INDIA- QATAR DOUBLE TAXATION AVOIDANCE AGREEMENT

The government of India and the government of the state of Qatar had signed a Double Taxation Avoidance Agreement (“DTAA”) on 7 April, 1999 for the avoidance of double taxation and with the view to prevent fiscal evasion with respect to taxes on income; which came into effect from 15 January, 2000.

Applicability

The DTAA applies to the following taxes in the contracting states:

1. In India- the income tax, including any surcharge thereon; and
2. In Qatar- the income tax.

Key Provisions

1. As per the DTAA, a withholding tax rate of 10% shall be levied on interests, royalty and fees for technical services and a 5% withholding tax rate on dividends, if at least 10% of the shares of the company paying the dividend is held by the recipient company; or else 10%. Additionally, an exemption to dividends earned by government institutions has been granted.
2. The profits of an enterprise of a contracting state shall be taxable only in that state unless the enterprise carries on business in the other contracting state through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may also be taxed in the other state but only so much of them as is attributable to that permanent establishment.
3. The competent authorities of the contracting states shall exchange such information (including documents), as is deemed necessary for the purpose of carrying out the provisions of the DTAA, in relation to the domestic laws.
4. Any person who under the laws of that state or any political sub-division or local authority thereof is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature is recognized as a resident of that state.
5. Directors’ fees and other similar payments derived by the resident of a contracting state in his capacity as a member of the board of directors of a company which is a resident of the other contracting state, may be taxed in that other state.
6. The DTAA provides that the competent authorities can resolve any dispute or doubts which may arise by mutual agreement. The contracting states may also consult each other for the elimination of double taxation in cases which have not been specifically covered under the DTAA.

Inference

The tax treaty signed between India and Qatar consists of provisions which are in consonance with the internationally accepted standards and practices like the mutual agreement procedure to amicably resolve disputes; assistance in collection of taxes; exchange of information for tax purposes with the law enforcements and elimination of double taxation clause which specifies that a deduction shall be allowed by the other state in regards to the taxes paid by the entity in one state.