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PRESS RELEASE
A Double Taxation Avoidance Agreement (DTAA) between
the Government of India and the Government of Kuwait was notified by the
Government of India on 28th November 2007 through S.O. 2000(E),
(notification No.277/2007-FTD) and has come into force on 17th October
2007 in accordance with Article 30 of the Agreement.
2. The provisions of the said Agreement shall be given effect to in the
Union of India and in the State of Kuwait with effect from the 1st day
of April 2008.
3. The salient features of the Agreement are:
3.1 Article 2- Taxes Covered: The Agreement will cover in the
case of India, the Income-tax including Surcharge thereon and in the
case of Kuwait, the corporate Income-tax, the contribution from the net
profits of the Kuwaiti shareholding companies payable to the Kuwaiti
Foundation for the Advancement of Science (KFAS), the Zakat etc.
3.2 Article 4 - Resident: In the case of India, a resident is a
person, who under the Indian law is liable to tax by reason of his
domicile, residence, place of management or any other criterion of a
similar nature. In the case of Kuwait a resident is an individual who is
a Kuwaiti national or an Indian national and who is present in Kuwait
for a period or periods totaling in the aggregate at least 183 days in
the fiscal year concerned, and a company or an entity which is
incorporated in Kuwait and is liable to tax therein. Government and
Government institutions have also been included within the ambit of
‘Resident’.
3.3 Article 5 - Permanent Establishment (PE): This article
provides for constitution of a project PE with a threshold period of 183
days or more. It also provides for an Insurance PE. This article also
provides for constitution of the service PE with a threshold period of
183 days in any twelve month period.
3.4 Article 8- Shipping and Air Transport: The profits derived by
an enterprise from the operation of ships or aircraft in international
traffic shall be taxable in the country of residence of the enterprise.
This article shall replace the provisions of the Agreement between the
government of the Republic of India and the government of the State of
Kuwait for the Avoidance of Double Taxation of Income from International
Air Transport signed on 21st April 1982.
3.5 Article 10-Dividends, Article 11- Interest and
Article 12-Royalties and Fees for Technical Services: Withholding
rates for taxation of dividends, interests and royalties in the source
state have been restricted to 10 % of the gross amount of dividends,
interest, royalties or fees for technical services.
3.6 Article 12-Royalties: The rate of withholding on royalties or
fees for technical services in the source state has been kept at 10%.
3.7 Article 13-Capital Gains: Capital Gains on sale of shares
will be taxable in the country of source.
3.8 Article 22- Other Income: Any income not specifically covered
under the Agreement shall be taxable only in the state of residence.
3.9 Article 26- Exchange of Information: The Agreement provides
for the exchange of information between the tax authorities of the two
countries for carrying out the provisions of the Agreement or of the
domestic tax laws of the two countries in respect of taxes covered under
the Agreement. A provision has also been added in this Article for
assistance in collection of taxes.
3.10 Article 27- Limitation of Benefits: This Article is an
anti-abuse provision aimed at preventing misuse of the Agreement.
4. The Agreement will provide tax stability to the residents of India
and Kuwait and facilitate mutual economic cooperation as well as
stimulating the flow of investment, technology and services from India
to Kuwait and vice versa.
December 24, 2007 |
