2. The Convention shall also apply to identical or substantially similar fees levied after the date of signature of the Agreement in addition to or in place of existing fees. The competent authorities of the States Parties shall inform each other of all substantial changes to their respective tax legislation and of all official documents relating to the application of the Convention. Many tax havens, such as Mauritius, Singapore and the United Arab Emirates (United Arab Emirates), have signed agreements to avoid double non-taxation and have demonstrated their commitment to an effective exchange of information for tax purposes. The DTAA for India, USA would apply to any natural or negligent person, trust, partnership, business, other entity of persons or any other taxable entity with income, both in India and the United States. The DBA Agreement between India and the United States includes the following taxes levied by both countries: the Agreement between India and the Hong Kong Special Administrative Region (HKSAR) of the People`s Republic of China for the Avoidance of Double Taxation has entered into force 4. Where a person other than a natural company is established in both Contracting States pursuant to paragraph 1 above, the competent authorities of the States Parties shall decide by mutual agreement on the matter and determine the nature and mode of action of the Convention in respect of that person. Mr. X, a resident of India, works in the United States. In return, Mr. X receives some remuneration for work done in the United States. Today, the U.S.
government levies the Federal Income Tax on income received in the United States. However, it is possible that the GOI may also levy income tax on the same amount, i.e. on remuneration earned abroad, given that Mr X is resident in India. In order to protect innocent taxpayers like Mr. X from the harmful effects of double taxation, governments of two or more countries can enter into a treaty known as the double taxation convention (DBAA). The DBA applies to the U.S. Federal Income Tax or, in other words, U.S. income tax. However, the agreement does not apply to the following taxes: the Government of India has concluded double taxation treaties (tax treaties) with several countries to develop a system for each country to distribute the right to fair taxation of different types of income. Tax treaties fully protect taxable persons against double taxation and also aim to prevent discrimination between taxable persons in the international field.
NIS/CIOs would therefore be well advised to use such agreements in tax planning for their investments in India. The comparison of tax rates according to the DBA is as follows: d. If he is a national of both States or of one of the two States, the competent authorities of the States Parties shall settle the matter by mutual agreement. Agreement between the Government of the United States of America and the Government of the Republic of India for the Avoidance of Double Taxation and the Prevention of Tax Evasion on Income. entered into force on 18 December 1990, after the two States Parties had notified each other of the conclusion, in accordance with article 30, paragraph 1, of the procedures necessary under their law for the implementation of the said Convention; 5. . . .