The Union Cabinet on 6 May 2015 gave its approval for the revised Double Taxation Avoidance Agreement (DTAA) with South Korea.
The bilateral DTAA was signed in 1985 for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income for the citizens of both the countries.
Features of revised Double Taxation Avoidance Agreement (DTAA)
• Its primary purpose is to provide for tax stability to the residents of India and South Korea and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between the two countries.
• It provides for source based taxation of capital gains, making adjustments to profits of associated enterprises on the basis of arm's length principle and residence based taxation of shipping income.
• It rationalizes tax rates in the Articles on Dividends, Interest and Royalties and Fees for Technical Services.
• It enables effective exchange of information and assistance in collection of taxes between tax authorities
• It incorporates limitation of benefits provisions under the agreement to ensure that the benefits are availed of only by genuine residents of both countries.
The revision in the agreement has become necessary in the backdrop of growing investment flows and increased movement of working professionals between the two countries in recent years.
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When: 6 May 2015