INDIA- SEYCHELLES DOUBLE TAXATION AVOIDANCE AGREEMENT

The government of India and the government of Seychelles signed a Tax Information Exchange Agreement (“TIEA”) instead of a double tax avoidance agreement which has been mostly signed by India with various other countries on 25 August, 2015. The main aim of a TIEA is to enable the exchange of information related to taxes between the contracting countries. This agreement has enabled the competent authorities to provide assistance through exchange of information that is foreseeably relevant to the administrative authorities of the contracting countries and enforce the domestic laws adequately.

Applicability

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

1. In India: taxes of every kind and description imposed by the Central Government or the Governments of political subdivisions or local authorities, irrespective of the manner in which they are levied.
2. In Seychelles: taxes of every kind and description imposed by the Government, irrespective of the manner in which they are levied.

 Key takeaways

As per the TIEA, the exchange of information between the contracting states shall take place after a formal request has been made by one state to the other. Following are the main features of this TIEA:

1. Exchange of information upon request: The competent authority of the requested Party shall provide upon requested information in pursuance of the TIEA. Such information shall be exchanged without regard to whether the requesting party needs such information for its own tax purpose or for conducting an investigation which would constitute a crime under its laws.
2. Tax examination abroad: At the request of the competent authority of the requesting party, the requested party may allow representatives of the competent authority of the requesting party to be present at the appropriate part of a tax examination in the territory of the requested party.
3. Possibility of declining a request for information: The competent authority of the requested party may decline the assistance or information sharing request in case the request is not made in conformity with this TIEA or the requesting Party has not pursued all means available in its own territory to obtain the information.
4. Confidentiality: Any information received by a contracting state under the provisions of this TIEA, shall be treated as confidential and may be disclosed only to persons or authorities in the jurisdiction of the concerned contracting state only for the purpose of assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes covered under the TIEA.
5. Costs: Unless the competent authorities of the contracting states otherwise agree, ordinary costs incurred in providing assistance shall be borne by the requested party, and extraordinary costs incurred in providing assistance shall, if they exceed 500 US dollars, be borne by the requesting party.

Inference

The TIEA signed between the countries has benefited both the contracting states as with this arrangement, the international corporation in tax matters by exchange of tax related information has been immensely promoted. The scope of the TIEA is broad as it covers all the taxes levied by governments of India and Seychelles which has broadened the scope of the countries and eased the manner to identify and discourage the tax evading practices being carried out by individuals and entities in the contracting states. The agreement also provides for a mutual agreement procedure for resolving any differences that may arise and for establishing the procedures necessary for the fulfillment of the provisions agreed upon in the TIEA.