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India-Maldives Double Taxation Avoidance Agreements

India and the Republic of Maldives have entered into several agreements to avoid double taxation and prevent fiscal evasion concerning taxes on income and capital gains. These agreements include a Limited Agreement for the avoidance of double taxation of income derived from international air travel, an agreement for mutual administrative assistance in tax matters between SAARC (South Asian Association for Regional Cooperation) member states, and a Tax Information Exchange Agreement (TIEA). They became effective on August 1, 2016, April 1, 2011, and August 2, 2016, respectively. 

Applicability

These agreements encompass various taxes:

  • In India, they cover taxes of every kind and description imposed by the Central Government, governments of political subdivisions, or local authorities.
  • In the Maldives, they encompass taxes imposed by the Government in accordance with the law, regardless of the entity responsible for collection.

Key Highlights

Here are the key highlights of these agreements:

  1. Residency: The definition of a resident includes any person liable to tax based on criteria like domicile, residence, place of management, or other similar factors under the laws of the respective member state. It also comprises political subdivisions, local authorities, and statutory bodies.
  2. Exchange of Information: The competent authorities of the member states are required to exchange information, including documents and public documents or certified copies thereof, as necessary to execute the provisions of these agreements.
  3. Continuation of Existing Laws: The taxation laws in effect in either of the states shall continue to regulate the assessment and taxation of income in the contracting states.
  4. Annual Reports: Both contracting states are obliged to provide an annual report to the other state concerning any changes to their taxation laws in the current year.
  5. Assistance in Revenue Collection: Member states shall lend assistance to each other in the collection of revenue claims.
  6. Secrecy of Information: Each state shall treat the information it receives regarding taxation upon inquiry as secret and limit the disclosure of any information received under this agreement.
  7. Review: Member states may meet to review this agreement on request or at the end of five years from its entry into force, unless they notify the SAARC Secretariat in writing that no such review is necessary.

Inference

These agreements, which aim to prevent double taxation and fiscal evasion, have strengthened the bilateral relationship between India and the Republic of Maldives. They contribute to reducing instances of tax avoidance. The agreements call for reciprocal assistance in the exchange of data necessary for administering and upholding domestic tax regulations. The exemption of income received by Indian firms from the operation of planes in international traffic from Maldivian tax and vice versa provides protection against double taxation for airline corporations in both countries. The agreements also allow the sharing of tax-related information and offer support in revenue collection, all with the primary goal of improving trade ties among SAARC member nations.

For more detailed information, legal advice, or assistance with matters related to the India-Maldives Double Taxation Avoidance Agreements, please feel free to contact Chandrawat & Partners. Our legal experts specialize in international tax agreements and are committed to providing tailored legal assistance to address your specific requirements.

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

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