Union Cabinet gives nod to amendments to tax avoidance pacts with Israel, Vietnam

Union Cabinet has approved the Protocol amending the Double Taxation Avoidance Convention (DTAC) India-Israel and Double Taxation Avoidance Convention (DTAC) between India-Vietnam and.
Decision in this regard was taken by the Union Cabinet meeting chaired by the Prime Minister Narendra Modi in New Delhi.
These agreements seek for the avoidance of double taxation and for prevention of fiscal evasion with respect to taxes on income.
The Protocol provides

• International standards for effective bilateral exchange of information on tax matters including bank information and information without domestic tax interest.
• Sharing of Information received from Vietnam and Israel in respect of a resident of India with other law enforcement agencies with authorisation respective agencies.

In case Protocol amending of DTAC with Israel further provides for Limitation of Benefits (LOB) Article. It is an anti-abuse provision which aims at preventing misuse of the Convention.
Background

• The existing DTAC between Indian and Israel was signed in 1996. Both signatory parties had agreed to update Article 27 on the Exchange of Information to meet internationally accepted standards.
• The existing DTAA between Indian and Vietnam was signed in 1994. Both signatory parties had agreed to update Article 27 on the ‘Exchange of Information’ to meet internationally accepted standards. They also had agreed to add a new Article on ‘Assistance in the Collection of taxes’, by amending the Protocol.

Month: Current Affairs - October, 2015