Double Taxation Avoidance Agreement Between India and Mozambique Notified

India on 31 May 2011 notified the Double Taxation Avoidance Agreement (DTAA) with the Government of Mozambique for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

The DTAA has a provision that business profits will be taxable in the source state in case the activities of an enterprise constitute a permanent establishment in the source state. Factory, office, place of managements, profits of construction, installation projects will come under the ambit of permanent establishment. Any permanent establishment will be taxed in the state of source if the project continues in that state for more than 12 months.

The DTAA further provides for effective exchange of information and assistance in collection of taxes between tax authorities of the two countries. It will also provide tax stability to the residents of India and Mozambique and facilitate mutual economic cooperation as well as stimulate the flow of investment, service and technology between India and Mozambique.