid to a resident of the other state being the beneficial owner of such interest, may be taxed in that other state.
  4. Royalties arising in state and paid to a resident of the other state, may be taxed in other state.
  5. The DTAA provides for a a withholding tax rate of 10% on dividends, interests, royalties and
  6. fees for technical services.

Inference

The DTAA lays down that Where a resident of Kuwait derives income which may be taxed in both – India and Kuwait, Kuwait shall allow as a deduction from the tax on the income of that resident, an amount equal to the income-tax paid in India and vice versa. The protocol further brings the DTAA’s information exchange provisions up to date with the current international standards and practices aligns them with the provisions laid down by Organization for Economic Cooperation and Development and the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.

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

Download Guide