Convention between the
Government of the Republic of India and the Government of the Republic of
Kazakstan for the avoidance of double taxation and for the prevention of fiscal
evasion with respect to taxes on income and on capital
Notification No. 10449 [F.
No. 501/6/94-FTD], dated 31-10-1997
Whereas the annexed
Convention between the Government of the Republic of Kazakstan and the
Government of the Republic of India for the avoidance of double taxation and
for the prevention of fiscal evasion with respect to taxes on income and on
capital will enter into force, on the second day of October, 1997, thirty days
after the receipt of the later of notification by both the Contracting States
to each other of the completion of the procedures required under their laws for
bringing into force of the said Convention in accordance with Article 30 of the
said Convention;
Now, therefore, in
exercise of the powers conferred under section 90 of the Income-tax Act, 1961
(43 of 1961) and section 44A of the Wealth-tax Act, 1957 (27 of 1957), the
Central Government hereby directs that all the provisions of the said
Convention shall be given effect to in the Union of India.
Convention between the
Government of the Republic of India and the Government of the Republic of
Kazakstan for the avoidance of double taxation and for the prevention of fiscal
evasion with respect to taxes on income and on capital
The Government of the
Republic of India and the Government of the Republic of Kazakstan desiring to
conclude a Convention for the avoidance of double taxation and for the
prevention of fiscal evasion with respect to taxes on income and on capital,
have agreed as follows:
Article 1
Personal scope
This Convention shall
apply to persons who are residents of one or both of the Contracting States.
Article 2
Taxes covered
1. This Convention shall
apply to taxes on income and on capital imposed on behalf of a Contracting
State or of its political sub-divisions or local authorities irrespective of
the manner in which they are levied.
2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.
3. The existing taxes to
which the Convention shall apply are in particular:
(a) in the Republic of Kazakstan:
(i) the tax on income of legal persons and individuals;
(ii) the tax
on the property of legal persons and individuals;
(hereafter referred to as
"Kazakstan tax");
(b) in the Republic of India:
(i) the income-tax, including any surcharge thereon; and
(ii) the tax
on capital (the wealth-tax)
(hereafter referred to as
"Indian tax");
4. The Convention shall
apply also to any identical or substantially similar taxes which are imposed
after the date of signature of the Convention in addition to, or in place of,
the existing taxes. The competent authorities of the Contracting States shall
notify each other of any significant changes which have been made in their
respective taxation laws.
General definitions
1. For the purposes of
this Convention, unless the context otherwise requires:
(a) the terms:
(i) "Kazakstan" means the
Republic of Kazakstan, and when used in a geographical sense, the term
"Kazakstan" includes the territorial waters, and also the exclusive
economic zone and continental shelf in which Kazakstan, for certain purposes,
may exercise sovereign rights and jurisdiction in accordance with international
law and in which the laws relating to Kazakstan tax are applicable;
(ii) "India" means the territory of
India and includes the territorial sea and airspace above, it as well as any
other maritime zone in which India has sovereign rights, other rights and
jurisdiction, according to the Indian law and in accordance with international
law, including the U.N. Convention on the law of the Sea;
(b) the term "person" includes an individual, a
company, a body of persons or any other entity which is treated as a taxable
unit under the taxation laws in force in the respective Contracting States;
(c) the term "company" means any body corporate or any
entity which is treated as a body corporate for tax purposes;
(d) the terms "a Contracting State" and "the other
Contracting State" mean Kazakstan or India, as the context requires;
(e) the terms "enterprise of a Contracting State" and
"enterprise of the other Contracting State" mean respectively an
enterprise carried on by a resident of a Contracting State and an enterprise
carried on by a resident of the other Contracting State;
(f) the term "international traffic" means any
transport by a ship or aircraft operated by an enterprise which is a resident
of a Contracting State, except when the ship or aircraft is operated solely
between places in the other Contracting State;
(g) the term "competent authority" means:
(i) in Kazakstan: the Ministry of Finance or its authorised
representative;
(ii) In India: the Central Government of the
Ministry of Finance (Department of Revenue) or their authorised
representatives;
(h) the term "national" means:
(i) any individual possessing the nationality of a Contracting
State;
(ii) any legal person, partnership or any
other association deriving its status as such from the laws in force in a
Contracting State;
(i) the term "fiscal year" means:
(i) in the case of India, "previous year as defined under
section 3 of the Income-tax Act, 1961;
(ii) in the
case of Kazakstan, the calendar year;
(j) the term "tax" means Indian tax or Kazak tax, as
the context requires, but shall not include any amount which is payable in
respect of any default or omission in relation to the taxes to which this
Convention applies or which represents a penalty imposed relating to those
taxes.
2. As regards the
application of the Convention at any time by a Contracting State any term not
defined therein shall, unless the context otherwise requires, have the meaning
which it has at that time under the law of that State concerning the taxes to
which the Convention applies.
Article 4
Resident
1. For the purposes of
this Convention, the term "resident of a Contracting State" means any
person who, under the laws of that State, is liable to tax therein by reason of
his domicile, residence, place of management, place of incorporation, or any
other critcrion of a similar nature.
But this term does not
include any person who is liable to tax in that State in respect only of income
from sources in that State or capital situated therein.
2. Where by reason of the
provisions of paragraph 1 an individual is a resident of both Contracting
States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident of the State in which he
has a permanent home available to him; if he has a permanent home available to
him in both States, he shall be deemed to be a resident of the State with which
his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests
cannot be determined, or if he has not a permanent home available to him in
either State, he shall be deemed to be a resident of the State in which he has
an habitual abode;
(c) if he has an habitual abode in both States or in neither of
them, he shall be deemed to be a resident of the State of which he is a
national;
(d) if he is a national of both States or of neither of them, the
competent authorities of the Contracting States shall settle the question by
mutual agreement.
3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall settle the question by mutual agreement.
Article 5
Permanent establishment
1. For the purposes of
this Convention, the term "permanent establishment" means a fixed
place of business through which the business of an enterprise is wholly or
partly carried on.
2. The term
"permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a mine,
an oil or gas well, a quarry or any other place of extraction of natural
resources;
(g) a sales
outlet;
(h) a
warehouse in relation to a person providing storage facilities for others; and
(i) a farm, plantation or other place where
agricultural, forestry, plantation or related activities are carried on.
3. The term
"permanent establishment" also includes:
(a) a building site or construction or installation or assembly
project, or supervisory activities connected therewith, only if such site,
project or activity lasts for more than 12 months, and
(b) an installation or structure used for the exploration of
natural resources, or supervisory activities connected therewith, or a drilling
rig or ship used for the exploration of natural resources, only if such use or
activity lasts for more than 12 months.
4. Notwithstanding the
preceding provisions of this Article, the term "permanent
establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging
to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging
to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise or of collecting information for the
enterprise;
(e) the maintenance of a fixed place of business solely for the
purpose of carrying on, for the enterprise, any other activity of a preparatory
or auxiliary character; or
(f) the maintenance of a fixed placed of business solely for any
combination of activities mentioned in sub-paragraphs (a) to (e), provided that
the overall activity of the fixed place of business resulting from this
combination is of a preparatory or auxiliary character.
5. Notwithstanding the
provisions of paragraphs 1 and 2, where a person -- other than an agent of an
independent status to whom paragraph 7 applies -- is acting on behalf of an
enterprise of the other Contracting State and has, and habitually exercises, in
a Contracting State an authority to conclude contracts in the name of the
enterprise, that enterprise shall be deemed to have a permanent establishment
in that State in respect of any activities which that person undertakes for the
enterprise, unless the activities of such person are limited to those mentioned
in paragraph 4 which, if exercised through a fixed place of business, would not
make this fixed place of business a permanent establishment under the
provisions of that paragraph.
6. Notwithstanding the
preceding provisions of this Article, an insurance enterprise of a Contracting
State shall, except in regard to re-insurance, be deemed to have a permanent
establishment in the other Contracting State if it collects premiums in the
territory of that other State or it insures risks situated therein through a
person other than an agent of an independent status to whom paragraph 7
applies.
7. An enterprise shall not
be deemed to have a permanent establishment in a Contracting State merely
because it carries on business in that State through a broker, general
commission agent or any other agent of an independent status, provided that
such persons are acting in the ordinary course of their business. However, when
the activities of such an agent are devoted wholly or almost wholly on behalf
of that enterprise, he will not be considered an agent of an independent status
within the meaning of this paragraph.
8. The fact that a company
which is a resident of a Contracting State controls or is controlled by a
company which is a resident of the other Contracting State, or which carries on
business in that other State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a permanent
establishment of the other.
Article 6
1. Income derived by a
resident of a Contracting State from immovable property (including income from
agriculture or forestry) situated in the other Contracting State may also be
taxed in that other State.
2. The term
"immovable property" shall have the meaning which it has under the
law of the Contracting State in which the property in question is situated. The
term shall in any case include property accessory to immovable property,
livestock and equipment used in agriculture and forestry, rights to which the
provisions of general law respecting landed property apply, usufruct of
immovable property and rights to variable or fixed payments as consideration
for the working of, or the right to work, mineral deposits, sources and other
natural resources, ships and aircraft shall not be regarded as immovable
property.
3. The provisions of
paragraph 1 shall apply to income derived from the direct use, letting, or use
in any other form of immovable property.
4. The provisions of
paragraphs 1 and 3 shall also apply to the income from immovable property of an
enterprise and to income from immovable property used for the performance of
independent personal services.
Business profits
1. The profits of an enterprise
of a Contracting State shall be taxable only in that State unless the
enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business
as aforesaid, the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to that permanent establishment.
2. Subject to the
provisions of paragraph 3, where an enterprise of a Contracting State carries
on or has carried on business in the other Contracting State through a
permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment.
3. In determining the
profits of a permanent establishment, there shall be allowed as deductions
expenses which are incurred for the purposes of the permanent establishment,
including executive and general administrative expenses so incurred, whether in
the State in which the permanent establishment is situated or elsewhere, in accordance
with the provisions of and subject to the limitations of the tax laws of that
State.
The permanent
establishment shall not be allowed a deduction for amounts paid to its head
office or any of the other offices of the resident by way of royalties, fees or
other similar payment in return for the use of patents or other rights, or by
way of commission, for specific services performed or for management, or by way
of interest on moneys lent to the permanent establishment.
4. No profits shall be
attributed to a permanent establishment by reason of the mere purchase by that
permanent establishment of goods or merchandise for the enterprise.
5. Where profits include
items of income or capital gains which are dealt with separately in other
Articles of this Convention, then the provisions of those Articles shall not be
affected by the provisions of this Article.
6. For the purposes of
preceding paragraphs, the profits to be attributed to the permanent
establishment shall be determined by the same method year by year unless there
is good and sufficient reason to the contrary.
Shipping and air transport
1. Profits derived by an
enterprise which is a resident of a Contracting State from the operation of
ships or aircraft in international traffic shall be taxable only in that State.
2. Profits derived by a
transportation enterprise which is a resident of a Contracting State from the
use, maintenance, or rental of containers (including trailers and other
equipment for the transport of containers) used for the transport of goods or
merchandise in international traffic shall be taxable only in that Contracting
State unless the containers are used solely within the other Contracting State.
3. For the purposes of
this Article, interest on funds connected with the operation of ships or
aircraft in international traffic shall be regarded as profits derived from the
operation of such ships or aircraft, and the provisions of Article 11 shall not
apply in relation to such interest. The provisions of this paragraph will,
however, not apply to interest on fixed deposits with a bank.
4. The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.
Article 9
Associated enterprises
Where--
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an interprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
Article 10
1. Dividends paid by a
company which is a resident of a Contracting State to a resident of the other
Contracting State may be taxed in that other States.
2. However, such dividends
may also be taxed in the Contracting State of which the company paying the
dividends is a resident and according to the laws of that State, but if the
receipt is the beneficial owner of the dividends the tax so charged shall not
exceed 10 per cent of the gross amount of the dividends. This paragraph shall
not affect the taxation of the company in respect of the profits out of which
the dividends are paid.
3. The term
"dividends" as used in this Article means income from shares or other
rights, not being debt-claims, participating in profits, as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the company making the
distribution is a resident.
4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends,
being a resident of a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident,
through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the
holding in respect of which the dividends are paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
5. Where a company which
is a resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends
paid by the company, except insofar as such dividends are paid to a resident of
that other State or insofar as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or a fixed
base situated in that other State, nor subject the company's undistributed
profits to a tax on undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in
such other State.
6. Profits of a company of
a Contracting State carrying on business in the other Contracting State through
a permanent establishment situated therein may, after having been taxed under
Article 7, be taxed on the remaining amount in the Contracting State in which
the permanent establishment is situated at a rate that does not exceed the rate
set forth in paragraph 2 of this Article.
Article 11
Interest
1. Interest arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other State.
2. However, such interest
may also be taxed in the Contracting State in which it arises and according to
the laws of that State, but if the recipient and the beneficial owner of the
interest is a resident of other Contracting State, the tax so charged shall not
exceed 10 per cent of the gross amount of the interest. The competent
authorities of the Contracting States shall by mutual agreement settle the mode
of application of this limitation.
3. Notwithstanding the
provisions of paragraph 2, interest arising in a Contracting State shall be
exempt from tax in that State provided it is derived and beneficially owned by:
(i) the Government, a political
sub-division or a local authority of the other Contracting State; or
(ii) the Central Bank of the other
Contracting State or any other governmental bank or financial
institution/agency that may be mutually agreed upon between the two Contracting
States.
4. The term
"interest" as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage and whether or not carrying a
right to participate in the debtor's profits, and in particular, income from
government securities and income from bonds or debentures, including premiums
and prizes attaching to such securities, bonds or debentures. Penalty charges
for late payment shall not be regarded as interest for the purpose of this
Article.
5. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,
being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent
establishment situated therein or performs in that other State independent
personal services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Article 7
or Article 14, as the case may be, shall apply.
6. Interest shall be
deemed to arise in a Contracting State when the payer is that State itself, a
political sub-division, a local authority or a resident of that State. Where,
however, the person paying the interest, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the indebtendness on which the
interest is paid was incurred and such interest is borne by such permanent
establishment or fixed base, then such interest shall be deemed to arise in the
State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall remain
taxable according to the laws of each Contracting State, due regard being had
to the other provisions of this Convention.
Article 12
Royalties and fees for
technical services
1. Royalties or fees for
technical services arising in a Contracting State and paid to a resident of the
other Contracting State may be taxed in that other State.
2. However, such royalties
or fees for technical services may also be taxed in the Contracting State in
which they arise, and according to the laws of that State, but if the recipient
is the beneficial owner of the royalties or fees for technical services, the
tax so charged shall not exceed 10 per cent of the gross amount of the
royalties or fees for technical services.
3. (a) The term
"royalties" as used in this Article means payments of any kind
received as a consideration for the use of, or the right to use, any copyright
of literary, artistic or scientific work including software, cinematograph
films, and patent, trade mark, design or model, plan, secret formula or
process, or for information concerning industrial, commercial or scientific
experience, and payments for the use of, or the right to use industrial,
commercial or scientific equipment;
(b) The term "fees for technical services" means
payment of any kind in consideration for the rendering of any managerial,
technical or consultancy services including the provision of services by
technical or other personnel but does not include payments for services
mentioned in Articles 14 and 15 of this Convention.
4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties,
being a resident of a Contracting State, carries on business in the other
Contracting State in which the royalties arise, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the right or property
in respect of which the royalties are paid is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Article 7
or Article 14, as the case may be, shall apply.
5. Royalties or fees for
technical services shall be deemed to arise in a Contracting State when the
payer is that State itself, a political sub-division, a local authority or a
resident of that State. Where, however, the person paying the royalties or fees
for technical services, whether he is a resident of a Contracting State or not,
has in a Contracting State a permanent establishment or a fixed base in
connection with which the liability to pay the royalties or fees for technical
services was incurred, and such royalties or fees for technical services are
borne by such permanent establishment or fixed base, then such royalties or
fees for technical services shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
6. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the royalties or fees for
technical services, having regard to the use, right or information for which
they are paid, exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In
such case, the excess part of the payments shall remain taxable according to
the laws of each Contracting State, due regard being had to the other
provisions of this Convention.
Article 13
Capital gains
1. Gains derived by a
resident of a Contracting State from the alienation of immovable property
referred to in Article 6 and situated in the other Contracting State may be
taxed in that other State.
2. Gains from the
alienation of movable property forming part of the business property of a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services, including such
gains from the alienation of such a permanent establishment (alone or with the
whole enterprise) or of such fixed base, may be taxed in that other State.
3. Gains derived by a
resident of Contracting State from the alienation of ships or aircraft operated
in international traffic, or movable property pertaining to the operation of
such ships, aircraft, shall be taxable only in that Contracting State.
4. Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State.
5. Gains from the
alienation of shares other than those mentioned in paragraph 4 of a company
which is a resident of a Contracting State may be taxed in that State.
6. Gains from the
alienation of any property other than that referred to in the preceding
paragraphs, shall be taxable only in the Contracting State of which the
alienator is a resident.
Article 14
Independent personal
services
1. Income derived by a
resident of a Contracting State in respect of professional services or other
activities of an independent character shall be taxable only in that State
except in the following circumstances, when such income may also be taxed in
the other Contracting State:
(a) if he has a fixed base regularly
available to him in the other Contracting State for the purpose of performing
his activities, in that case, only so much of the income as is attributable to
that fixed base may be taxed in that other State; or
(b) if his stay in the other State is for a
period or periods aggregating 183 days or more in any 12-month period
commencing or ending in the fiscal year concerned; in that case, only so much
of the income as is derived from his activities performed in that other State
may be taxed in that other State.
2. The term
"professional services" includes especially independent scientific,
literary, artistic, educational or teaching activities as well as the
independent activities of physicians, lawyers, engineers, architects, surgeons,
dentists and accountants.
Article 15
Dependent personal
services
1. Subject to the
provisions of Articles 16, 18 and 19 salaries, wages and other similar
remuneration derived by a resident of a Contracting State in respect of an
employment shall be taxable only in that State unless the employment is
exercises in the other Contracting State. If the employment is so exercised,
such remuneration as is derived there from may be taxed in that other State.
2. Notwithstanding the
provisions of paragraph 1, remuneration derived by a resident of a Contracting
State in respect of an employment exercised in the other Contracting State
shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other
State for a period or periods not exceeding in the aggregate 183 days in any
12-month period commencing or ending in the fiscal year concerned, and
(b) the remuneration is paid by, or on
behalf of, an employer who is not a resident of the other State, and
(c) the remuneration is not borne by a
permanent establishment or a fixed base which the employer has in the other
State.
3. Notwithstanding the
preceding provisions of this Article, remuneration derived in respect of an
employment exercised aboard a ship or aircraft operated in international
traffic, may be taxed in the Contracting State in which the enterprise
operating the ship or aircraft is a resident.
Directors' fees
Directors' fees and other
similar payments derived by a resident of a Contracting State in his capacity
as a member of the board of directors or a similar body of a company which is a
resident of the other Contracting State may also be taxed in that other State.
Article 17
Artistes and sport persons
1. Notwithstanding the
provisions of Articles 14 and 15, income derived by a resident of a Contracting
State as an entertainer, such as a theatre, motion picture, radio or television
artiste, or a musician, or as a sport person, from his personal activities as
such exercised in the other Contracting State, may be taxed in that other
State.
2. Where income in respect
of personal activities exercised by an entertainer or a sport person in his
capacity as such accrues not to the entertainer or sport person himself but to
another person, that income may, notwithstanding the provisions of Articles 7,
14 and 15 be taxed in the Contracting State in which the activities of the
entertainer or sport person are exercised.
3. The provisions of paragraphs 1 and 2, shall not apply to income from activities performed in a Contracting State by entertainers or sport persons if the visit to that State is substantially supported by public funds of one or both of the Contracting States or of political sub-divisions or local authorities thereof. In such a case, the income is taxable only in the Contracting State of which the entertainer or sport person is a resident.
Article 18
Pensions and other payments
1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment and any annuity paid to such a resident shall be taxable only in that State.
2. The term
"annuity" means a stated sum payable to an individual periodically at
stated times during his life or during a specified or ascertainable period of
time under an obligation to make the payments in return for adequate and full
consideration in money or money's worth.
Article 19
Government service
1. (a) Salaries,
wages and other similar remuneration, other than a pension, paid by a
Contracting State or a political sub-division or a local authority thereof to
an individual in respect of services rendered to that State or sub-division or
authority shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration
shall be taxable only in the other Contracting State if the services are
rendered in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not
become a resident of that State solely for the purpose of rendering the
services.
2. (a) Any
pension paid, by or out of funds created by, a Contracting State or a political
sub-division or a local authority thereof to an individual in respect of
services rendered to that State or sub-division or authority shall be taxable
only in that State.
(b) However, such pension shall be taxable only in the other
Contracting State if the individual is a resident of, and a national of, that
State.
3. The provisions of
Articles 15, 16 and 18 shall apply to salaries, wages and other similar
remuneration and to pensions, in respect of services rendered in connection
with a business carried on by a Contracting State or a political sub-division
or a local authority thereof.
Article 20
Students and apprentices
1. A student or business
apprentice who is or was a resident of a Contracting State immediately before
visiting the other Contracting State and who is present in that other
Contracting State solely for the purpose of his education or training shall,
besides grants, loans and scholarships, be exempt from tax in that other State
on:
(a) payments made to him by persons residing
outside that other State for the purposes of his maintenance, education or
training; and
(b) remuneration from employment in that
other State for an amount not exceeding the amount which is exempt from tax
under the laws of that other Contracting State for any fiscal year,
as the case may be,
provided that such employment is directly related to his studies or is
undertaken for the purpose of his maintenance.
2. The benefit of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article for more than seven consecutive years from the date of his first arrival in that other Contracting State.
Article 21
Professors, teachers and
research scholars
1. A professor or teacher
who is or was a resident of the Contracting State immediately before visting
the other Contracting State for the purpose of teaching or engaging in
research, or both, at university, college, school or other approved institution
in that other Contracting State shall be exempt from tax in that other State on
any remuneration for such teaching or research for a period not exceeding two
years from the date of his arrival in that other State.
2. This article shall not
apply to income from research, if such research is undertaken primarily for the
private benefit of a specific person or persons.
3. For the purposes of
this Article and Article 20, an individual shall be deemed to be a resident of
a Contracting State if he is resident in that State in the fiscal year in which
he visits the other Contracting State or in the immediately preceding fiscal
year.
4. For the purposes of paragraph 1 "approved institution" means an institution which has been approved in this regard by the competent authority of the concerned State.
Article 22
Other income
1. Items of income of a
resident of a Contracting state, wherever arising, not dealt with in the
foregoing Articles of this Convention shall be taxable only in that State.
2. The provisions of
paragraph 1 shall not apply to income, other than income from immovable
property as defined in paragraph 2 of Article 6, if the recipient of such
income, being a resident of a Contracting State, carries on business in the
other Contracting State through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the income is
paid is effectively connected with such permanent establishment or fixed base.
In such case the provisions of Article 7 or Article 14, as the case may be,
shall apply.
3. Notwithstanding the
provisions of paragraph 1, if a resident of a Contracting State derives income
from sources within the other Contracting State in the form of lotteries,
crossword puzzles, races including horse races, card games and other games or
any sort of gambling or betting of any form or nature whatsoever, such income may
be taxed in the other Contracting State.
Article 23
Capital
1. Capital represented by
immovable property referred to in Article 6, owned by a resident of a
Contracting State and situated in the other Contracting State may be taxed in
that other State.
2. Capital represented by
movable property forming part of the business property of a permanent
establishment which an enterprise of a Contracting State has in the other
Contracting State or by movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, may also be taxed in that
other State.
3. Capital represented by
ships and aircraft operated in international traffic, and by movable property
pertaining to the operation of such ships or aircraft, shall be taxable only in
that Contracting State in which the enterprise operating such ships or aircraft
is a resident.
Article 24
Elimination of double
taxation
1. The laws in force in either
of the Contracting States will continue to govern the taxation of income in the
respective Contracting States except where provisions to the contrary are made
in this Convention.
2. In the case of
Kazakstan, double taxation shall be avoided as follows:
(a) Where a resident of Kazakstan derives income or owns capital
which, in accordance with the provisions of this Convention, may be taxed in
India, Kazakstan shall allow:
(i) as a deduction from the tax on the
income of that resident, an amount equal to the income-tax paid in India;
(ii) as a deduction from the tax on capital
of that resident, an amount equal to the tax on capital paid in India.
The amount of the tax to
be deducted pursuant to the above provision shall not exceed the tax which
would have been charged on the same income in Kazakstan under the rates
applicable thereon.
3. In the case of India,
double taxation shall be avoided as follows:
(a) Where a resident of India derives income or owns capital
which, in accordance with the provisions of this Convention, may be taxed in
Kazakstan, India shall allow:
(i) as a deduction from the tax on the
income of that resident, an amount equal to the income-tax paid in Kazakstan;
(ii) as a deduction from the tax on capital
of that resident, an amount equal to the tax on capital paid in Kazakstan.
The amount of the tax to be deducted pursuant to the above provision shall not exceed the tax which would have been charged on the same income in India under the rates applicable thereon.
4. Income or capital
which, in accordance with the provisions of this Convention, is not to be
subjected to tax in a Contracting State, may be taken into account for
calculating the rate of tax to be imposed in that Contracting State.
5. The tax paid in a
Contracting State shall be deemed to include the tax which would have been paid
but for any exemption or reduction of tax granted under incentive provisions
contained in the law of that Contracting State designed to promote economic
development to the extent that such exemption or reduction is granted for
profits from industrial or manufacturing activities or from agriculture,
fishing or tourism (including restaurants and hotels) provided that the
activities have been carried out within that Contracting State.
Article 25
Non-discrimination
1. Nationals of a
Contracting State shall not be subjected in the other Contracting State to any
taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of
that other State in the same circumstances, are or may be subjected. This
provision shall, notwithstanding the provisions of Article 1, also apply to
persons who are not residents of one or both of the Contracting States.
2. The taxation on a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State carrying on the
same activities. This provision shall not be construed as preventing a
Contracting State from charging the profits of a permanent establishment which
a company of the other Contracting State has in the first-mentioned State at a
rate of tax which is higher than that imposed on the profits of a similar
company of the first-mentioned Contracting State, nor as being in conflict with
the provisions of paragraph 3 of Article 7 of this Convention.
3. Enterprises of a
Contracting State, the capital of which is wholly or partly owned or
controlled, directly or indirectly, by one or more residents of the other
Contracting State, shall not be subjected in the first-mentioned State to any
taxation or any requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to which other similar
enterprises of the first-mentioned State are or may be subjected.
4. Except where the
provisions of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article
12 apply, interest, royalties and other disbursements paid by an enterprise of
a Contracting State to a resident of the other Contracting State shall, for the
purpose of determining the taxable profits of such enterprise, be deductible
under the same conditions as if they had been paid to a resident of the
first-mentioned State. Similarly, any debts of an enterprise of a Contracting
State to a resident of the other Contracting State shall, for the purpose of
determining the taxable capital of such enterprise, be deductible under the
same conditions as if they had been contracted to a resident of the
first-mentioned State.
5. The provisions of this
Article shall, notwithstanding the provisions of Article 2, apply to taxes of
every kind and description.
Article 26
Mutual agreement procedure
1. Where a person
considers that the actions of one or both of the Contracting States result or
will result for him in taxation not in accordance with the provisions of this
Convention, he may, irrespective of the remedies provided by the domestic law
of those States, present his case to the competent authority of the Contracting
State of which he is a resident or, if his case comes under paragraph 1 of
Article 25, to that of the Contracting State of which he is a national. The
case must be presented within three years from the first notification of the
action resulting in taxation not in accordance with the provisions of the
Convention.
2. The competent authority
shall endeavour, if the objection appears to it to be justified and if it is
not itself able to arrive at a satisfactory solution, to resolve the case by
mutual agreement with the competent authority of the other Contracting State,
with a view to the avoidance of taxation which is not in accordance with the
Convention. Any agreement reached shall be implemented notwithstanding any time
limits in the domestic law of the Contracting States.
3. The competent
authorities of the Contracting States shall endeavour to resolve by mutual
agreement any difficulties or doubts arising as to the interpretation or application
of the Convention. They may also consult together for the elimination of double
taxation in cases not provided for in the Convention.
4. The competent
authorities of the Contracting States may communicate with each other directly
for the purpose of reaching an agreement in the sense of the preceding
paragraphs. When it seems advisable in order to reach agreement to have an oral
exchange of opinions, such exchange may take place through a Commission
consisting of representatives of the competent authorities of the Contracting
States.
Article 27
Exchange of information
1. The competent
authorities of the Contracting States shall exchange such information
(including documents) as is necessary for carrying out the provisions of this
Convention or of the domestic laws of the Contracting States concerning taxes
covered by the Convention insofar as the taxation thereunder is not contrary to
the Convention in particular for the prevention of fraud or evasion of such
taxes. The exchange of information is not restricted by Article 1. Any
information received by a Contracting State shall be treated as secret in the
same manner as information obtained under the domestic laws of that State and
shall be disclosed only to persons or authorities (including courts and
administrative bodies) involved in the assessment or collection of, the
enforcement or prosecution in respect of, or the determination of appeals in
relation to, the taxes covered by the Convention. Such persons or authorities
shall use the information only for such purposes. They may disclose the
information in public court proceedings or in judicial decisions.
2. In no case shall the
provisions of paragraph 1 be construed so as to impose on a Contracting State
the obligation:
(a) to carry out administrative measures at
variance with the laws and administrative practice of that or of the other
Contracting State;
(b) to supply information or documents which
is not obtainable under the laws or in the normal course of the administration
of that or of the other Contracting State;
(c) to supply information which would
disclose any trade, business, industrial, commercial or professional secret or
trade process, or information, the disclosure of which would be contrary to
public policy (ordre public).
Article 28
Assistance in collection
1. The Contracting States
undertake to lend assistance to each other in the collection of taxes to which
this Convention relates together with interest, costs, and civil penalties
relating to such taxes, referred to in this Article as a "revenue
claim".
2. Request for assistance
by the competent authority of a Contracting State in the collection of a
revenue claim shall include a certification by such authority that, under the
laws of that State, the revenue claim has been finally determined. For the
purposes of this Article, a revenue claim is finally determined when a
Contracting State has the right under its internal law to collect the revenue
claim and the taxpayer has no further rights to restrain collection.
3. Amounts collected by
the competent authority of a Contracting State pursuant to this Article shall
be forwarded to the competent authority of the other Contracting State.
However, the first-mentioned Contracting State shall be entitled to
reimbursement of costs, if any, incurred in the course of rendering such
assistance to the extent mutually agreed between the competent authorities of
the two States.
4. Nothing in this Article shall be construed as imposing on either Contracting State the obligation to carry out administrative measures of a different nature from those which used in the collection of its own taxes or those which would be contrary to its public policy (ordre public).
Article 29
Members of diplomatic
missions and consular posts
Nothing in this Convention
shall affect the fiscal privileges of members of diplomatic mission or consular
posts under the general rules of international law or under the provisions of
special agreements.
Article 30
Entry into force
1. The Contracting States
shall notify each other in writing through diplomatic channels, the completion
of the procedure required by the respective laws for the entry into force of
this Convention. This Convention shall enter into force thirty days after the
receipt of the later of the notifications.
2. The provisions of this
Convention shall have effect:
(a) in India in respect of income derived or
capital held in any fiscal year beginning on or after the first day of April
next following the calendar year in which the Convention enters into force; and
(b) in Kazakstan in respect of income derived or capital held in any fiscal year beginning on or after the first day of January next following the calendar year in which the Convention enters into force.
Article 31
Termination
This Convention shall
remain in force indefinitely until terminated by one of the Contracting States,
Either Contracting State may terminate the Convention, through diplomatic
channels, by giving notice of termination at least six months before the end of
any calendar year after the expiry of five years from the date of entry into
force of the Convention. In such event, the Convention shall cease to have
effect:
(a) in India, in respect of income arising in any previous year
on or after the first day of April next following the calendar year in which
the notice is given and in respect of capital which is held at the expiry of
any previous year beginning on or after the first day of April next following
the calendar year in which the notice of termination is given; and
(b) in Kazakstan, in respect of income arising in any fiscal year
on or after the first day of January next following the calendar year in which
the notice is given and in respect of capital which is held at the expiry of
any fiscal year beginning on or after the first day of January next following
the calendar year in which the notice of termination is given.
IN WITNESS WHEREOF, the
undersigned, being duly authorised thereto, have signed this Convention.
DONE in duplicate at New
Delhi, this 9th day of December 1996, in Hindi, Kazak, Russian and English
languages, all texts being equally authentic. In case of divergence between the
texts, the English text shall prevail.
At the signing of the
Convention between the Government of the Republic of India and the Government
of the Republic of Kazakstan for the avoidance of double taxation and for the
prevention of fiscal evasion with respect to taxes on income and on capital the
undersigned have agreed that the following shall form an integral part of the
Convention.
With reference to Article
7;
In respect of paragraphs 1
and 2 of Article 7, where an enterprise of one of the Contracting States sells
goods or merchandise or carries on business in the other Contracting State
through a permanent establishment situated therein, the profits of that
permanent establishment shall not be determined on the basis of the total
amount received by the enterprise, but shall be determined only on the basis of
the remuneration which is attributable to the actual activity of the permanent
establishment for such sales or business. Especially, in the case of contracts
for the survey, supply, installation or construction of industrial, commercial
or scientific equipment or premises, or of public works, when the enterprise
has a permanent establishment, the profits of such permanent establishment
shall not be determined on the basis of the total amount of the contract, but
shall be determined only on the basis of that part of the contract which is
effectively carried out by the permanent establishment in the Contracting State
where the permanent establishment is situated.
With reference to Articles
10, 11 and 12;
In respect of Articles 10,
11 and 12 if under any Convention, Agreement or Protocol between the
Governments of the Republic of Kazakstan and the Republic of India with a third
State, either Kazakstan or India limit their taxation on dividends (single
rate) interest, royalties or fees for technical services to a rate lower or a
scope more restricted than the rate or scope provided for in this Convention on
the said items of income, the same rate or scope as provided for in that
Convention, Agreement or Protocol on the said items of income shall also apply
under this Convention.
IN WITNESS WHEREOF, the
undersigned, being duly authorised thereto, have signed this Protocol.
DONE in duplicate at New Delhi,
this 9th day of December, 1996, in Hindi, Kazak, Russian and English languages,
all texts being equally authentic. In case of divergence between the texts, the
English text shall prevail.
Convention between India
and Kenya for the Avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income
Notification F. No.
501/3/72-FTD, dated 20 August, 1985
G.S.R. 665(E).--Whereas the
Government of India and the Government of Kenya have concluded a Convention, as
set out in the Annexure hereto, for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income;
And whereas all the
requirements have been completed in India and Kenya as are necessary to give
the said Convention the force of law in India and Kenya respectively, as
required by paragraph 1 of Article 30 of the said Convention;
And whereas the diplomatic
notes to this effect have been exchanged between the said two Governments, as
required by paragraph 2 of Article 30 of the Said Convention.
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961) and section 24A of the Companies (Profits) Surtax Act, 1964 (7 of
1964), the Central Government hereby directs that all the provisions of the
said Convention shall be given effect to in the Union of India.
The Government of India
and the Government of the Republic of Kenya desiring to conclude a Convention
to avoid double taxation and to prevent fiscal evasion with respect to taxes on
income have agreed upon the following measures.
ARTICLE 1: Personal
Scope.--This Convention shall apply to persons who are residents of one or both
of the Contracting States.
ARTICLE 2: Taxes
covered.--1. This Convention shall apply to taxes on income imposed on behalf
of each Contracting State, irrespective of the manner in which they are levied.
2. There shall be regarded
as taxes on income all taxes imposed on total income, or on elements of income
including taxes on gains from the alienation of movable or immovable property,
and taxes on the total amounts of wages or salaries paid by enterprises.
3. The existing taxes to
which the Convention shall apply are, in particular :
(a) in the case of India, the income-tax including any surcharge
thereon imposed under the Income-tax Act, 1961 (43 of 1961); and the surtax
imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964) (hereinafter
referred to as "Indian tax").
(b) in the case of Kenya :
the income taxes imposed
under the Income Tax Act (Cap. 70) (hereinafter referred to as "Kenyan
Tax").
4. This Convention shall
apply also to any identical or substantially similar taxes on income which are
imposed after the date of signature of this Convention in addition to, or in
place of, the existing taxes. The Contracting States shall notify each other of
significant changes which have been made in their respective taxation laws.
ARTICLE 3: General
Definitions.--1. In this Convention unless the context otherwise requires.--
(a) The term "Kenya" means the Republic of Kenya,
including any area outside the territorial waters of Kenya which, in accordance
with international law, has been or may be designated, under the laws of Kenya
concerning the Continental Shelf, as an area over which Kenya may exercise
sovereign rights with respect to the exploration for and exploitation of
natural resources;
(b) The term "India" means the territory of India and
includes the territorial sea and airspace above it as well as any other
maritime zone referred to in the Territorial waters, Continental Shelf,
Exclusive Economic Zone and other Maritime Zones Act, 1976 (Act No. 80 of
1976), in which India has certain rights and to the extent that these rights
can be exercised therein as if such maritime zone is a part of the territory of
India;
(c) the terms "a Contracting State" and "the other
Contracting State" mean Kenya or India as the context requires;
(d) the term "tax" means Kenyan tax or Indian tax as
the context requires, but shall not include any tax which is payable in respect
of any default or omission in relation to the taxes to which this Convention
applies or which represents a penalty imposed relating to those taxes;
(e) the term "person" means an individual, a company
and any other body of persons treated as an entity for tax purposes;
(f) the term "company" means any body corporate or any
entity which is treated as a body corporate for tax purposes;
(g) the terms "Kenyan enterprise" and "Indian
enterprise" mean respectively an industrial or commercial enterprise or
undertaking carried on by a resident of Kenya and an industrial or commercial
enterprise or undertaking carried on by a resident of India and the terms
"enterprise of a Contracting State" and "enterprise of the other
Contracting State" mean a Kenyan enterprise or an Indian enterprise, as
the context requires;
(h) the term "national" means any individual possessing
the nationality of Kenya or India as the case may be and all legal persons,
partnerships and associations deriving their status as such from the law in
force in Kenya or India, as the case may be.
(i) the term "competent authority" means :
(a) in the case of Kenya the Minister of Finance or his
authorised representative;
(b) In the
case of India the Ministry of Finance (Department of Revenue).
(j) the term "international traffic" means any voyage
of a ship or aircraft operated by an enterprise or a Contracting State, except where
the voyage is confined solely to places within the other Contracting State.
2. In the application of
the provisions of this convention by a Contracting State any terms not
otherwise defined herein shall unless the context otherwise requires, have the
meaning which it has under the laws in force in that contracting State relating
to the taxes which are the subject of the present Convention.
ARTICLE 4: Fiscal
Domicile.--1. For the purpose of this Convention, the term "resident of a
Contracting State" means any person who, under the law of that State, is
liable to taxation therein by reason of his domicile, residence place of
management or any other criterion of a similar nature.
2. There by reason of the
provisions of paragraph 1 an individual is a resident of both Contracting
States, then his residential status be determined in accordance with the
following rules :--
(a) he shall be deemed to be a resident of the Contracting State
in which he has a permanent home available to him. If he has a permanent home
available to him in both Contracting States, he shall be deemed to be a
resident of the Contracting State with which his personal and economic
relations are closer (hereinafter referred to as his "centre of vital
interests");
(b) if the Contracting State in which he has his centre of vital
interests cannot be determined, or if he does not have a permanent home
available to him in either Contracting State, he shall be deemed to be a
resident of the Contracting State in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting States or in
neither of them, he shall be deemed to be a resident of the Contracting State
of which he is a national;
(d) if he is a national of both contracting States or of neither
of them, the Competent authorities of the Contracting States shall settle the
question by mutual agreement.
3. Where by reason of the
provisions of paragraph 1 a company is a resident of both Contracting States,
then this case shall be determined in accordance with the following rules :
(a) it shall be deemed to be a resident of the Contracting State
of which it is a national;
(b) if it is a national of neither of the
Contracting States then it shall be deemed to be a resident of a Contracting
State in which its place of effective management is situated.
4. Where by reason of the
provisions of paragraph 1 a person other than an individual or a company is a
resident of both Contracting States, it shall then be deemed to be a resident
of the contracting State in which its place of effective management is
situated.
ARTICLE 5: Permanent
Establishment.--1. For the purposes of
this Convention, the term "permanent establishment" means a fixed
place of business in which the business of the enterprise is wholly or partly carried
on.
2. The term
"permanent establishment" shall include especially :
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a mine,
oilwell, quarry or other place of extraction of natural resources;
(g) a farm, plantation or other place where
agricultural forestry, plantation or related activities are carried on;
(h) a
building site or construction or assembly project which exists for more than
six months;
(i) the provision of supervisory activities
for more than six months on a building site or construction or assembly
project.
3. The term
"permanent establishment" shall not be deemed to include :
(a) the use of facilities solely for the
purpose of storage or display of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display;
(c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;
(d) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise, or for
collecting information for the enterprise;
(e) the maintenance of a fixed place of business solely for the
purpose of advertising, for the supply of information, for scientific research
or for similar activities which have a preparatory a auxiliary character for
the enterprise.
4. A person acting in a
Contracting State for or on behalf of an enterprise of the other Contracting
State--other than an agent of an independent status to whom the provisions of
paragraph 6 apply--shall be deemed to be a permanent establishment in the first
mentioned State if:
(a) he has, and habitually exercises in that
State, an authority to conclude contracts for or on behalf of the enterprise,
unless his activities are limited to the purchase of goods or merchandise for
the enterprise; or
(b) he maintains in that first mentioned
State a stock of goods or merchandise belonging to that enterprise from which
he regularly fulfils orders on behalf of that enterprise.
5. An insurance enterprise
of a Contracting State shall be deemed to have a permanent establishment in the
other Contracting State if it collects premiums in that other State or insures
risks therein through an employee or through a representative who is not an
agent of independent status within the meaning of paragraph 6.
6. An enterprise of a
Contracting State shall not be deemed to have a permanent establishment in the
other Contracting State merely because it carries on business in that other
State through a broker, general commission agent or any other agent of an
independent status, where such persons are acting in the ordinary course of
their business. However, where the activities of such an agent are devoted
wholly or almost wholly on behalf of that enterprise, he would not be
considered an agent of an independent status within the meaning of this
paragraph.
7. The fact that a company
which is a resident of a Contracting State controls or is controlled by a
company which is a resident of the other Contracting State, or which carries on
business in that other State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company, a permanent
establishment of the other.
ARTICLE 6: Income from
Immovable Property.--1. Income from immovable property including income from
agriculture or forestry may be taxed in the Contracting State in which such
property is situated.
2. For the purposes of this
Convention, the term "immovable property" shall be defined in
accordance with the law of the Contracting State in which the property in
question is situated. The term shall in any case include property accessory to
immovable property, livestock and equipment used in agriculture and forestry,
right to which the provisions of general law respecting landed property apply,
usufruct of immovable property and rights to variable or fixed payments as
consideration for the working of, or the right to work, mineral deposits,
sources and other natural resources; ships, boats and aircraft shall not be
regarded a immovable property.
3. The provisions of
paragraph 1 shall apply to income derived from the direct use, letting, or use
in any other form of immovable property and to profits from the alienation of
such property.
4. The provisions of
paragraphs 1 and 3 shall also apply to the income from immovable property of an
enterprise and to income from immovable property used for the performance of
professional services.
ARTICLE 7: Business
Profits.--1. The profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on business in the
other Contracting State through a permanent establishment situated therein. If
the enterprise carries on or has carried on business as aforesaid, the profits
of the enterprise may be taxed in the other State but only so much of them as
is attributable to: (a) that permanent establishment, (b) sales in the other
State of goods or merchandise of the same or similar kind as those sold through
that permanent establishment, or (c) other business activities carried on in
that other State of the same or similar kind as those effected through that
permanent establishment.
2. Where an enterprise of
a Contracting State carries on business in the other Contracting State through
a permanent establishment situated therein, there shall in each Contracting
State be attributed to the permanent establishment the profits which it might
be expected to make if it were a distinct and separate enterprise engaged in
the same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment.
3. In the determination of
the profits of a permanent establishment there shall be allowed as deduction
expenses which are incurred for the purposes of the business of the permanent
establishment including executive and general administrative expenses so
incurred, whether in the State in which in the Permanent establishment is
situated or elsewhere.
4. In so far as it has
been customary in a Contracting State, according to its law, to determine the
profits to be attributed to a permanent establishment on the basis of an
apportionment of the total profits of the enterprise to its various parts,
nothing in paragraph 2 shall preclude that State from determining the profits
to be taxed by such an apportionment as may be customary; the method of
apportionment adopted shall, however, be such that the result shall be in
accordance with the principles laid down in this Article.
5. No portion of any
profits arising to an enterprise of a Contracting State shall be attributed to
a permanent establishment situated in the other Contracting State by reason of
the mere purchase of goods or merchandise within that other State for
enterprise.
6. For the purpose of the
preceding paragraphs, the profits to be attributed to the permanent
establishment shall be determined by the same method year by year unless there
is good and sufficient reason to the contrary.
7. Where profits include
items of income which are dealt with separately in other articles of this
Convention, then the provisions of those article shall not be affected by the
provisions of this article.
ARTICLE 8: Air
transport.--1. Profits derived by an enterprise of a Contracting State from the
operation of aircraft in international traffic shall be taxable only in the
Contracting State in which the place of effective management of the enterprise
is situated.
2. The provisions of
paragraph 1 of this article shall also apply to a share of the profits from the
operation of aircraft in international traffic derived by an enterprise of a
Contracting State through participation in a pooled service, in a joint air
transport or in an international operating agency.
3. For the purposes of
paragraph 1, interest on funds directly connected with the operation of
aircraft in international traffic shall be regarded as income from the
operation of such aircraft, and the provisions of Article 12 shall not apply in
relation to such interest.
ARTICLE 9: Shipping.--1.
Profits derived by an enterprise of a Contracting State from the operation of
ships in international traffic may be taxed in both Contracting States
according to the law of each Contracting State :
Provided that where such
an enterprise derives profits from such operation in the other Contracting
State :
(a) Such profits shall be deemed to be an
amount not exceeding five per cent of the full amount received by the
enterprise on account of the carriage of passengers or freight embarked in that
other State;
(b) the tax chargeable in that other State
shall be reduced by an amount equal to fifty per cent thereof.
ARTICLE 10: Associated
Enterprises.--1. Where--
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their, commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
2. Where profits on which
an enterprise of a Contracting State has been charged to tax in that State are
also included in the profits of an enterprise of the other Contracting State
and taxed accordingly, and the profits so included are profits which would have
accrued to that enterprise of the other State, if the conditions made between
the enterprises had been those which would have been made between independent
enterprises, then the first-mentioned State shall make an appropriate adjustment
to the amount of tax charged on those profits in the first-mentioned State. In
determining such an adjustment due regard shall be had to the other provisions
of this Convention in relation to the
nature of the income.
ARTICLE 11: Dividends.--1.
Dividends paid by a company which is resident of a Contracting State to a
resident of the other Contracting State may be taxed in that other State.
2. However, such dividends
may also be taxed in the Contracting State of which the company paying the
dividends is a resident, and according to the law of that State, but if the
recipient is the beneficial owner of the dividends the tax so charged shall not
exceed, 15 per cent of the gross amount.
3. The term
"dividends" as used in this Article means income from shares or other
rights, not being debt-claims, participating in profits, as well as income from
other corporate rights assimilated to income from shares or any other item
which is deemed to be a dividend or distribution of a company by the taxation
law of the Contracting State of which the company making the distribution is a
resident.
4. The provisions of
paragraph 2 shall not apply if the recipient of the dividends, being a resident
of a Contracting State, carries on business in the other Contracting State of
which the company paying, the dividends is a resident, through a permanent
establishment situated therein, or performs in that other State professional
services from a fixed base situated therein, and the holding by virtue of which
the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such a case, the provisions of Article 7 or
Article 16 as the case may be shall apply.
5. Where a company which
is a resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends
paid by the company except insofar as such dividends are paid to a resident of
that other State or insofar as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or a fixed
base situated in that other State, nor subject the company's undistributed
profits to a tax on the company's undistributed profits, even if the dividends
paid or the undistributed profits consist wholly or partly of profits or income
arising in such other State.
ARTICLE 12: Interest.--1.
Interest arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such interest
may be taxed in the Contracting State, in which it arises, and according to the
law of that State, but the tax so charged in the Contracting State in which the
interest arises shall, not exceed 15 per cent of the gross amount of the
interest.
3. Notwithstanding the
provisions of paragraph 2, interest arising in a Contracting State and paid to
the Government of the other Contracting State or local authority thereof, the
Central Bank of that other Contracting State, or any agency wholly owned by
that Government or local authority, shall be exempt from tax of the
first-mentioned Contracting State. The competent authorities of the Contracting
State may determine by mutual agreement any other governmental institution to
which this paragraph shall apply.
4. The term
"interest" as used in this article means income from Government
securities, bonds or debentures whether or not secured by mortgage and whether
or not carrying a right to participate in profits, and other debt-claims of
every kind as well as all other incomes assimilated to income from money lent
by the taxation law of the Contracting State in which the income arises.
5. The provisions of
paragraph 2 shall not apply in the recipient of the interest, being a resident
of a Contracting State, carries on business in the other Contracting State in
which the interest arises through a permanent establishment situated therein,
or performs in that other State professional services from a fixed base
situated therein, and the debt-claim in respect of which the interest is paid
is effectively connected with such permanent establishment or fixed base. In
such a case, the provisions of Article 7 or Article 16, as the case may be,
shall apply.
6. Interest shall be
deemed to arise in a Contracting State when the payer is that State itself, a
political sub-division, a local authority or a resident of that State. Where,
however, the person paying the interest, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the indebtedness on which the interest
is paid was incurred, and that interest is borne by that permanent
establishment or fixed base, then such interest shall be deemed to arise in the
Contracting State in which the permanent establishment or fixed base is
situated.
7. Where, owing to a
special relationship between the payer and the recipient or between both of
them and some other person, the amount of the interest paid, having regard to
the debt-claim for which it is paid, exceeds the amount which would have been
agreed upon by the payer and the recipient in the absence of such relationship,
the provisions of this article shall apply only to the last-mentioned amount,
in that case, the excess part of the payment shall remain taxable according to
the law of each Contracting State, due regard being had to the other provisions
of this Convention.
ARTICLE 13: Royalties.--1.
Royalties arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such royalties
may be taxed in the Contracting State in which they arise, and according to the
law of that State, but the tax so charged in the Contracting State in which the
royalties arise shall, not exceed 20 per cent of the gross amount of the
royalties.
3. The term
"royalties" as used in this Article means payments of any kind
received as a consideration for the use of, or the right to use, any copyright
of literary, artistic or scientific work (including cinematograph films, and
films or tapes for radio or television broadcasting), any patent, trade mark,
design or model, plan, secret formula or process, or for the use of, or the
right to use, industrial, commercial or scientific equipment, or for information
concerning industrial, commercial or scientific experience.
4. The provisions of
paragraph 2 shall not apply if the recipient of the royalties, being a resident
of a Contracting State, carries on business in the other Contracting State in
which the royalties arise through a permanent establishment situated herein, or
performs in that other State professional services from a fixed base situated
therein, and the right or property in respect of which the royalties are paid
is effectively connected with such permanent establishment or fixed base. In
such a case, the provisions of Article 7 or Article 16 as the case may be,
shall apply.
5. Royalties, shall be
deemed to arise in a Contracting State when the payer is that contracting State
itself, a political sub-division, a local authority or a resident of that
State. Where, however, the person paying the royalties, whether he is a
resident of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed-base in connection with which the liability to pay the
royalties was incurred, and such royalties are borne by such permanent
establishment or fixed base, then such royalties shall be deemed to arise in
the Contracting State in which the permanent establishment or fixed base in situated.
6. Where, owing to a
special relationship between the payer and the recipient or between both of
them and some other person, the amount of royalties paid, having regard to the
use, right or information for which they are paid, exceeds the amount which
would have been agreed upon by the payer and the recipient in the absence of
such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In that case, the excess part of the payment shall
remain taxable according to the law of each Contracting State, due regard being
had to the other provisions of this Convention.
ARTICLE 14: Capital
Gains.--1. Gains from the alienation of immovable property, as defined in
paragraph 2 of Article 6 may be taxed in the Contracting State in which such
property is situated.
2. Gains from the
alienation of movable property forming part of the business property of a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State
for the purpose of performing professional services, including such gains from
the alienation of such a permanent establishment (alone or together with the
whole enterprise) or of such a fixed base, may be taxed in that other State.
3. Notwithstanding the
provisions of paragraph 2 gains by an enterprise of a Contracting State from
the alienation of ships and aircraft which it operates in international traffic
and movable property pertaining to the operation of such ships and aircraft
shall be taxable only in that State.
4. Gains from the
alienation of--
(a) shares of a company, the property of
which consists principally of immovable property situated in a Contracting
State, and
(b) interest in a partnership or a trust,
the property of which consists principally of immovable property situated in a
Contracting State,
may be taxed in that
State. For the purposes of this paragraph the term "immovable property"
includes the shares of a company referred to in sub-paragraph (a) or an
interest in a partnership or a trust referred to in sub-paragraph (b).
5. Gains derived by a
resident of a contracting State from the alienation of any property other than
those mentioned in paragraphs 1, 2, 3 and 4, shall be taxable only in that
State.
ARTICLE 15: Management and
Professional Fees.--1. Management or professional fees arising in a Contracting
State and paid to a resident of the other Contracting State may be taxed in
that other State.
2. However such management
or professional fees may be taxed in the Contracting State in which they arise,
and according to the law of that State, but the tax so charged shall not exceed
17per cent of the gross amount of the management or professional fees.
3. The term
"management or professional fees" as used in this Article means
payments of any kind to any person, other than to an employee of the person,
making the payments in consideration for any services of a managerial, technical,
professional or consultancy nature.
4. The provisions of
paragraph 2 shall not apply if the recipient of the management or professional
fees, being a resident of a Contracting State, has in the other Contracting
State in which the management or professional fees arise a permanent
establishment with which the services giving rise to the management or
professional fees are effectively connected. In such a case the provisions of
Article 7 shall apply.
5. Management or
professional fees shall be deemed to arise in a Contracting State when the
payer is that Contracting State itself, a political sub-division, a local
authority or a resident of that State. Where, however, the person paying the
management or professional fees, whether he is a resident of that State or not,
has in a Contracting State a permanent establishment in connection with which
the liability to pay the management or professional fees was incurred and such
management or professional fees are borne by such permanent establishment, then
such management or professional fees shall be deemed to arise in the
Contracting State in which the permanent establishment is situated.
6. Where, owing to a
special relationship between the payer and the beneficial owner of the
management or professional fees or between both of them and some other person,
the amount of the management or professional fees paid, having regard to the
service for which they are paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In that case the excess part of the payment shall remain
taxable according to the law of each Contracting State, due regard being had to
the other provisions of this Convention.
ARTICLE 16: Independent
Personal Services.--1. Income derived by a resident of a Contracting State in
respect of professional services or other independent activities of a similar
character shall be taxable only in that State unless :
(a) he has a fixed base regularly available
to him in the other Contracting State for the purposes of performing his
activities, in which case so much of the income may be taxed in that other
State as is attributable to that fixed base; or
(b) he is present in the other Contracting
State for the purpose of performing his activities for a period or periods
exceeding in the aggregate 183 days in the calendar year concerned in the case
of Kenya or the previous year concerned in the case of India, in which case so
much of the income may be taxed in that other State as is attributable to the
activities performed in that other State.
2. The term
"professional services" includes independent scientific, literary,
artistic, educational or teaching activities as well as the independent
activities of physicians, lawyers, engineers, architects, dentists, and
accountants.
ARTICLE 17: Dependent
Personal Services.--1. Subject to the provisions of Articles 18, 19, 20, 21, 22
and 23, salaries, wages and other similar remuneration derived by a resident of
a Contracting State in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived therefrom may be
taxed in the other State.
2. Notwithstanding the
provisions of paragraph 1, remuneration derived by a resident of a Contracting
State in respect of an employment exercised in the other Contracting State
shall be taxable only in the first-mentioned State if :
(a) the recipient is present in the other
State for a period or periods not exceeding in the aggregate 183 days in the
fiscal year concerned, and
(b) the remuneration is paid by, or on
behalf of an employer who is not a resident of the other State, and
(c) the remuneration is not borne by a
permanent establishment or a fixed base which the employed has in the other
State.
3. Notwithstanding the
preceding provisions of this Article remuneration in respect of an employment
exercised aboard a ship or aircraft in international traffic, may be taxed only
in Contracting State in which the place of effective management of the
enterprise is situated.
ARTICLE 18: Directors'
Fees.--Directors' fees and similar payments derived by a resident of a
Contracting State in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State.
ARTICLE 19: Artistes and
Athletes.--1. Notwithstanding the provisions of Articles 7, 16 and 17, income
derived by public entertainers, such as theatre, motion picture, radio or
television artistes, and musicians, and by athletes, from their personal
activities as such may be taxed in the Contracting State in which those
activities are exercised.
2. Notwithstanding
anything contained in this Convention, where the services of public entertainer
or an athlete mentioned in paragraph 1 are provided in a Contracting State by
an enterprise of the other Contracting State, the profits derived by that
enterprise from providing those services may be taxed in the first mentioned
State.
3. The provisions of
paragraphs 1 and 2 shall not apply to services of public entertainers and
athletes. If their visit to a Contracting State is supported wholly or
substantially from public funds of the other Contracting State.
ARTICLE 20: Government
Service.--1. (a) Remuneration other than a pension, paid by a Contracting State
or a political sub-division or a local authority thereof to any individual in
respect of services rendered to that State or sub-division or local authority
thereof shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the
Contracting State of which the recipient is a resident if the services are rendered
in that State and the recipient did not become a resident of that State solely
for the purpose of performing the services.
2. The provisions of
paragraph 1 shall not apply to remuneration in respect of services rendered in
connection with any trade or business carried on by one of the Contracting
States or a political sub-division or a local authority thereof.
ARTICLE 21: Pensions.--1.
Any pension [other than a pension of the kind referred to a paragraph (2) of
this Article] and any annuity, derived from sources within a Contracting State
by an individual who is a resident of the other Contracting State may be taxed
in the first-mentioned Contracting State, but if the individual is subject to
tax in the other Contracting State in respect of the pension or annuity the tax
so charged in the first-mentioned Contracting State shall not exceed the lower
of--
(a) 5 per cent of the pension or annuity; or
(b) the
amount of tax chargeable on the pension or annuity in the other Contracting
State.
2. Pensions paid, by or
out of funds created by, a Contracting State to an individual for services
rendered to the Contracting State in the discharge of governmental functions
may be taxed only in that Contracting State.
3. The term
"annuity" means a stated sum payable periodically at stated times,
during life or during a specified or ascertainable period of time under an
obligation to make the payments in return for adequate and full consideration
in money or money's worth.
ARTICLE 22: Students and
Apprentices.--1. A student or business apprentice who is or was immediately
before visiting a Contracting State or resident of the other Contracting State
and who is present in the first-mentioned Contracting State solely for the
purpose of his education or training shall be exempt from tax in the
first-mentioned Contracting State on payments made to him by persons residing
outside that first mentioned Contracting State for the purposes of his
maintenance, education or training.
2. The benefits of this
Article shall extend only for such period of time as may be reasonably or
customarily required to complete the education or training undertaken, but in
no event shall any individual have the benefits of this article for more than
three consecutive years.
ARTICLE 23: Professors and
Teachers.--1. A professor or teacher who visits a Contracting State for a
period not exceeding one year for the purpose of teaching or conducting
research at a University, College, School or other Educational institution in
that Contracting State and who is, or was immediately before such visit, a
resident of the other Contracting State shall be exempt from tax in the
first-mentioned Contracting State on any remuneration for such teaching or
research in respect of which he is subject to tax in the other Contracting
State. However, any remuneration for such work received from sources outside
the State shall not be deductible in the first-mentioned State.
2. This Article shall not
apply to income from research if such research is undertaken primarily for the
private benefit of a specific person or persons.
ARTICLE 24: Income not
expressly mentioned.--1. Items of income of a resident of a Contracting State
which are not expressly mentioned in the foregoing articles of this Convention
in respect of which he is subject to tax in that State shall be taxable only in
that State.
2. However, if such income
is derived by a resident of a Contracting State from sources in the other
Contracting State, such income may also be taxed in the State in which it arises,
and according to the law of that State.
ARTICLE 25: Method of
Elimination of Double Taxation.--1. The laws in force in either of the
Contracting States will continue to govern the taxation of income in the
respective Contracting states except where provisions to the contrary are made
in this Convention.
2. (a) The amount of
Kenyan tax payable, under the laws of Kenya and in accordance with the
provision of this Convention, whether directly or by deduction, by a resident
of India, in respect of income from sources within Kenya which has been
subjected to tax both in India and in Kenya, shall be allowed as a credit
against the Indian tax payable in respect of such income, provided that such
credit shall not exceed the Indian tax (as computed before allowing any such
credit) which is appropriate to the income derived from sources within Kenya;
so, however, that where such resident is a company by which surtax is payable
in India, the credit aforesaid hall be allowed in the first instance against
income-tax payable by the company in India, and as to the balance, if any,
against surtax payable by it in India;
(b) For the purposes of
the credit referred to in sub-paragraph (a) above, the term "Kenyan tax
payable" shall be deemed to include any amount which would have been
payable as Kenyan tax for any year but for: (i) any investment deduction
granted under paragraph 24 of the Second Schedule to the Income Tax Act, cap
470; (ii) the lower Corporation rate of income-tax provided by paragraph 2(b)
of the Third Schedule to the Income Tax Act, cap 470; (iii) any other
provisions which may subsequently be enacted granting an exemption or reduction
of tax which the competent authorities of the Contracting States agree to be
for the purpose of economic development.
3. (a) The amount of
Indian tax payable, under the laws of India and in accordance with the
provisions of this Convention, whether directly or by deduction, by a resident
of Kenya, in respect of income from sources within India which has been
subjected to tax both in India and Kenya, shall be allowed as a credit against
Kenyan tax payable in respect of such income provided that such credit shall
not exceed the Kenyan tax (as computed before allowing any such credit) which
is appropriate to the income derived from sources within India;
(b) For the purposes of
the credit referred to in sub-paragraph (a) above, the term "Indian tax
payable" shall be deemed to include any amount by which Indian tax has
been reduced by the special incentive measures set forth in the following
sections of the Income Tax Act, 1961:--
(a) Sections 10(4), 10(4A), 10(6)(viia),
10(15)(iv), 10A, 32A, 33A, 35B, 35CC, 80HH, 20-I, 80K, 80L, and
(b) any other provisions which may
subsequently be enacted granting a deduction from taxable income or exemption
from or reduction of tax which the competent authorities of the Contracting
States agree to be for the purposes of economic development.
4. Where under this
Convention a resident of a Contracting State is exempt from tax in that
Contracting State in respect of income derived from the other Contracting State
then the first mentioned Contracting State may, in calculating tax in the
remaining income of that person apply the rate of tax which would have been
applicable if the income exempted from tax in accordance with this Convention
had not been so exempted.
ARTICLE 26:
Non-discrimination.--1. The nationals of a Contracting State shall not be
subjected in the other Contracting State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and
connected requirements to which nationals of that other State in the same
circumstances are or may be subjected.
2. The taxation on a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State carrying on the
same activities.
3. Nothing in this Article
shall be construed as obliging a Contracting State to grant to residents of the
other Contracting State any personal allowances, reliefs and reductions for
taxation purposes on account of civil status or family responsibilities which
it grants to its own residents.
4. Enterprises of a
Contracting State, the capital of which is wholly or partly owned or controlled
directly or indirectly, by one or more residents of the other Contracting
State, shall not be subjected in the first-mentioned State to any taxation or
any requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of that
first-mentioned State are or may be subjected.
5. In this Article the
term "taxation" means taxes which are the subject of this Convention.
6. Notwithstanding the
provisions of the foregoing paragraphs, a company which is a resident of India
and which has a permanent establishment in Kenya shall remain subject to an
additional rate of tax in accordance with the provisions of Kenyan law, but
such additional rate shall not exceed 7.5 per cent. However, such a company
will not be subjected to any taxation or any requirement connected therewith
which is other or more burdensome than the taxation and connected requirements
to which other similar enterprises of that first-mentioned State are or may be
subjected.
ARTICLE 27: Mutual
Agreement Procedure.--1. Where a resident of a Contracting State considers that
the actions of one or both of the Contracting States result or will result for
him in taxation not in accordance with this Convention, he may, notwithstanding
the remedies provided by the national laws of those States, present his case to
the competent authority of the State of which he is a resident. The case must
be presented within three years of the date of such action or the latest of
such actions as the case may be.
2. The competent authority
shall endeavour, if the objection appears to it to be justified and if it is
not itself able to arrive at an appropriate solution, to resolve the case by
mutual agreement with the competent authority of the other Contracting State,
with a view to the avoidance of taxation not in accordance with this
Convention. Any agreement reached shall be implemented notwithstanding any time
limits in the national laws of the Contracting States.
3. The competent
authorities of the Contracting States shall endeavour to resolve by mutual
agreement any difficulties or doubts arising as to the interpretation or
application of this Convention. They
may also consult together for the elimination of double taxation in cases not
provided for in this Convention.
4. The competent
authorities of the Contracting States may communicate directly with each other
for the purposes of applying the provisions of this Convention. When it seems
advisable in order to reach agreement to have an oral exchange of opinions,
such exchange may take place through a commission consisting of representatives
of the competent authorities of the contracting States.
ARTICLE 28: Exchange of
Information.--1. The competent authorities of the contracting States shall
exchange such information as is necessary for the carrying out of this
Convention or for preventing fraud or fiscal evasion concerning taxes covered
by this Convention in so far as the taxation thereunder is in accordance with
this Convention. Any information so exchanged shall be treated as secret and
shall not be disclosed to any persons or authorities other than those concerned
with the assessment or collection of the taxes which are the subject of this
Convention.
2. In no case shall the
provisions of paragraph 1 be construed so as to impose on one of the
Contracting States the obligation.
(a) to carry out administrative measures at
variance with the laws or the administrative practice of that or of the other
Contracting State;
(b) to supply particulars which are not
obtainable under the laws or in the normal course of the administration of that
or of the other contracting State;
(c) to supply information which would
disclose any trade, business, industrial, Commercial or professional secret or
trade process, or information, the disclosure of which would be contrary to
public policy.
ARTICLE 29: Diplomatic and
Consular Officials.--Nothing in this Convention shall affect the fiscal privilege
of diplomatic or consular officials under the general rules of international
law or under the provisions of special agreements.
ARTICLE 30: Entry into
Force.--1. This Convention shall come into force on the date then the last of
all such things shall have been done in India and Kenya as are necessary to
give the Convention the force of law in India and Kenya respectively.
2. The Contracting States
shall notify each other of the completion of the requirements mentioned in
paragraph 1 of this Article. The exchange of diplomatic notes certifying that
this requirement has been completed shall take place at..........
3. Upon the exchange of
such diplomatic notes, this Convention shall have effect :
(a) in Kenya:
(i) In respect of taxes withheld at the source
on amounts paid or credited to non-residents on or after 1st January in the
calendar year following the year in which all the required formalities are
completed.
(ii) In respect of other taxes on income
arising for the year of income commencing on or after the 1st January in the
calendar year in which all the required formalities are completed.
(b) in India, in respect of income assessable for any assessment
year commencing on or after 1st day of April, in the year in which all the
required formalities are completed.
ARTICLE 31:
Termination.--This Convention shall continue in effect indefinitely but either
of the Contracting States may, on or before the thirtieth day of June in any
calendar year beginning after the expiration of a period of five years from the
date of its entry into force, give the other Contracting State, through
diplomatic channels, written notice of termination and, in such event, this
Convention shall cease to have effect.
(a) in Kenya :
(i) in respect of tax withheld at a source
on amounts paid or credited to non-residents on or after the 1st day of January
in the calendar year next following that in which the notice is given;
(ii) in respect of other tax on income
arising for the year of income next following that in which the notice of
termination is given and subsequent years;
(b) in India:
in respect of income
assessable for the assessment year commencing on the 1st day of April in the
second calendar year next following the calendar year in which the notice is
given, and subsequent years.
In witness whereof the
undersigned being duly authorised thereto, have signed the present Convention.
Done in duplicate at
Nairobi this twelfth day of April, one thousand nine hundred and eighty five in
the English and Hindi languages but in the event of any dispute, the English
text shall prevail.
Sd/- Sd/-
For the Government of the For
the Government of the
Republic of India Republic
of Kenya
Agreement between the
Government of the Republic of India and the Government of the State of Kuwait
for the avoidance of double taxation of the income derived from international
air transport
Notification F. No.
501/1/800-FTD, dated 31 March, 1983
G.S.R. 302 (E).--Whereas
the annexed 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 derived from international air transport as come into force on the
notification by both the Contracting States to each other of completion of the
procedures required by their respective laws, as required by Article 5 of the
said Agreement.
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961) and section 24A of the Companies (Profits) Sur-tax Act, 1964 (7 of
1964), the Central Government hereby directs that all the provisions of the
said agreement shall be given effect to in the Union of India.
The Government of India
and the Government of Kuwait desiring to conclude an Agreement for the
avoidance of double taxation of income derived from international air
transport,
Have agreed as follows :
ARTICLE 1:1. The existing
taxes to which this Agreement shall apply are :
(a) in the case of Kuwait :
(i) the income tax imposed under the Income-Tax Decree No. 3 of
1955;
(ii) the additional income-tax imposed under
the Law No. 34 of 1970 (hereinafter referred to as "Kuwaiti tax").
(b) in the case of India :
(i) the income-tax including any surcharge
thereon imposed under the Income-tax Act, 1961 (43 of 1961);
(ii) the surtax imposed under the Companies
(Profits) Surtax Act, 1964 (7 of 1964) (hereinafter referred to as "Indian
tax").
2. This Agreement shall
also apply to any identical, or substantially similar taxes which are imposed
after the date of signature of this Agreement in addition to, or in place of,
the taxes referred to in paragraph 1 of this Article.
ARTICLE 2: 1. In this
Agreement unless the context otherwise requires.--
(a) the term "Kuwait" means the
territory of Kuwait and includes the territorial sea and airspace above;
(b) the term "India" means the
territory of India and includes the territorial sea and airspace above it as
well as any other maritime zone referred to in the Territorial Waters,
Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976
(Act No. 80 of 1976), in which India has certain rights and to the extent that
these rights can be exercised therein as if such maritime zone is a part of the
territory of India;
(c) the term "a Contracting State"
and the "other Contracting State" mean Kuwait or India, as the
context requires;
(d) the term
"tax" means "Kuwaiti tax" or "Indian tax" as the
context requires;
(e) the term "enterprise of a
Contracting State" means an airline which is authorised by the Government
of that State by a general or special arrangement between the two Contracting
States to operate scheduled or non-scheduled flights between or beyond their
territories;
(f) the term "international
traffic" means any transport by an aircraft operated by an enterprise of a
Contracting State, except when the aircraft is operated solely between places
in the other Contracting State;
(g) the expression "operation of
aircraft" means a business of carriage by air of persons, livestock, baggage,
cargo or mail and includes the sale of tickets and airway bills for, and the
provision of services connected with such carriage either for the enterprise
itself or for any other enterprise engaged in such operations.
2. In the application of
the provisions of this Agreement by one of the Contracting States, any term
used but not defined herein shall, unless the context otherwise requires, have
the meaning which it has under the laws in force in that State relating to the
taxes which are the subjects of this Agreement.
ARTICLE 3: 1. Profits
derived by an enterprise of a Contracting State from the operation of aircraft
in international traffic shall be exempt from tax in the other Contracting
State.
2. The provisions of
paragraph 1 shall also apply to the share of profits from the operation of
aircraft in international traffic derive by an enterprise of a Contracting
State through participation in a pooled service, in a joint air transport
operation or in an international operating agency.
3. For the purpose of
paragraph 1, interest on funds directly connected with the operation of
aircraft in international traffic shall be regarded as income from the
operation of aircraft.
ARTICLE 4: The laws in force in either of the
Contracting States will continue to govern the assessment and taxation of
income in the contracting States except where express provisions to the
contrary is made in this Agreement.
ARTICLE 5: 1. This
Agreement shall be approved in accordance with the laws in force in each of the
Contracting States. It shall enter into force thirty days after the exchange of
letters certifying that the proper procedure was fulfilled in each Contracting
State. The exchange of letters shall take place at New Delhi.
2. The provisions of this
Agreement shall have effect in respect of the earnings arising from 1-1-1967.
3. No action would be
taken to reopen assessments in respect of the period prior to 1-1-1967.
ARTICLE 6: This Agreement
shall continue in effect indefinitely but either Contracting State may, on or
before the thirtieth day of June in any calendar year after the year 1986 give
notice of termination to the other Contracting State and in such event this
Agreement shall cease to be effective :
(a) In Kuwait, in respect of any year of tax
commencing on or after the 1st day of July of the second calendar year
following the year in which the notice is given;
(b) In India, in respect of any assessment
year commencing on or after the 1st day of April of the second calendar year
following the year in which the notice is given.
In witness whereof the
undersigned, duly authorised thereto have signed the present Agreement.
Done in duplicate at
Kuwait this twenty-first day of April, one thousand nine hundred and eighty two
in the Hindi, Arabic and English languages and in the event of any doubt, the
English text shall prevail.
Sd/- Sd/-
For the Government of
India For
the Government of Kuwait.
Agreement between the
Government of the Republic of India and the Government of the Kyrgyz Republic
for the avoidance of double taxation and for the prevention of fiscal evasion
with respect to
taxes on income
Notification No.
34/2001[F. No. 503/7/95-FTD], dated 7-2-2001
Whereas the annexed Agreement between the Government of the Republic of India and the Government of the Kyrgyz Republic for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income has come into force on the 10th January, 2001, thirty days after the date of receipt of the latter of the notifications by the Contracting States to each other of the completion of the procedure required by the respective laws for the entry into force of this Agreement in accordance with Article 29 of the said Agreement;
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961), the Central Government hereby directs that all the provisions of the
said Agreement shall be given effect to in the Union of India.
Agreement between the Government
of the Republic of India and the Government of the Kyrgyz Republic for the
avoidance of double taxation and for the prevention of fiscal evasion with
respect to taxes on income
The Government of the
Republic of India and the Government of the Kyrgyz Republic desiring to
conclude an Agreement for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income and with a view to promoting
economic co-operation between the two countries,
have agreed as follows:--
Article 1
Personal Scope
This Agreement shall apply
to persons who are residents of one or both of the Contracting States.
Article 2
Taxes Covered
1. This Agreement shall
apply to taxes on income imposed on behalf of a Contracting State irrespective
of the manner in which they are levied.
2. There shall be regarded
as taxes on income all taxes imposed on total income, or on elements of income
including taxes on gains from the alienation of movable or immovable property
and taxes on the total amounts of wages or salaries paid by enterprises.
3. The existing taxes to
which the Agreement shall apply are in particular:
(a) in India:
the income-tax, including any surcharge
thereon;
(hereinafter referred to as "Indian
tax")
(b) in
Kyrgyzstan:
(i) tax on profits and income of legal persons;
(ii) income-tax
on physical persons;
(hereinafter referred to
as "Kyrgyz tax");
4. The Agreement shall
apply also to any identical or substantially similar taxes which are imposed
after the date of signature of the Agreement in addition to, or in place of,
the existing taxes referred to in paragraph 3. The competent authorities of the
Contracting States shall notify each other of any significant changes which
have been made in their respective taxation laws.
Article 3
General Definitions
1. For the purposes of
this Agreement, unless the context otherwise requires,--
(a) the term "India" means the territory of India and
includes the territorial sea and airspace above it, as well as any other
maritime zone in which India has sovereign rights, other rights and
jurisdiction, according to the Indian law and in accordance with international
law, including the UN Convention on the Law of the Sea;
(b) the term "Kyrgyzstan" means the Kyrgyz Republic
when used in the geographical terms the term "Kyrgyzstan" means the
territory on which the Kyrgyz Republic exercises sovereign rights and
jurisdiction in accordance with Kyrgyz law and in accordance with International
Law;
(c) the term "person" includes an individual, a company,
a body of persons and any other entity which is treated as a taxable unit under
the taxation laws in force in the respective Contracting States;
(d) the term "company" means any corporate entity which
is treated as a body corporate for tax purposes and includes in particular
joint stock companies, limited companies or any other enterprise treated as
company under Kyrgyz law;
(e) the terms "enterprise of a Contracting State" and
"enterprise of the other Contracting State" mean respectively an
enterprise carried on by a resident of a Contracting State and an enterprise
carried on by a resident of the other Contracting State;
(f) the term "international traffic" means any
transport by an aircraft operated by an enterprise which is a resident of a
Contracting State, except when the aircraft is operated solely between places
in the other Contracting State;
(g) the term "competent authority" means:--
(i) in India, the Central Government in the Ministry of Finance
(Department of Revenue) or their authorised representative;
(ii) in Kyrgyz Republic, the Ministry of
Finance or their authorised representative;
(h) the term "national" means:--
(i) any individual possessing the nationality of a Contracting
State;
(ii) any legal person, partnership or association
deriving its status as such from the laws in force in a Contracting State.
(i) the term "fiscal year" means:--
(i) in the case of India, the financial year beginning on the
first day of April;
(ii) in the
case of Kyrgyzstan, the calendar year;
(j) the term "tax" means Indian tax or Kyrgyz tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty or fine imposed relating to those taxes.
(k) the terms "a Contracting State" and "the other
Contracting State" mean the Republic of India or the Kyrgyz Republic as
the context requires.
2. As regards, the
application of the Agreement by a Contracting State any term not defined
therein shall, unless the context otherwise requires, have the meaning which it
has under the law of that State concerning the taxes to which the Agreement
applies.
Article 4
Resident
1. For the purposes of
this Agreement, the term "resident of a Contracting State" means any
person who, under the laws of that State, is liable to tax therein by reason of
his domicile, residence, place of management, or any other criterion of a
similar nature. But this term does not include any person who is liable to tax
in that State in respect only of income from sources in that State.
2. Where by reason of the
provisions of paragraph 1 an individual is a resident of both Contracting
States, then his status shall be determined as follows:--
(a) he shall be deemed to be a resident of the State in which he
has a permanent home available to him; if he has a permanent home available to
him in both States, he shall be deemed to be a resident of the State with which
his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests
cannot be determined, or if he has not a permanent home available to him in
either State, he shall be deemed to be a resident of the State in which he has
an habitual abode;
(c) if he has an habitual abode in both States or in neither of
them, he shall be deemed to be a resident of the State of which he is a
national;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the
provisions of paragraph 1 a person other than an individual is a resident of
both Contracting States, then it shall be deemed to be a resident of the State
in which its place of effective management is situated. If the State in which
its place of effective management is situated cannot be determined, then the
competent authorities of the Contracting States shall settle the question by
mutual agreement.
Article 5
Permanent Establishment
1. For the purposes of
this Agreement, the term "permanent establishment" means a fixed
place of business through which the business of an enterprise is wholly or
partly carried on.
2. The term
"permanent establishment" includes especially:--
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a mine,
an oil or gas well, a quarry or any other place of extraction of natural
resources;
(g) a sales
outlet;
(h) a
warehouse in relation to a person providing storage facilities for others; and
(i) a farm, plantation or other place where
agricultural, forestry, plantation or related activities are carried on.
3. A building site, a
construction, assembly or installation project, or supervisory activities
connected therewith, only if such site, or project or activity lasts for more
than six months.
4. An enterprise shall be
deemed to have a permanent establishment in a Contracting State and to carry on
business through that permanent establishment if it provides services or
facilities in connection with, or supplies plant and machinery on hire used for
or to be used in the prospecting for, or extraction or exploitation of mineral
oils in that State.
5. Notwithstanding the
preceding provisions of this article, the term "permanent
establishment" shall be deemed not to include:--
(a) the use of facilities solely for the
purpose of storage, display or delivery of goods or merchandise belonging to
the enterprise;
(b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage,
display or delivery;
(c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;
(d) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise or of
collecting information for the enterprise;
(e) the maintenance of a fixed place of
business solely for the purpose of carrying on, for the enterprise, any other
activity of a preparatory or auxiliary character; or
(f) the maintenance of a fixed place of
business solely for any combination of activities mentioned in sub-paragraphs
(a) to (e), provided that the overall activity of the fixed place of business resulting
from this combination is of a preparatory or auxiliary character.
6. Notwithstanding the
provisions of paragraphs 1 and 2, where a person -- other than an agent of an
independent status to whom paragraph 8 applies -- is acting in a Contracting State
on behalf of an enterprise of the other Contracting State that enterprise shall
be deemed to have a permanent establishment in the first-mentioned Contracting
State in respect of any activities which that person undertakes for the
enterprise, if such a person:--
(a) has and habitually exercises in that State an authority to
conclude contracts in the name of the enterprise, unless the activities of such
person are limited to those mentioned in paragraph 5 which, if exercised
through a fixed place of business, would not make this fixed place of business
a permanent establishment under the provisions of that paragraphs; or
(b) has no such authority, but habitually maintains in the
first-mentioned State a stock of goods or merchandise from which he regularly
delivers goods or merchandise on behalf of the enterprise; or
(c) habitually secures orders in the first-mentioned State,
wholly or almost wholly for the enterprise itself or for the enterprise and
other enterprises controlling, controlled by, or subject to the same control,
as that enterprise.
7. Notwithstanding the
preceding provisions of this Article, an insurance enterprise of a Contracting
State shall, except in regard to re-insurance, be deemed to have a permanent
establishment in the other Contracting State if it collects premiums in the
territory of that other State or it insures risks situated therein through a
person other than an agent of an independent status to whom paragraph 8
applies.
8. An enterprise shall not
be deemed to have a permanent establishment in a Contracting State merely
because it carries on business in that other State through a broker, general
commission agent or any other agent of an independent status, provided that
such, persons are acting in the ordinary course of their business. However when
the activities of such an agent are devoted wholly or almost wholly on behalf
of that enterprise, he will not be considered an agent of an independent status
within the meaning of this paragraph.
9. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
Article 6
Income from Immovable
Property
1. Income derived by a
resident of a Contracting State from immovable property (including income from
agriculture or forestry) situated in the other Contracting State may be taxed
in that other State.
2. The term
"immovable property" shall have the meaning which it has under the
law of the Contracting State in which the property in question is situated. The
term shall in any case include property accessory to immovable property,
livestock and equipment used in agriculture and forestry, rights to which the
provisions of general law respecting landed property apply, usufruct of
immovable property and rights to variable or fixed payments as consideration
for the working of, or the right to work, mineral deposits, sources and other
natural resources; ships, boats and aircraft or road and railway vehicles shall
not be regarded as immovable property.
3. The provisions of
paragraph 1 shall apply to income derived from the direct use letting, or use
in any other form of immovable property.
4. The provisions of
paragraphs 1 and 3 shall also apply to the income from immovable property of an
enterprise and to income from immovable property used for the performance of
independent personal services.
5. Where the ownership of
shares or other corporate rights in a company entitles the owner of such shares
or corporate rights to the enjoyment of immovable property held by the company,
the income from direct use, letting, or use in any other form of such right to
enjoyment may be taxed in the Contracting State, in which the immovable
property is situated.
Article 7
Business Profits
1. The profits of an
enterprise of a Contracting State shall be taxable only in that State unless
the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business
as aforesaid, the profits of the enterprise may also be taxed in the other
State but only so much of them as is attributable to that permanent
establishment.
2. Subject to the
provisions of paragraph 3, where an enterprise of a Contracting State carries
on business in the other Contracting State through a permanent establishment
situated therein, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might be expected to make if it
were a distinct and separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing wholly
independently with the enterprise of which it is a permanent establishment.
3. In determining the
profits of a permanent establishment, there shall be allowed as deductions
expenses which are incurred for the purposes of the business of the permanent
establishment, including executive and general administrative expenses so
incurred, whether in the State in which the permanent establishment is situated
or elsewhere, in accordance with the provisions of and subject to the limitations
of the tax laws of that State.
4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
5. For the purposes of the
preceding paragraphs, the profits to be attributed to the permanent
establishment shall be determined by the same method year by year unless there
is good and sufficient reason to the contrary.
6. Where profits include
items of income which are dealt with separately in other Articles of this
Agreement, then the provisions of those Articles shall not be affected by the
provisions of this Article.
Article 8
International Traffic
1. Profits derived by an
enterprise of a Contracting State from the operation of aircraft in international
traffic shall be taxable only in that Contracting State.
2. Profits derived by a
transportation enterprise which is a resident of a Contracting State from the
use, maintenance, or rental of containers (including trailers and other
equipment for the transport of containers) used for the transport of goods or
merchandise in international traffic shall be taxable only in that Contracting
State unless the containers are used solely within the other Contracting State.
3. For the purposes of
this Article, interest on funds connected with the operation of aircraft in
international traffic shall be regarded as profits derived from the operation
of such aircraft, and the provisions of Article 11 shall not apply in relation
to such interest.
4. The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.
Article 9
Associated enterprises
1. Where:--
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
2. Where a Contracting
State includes in the profits of an enterprise of that State -- and taxes
accordingly -- profits on which an enterprise of the other Contracting State
has been charged to tax in that other State and the profits so included are
profits which would have accrued to the enterprise of the first mentioned State
if the conditions made between the two enterprises had been those which would
have been made between independent enterprises, then that other State shall
make an appropriate adjustment to the amount of the tax charged therein on
those profits. In determining such adjustment, due regard shall be had to the
other provisions of this Agreement and the competent authorities of the
Contracting States shall, if necessary consult each other.
Article 10
Dividends
1. Dividends paid by a
company which is a resident of a Contracting State to a resident of the other
Contracting State may be taxed in that other State.
2. However, such dividends
may also be taxed in the Contracting State of which the company paying the
dividends is a resident and according to the laws of that State, but if the
recipient is the beneficial owner of the dividends the tax so charged shall not
exceed 10 per cent of the gross amount of the dividends. This paragraph shall
not affect the taxation of the company in respect of the profits out of which
the dividends are paid.
3. The term
"dividends" as used in this Article means income from shares or other
rights, not being debt-claims, participating in profits, as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the company making the
distribution is a resident.
4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends,
being a resident of a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident,
through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the
holding in respect of which the dividends are paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
Article 11
Interest
1. Interest arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other State.
2. However, such interest
may also be taxed in the Contracting State in which it arises and according to
the laws of that State, but if the recipient is the beneficial owner of the
interest, the tax so charged shall not exceed 10 per cent of the gross amount
of the interest.
3. Notwithstanding the
provisions of paragraph 2, interest arising in a Contracting State shall be
exempt from tax in that State provided it is derived and beneficially owned
by:--
(i) the Government of the other Contracting State; or
(ii) the Central Bank of the other
Contracting State or Government financial institutions that may be mutually
agreed upon between the two Contracting States.
4. The term
"interest" as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage and whether or not carrying a
right to participate in the debtor's profits, and in particular, income from
government securities and income from bonds or debentures, including premiums
and prizes attaching to such securities, bonds or debentures. Penalty charges
for late payment shall not be regarded as interest for the purpose of this
Article.
5. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,
being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Article 7
or Article 14, as the case may be, shall apply.
6. Interest shall be
deemed to arise in a Contracting State when the payer is that State itself or a
resident of that State. Where, however, the person paying the interest, whether
he is a resident of a Contracting State or not, has in a Contracting State a
permanent establishment or a fixed base in connection with which the indebtedness
on which the interest is paid was incurred and such interest is borne by such
permanent establishment or fixed base, then such interest shall be deemed to
arise in the State in which the permanent establishment or fixed base is
situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
Article 12
Royalties and fees for
technical services
1. Royalties or fees for
technical services arising in a Contracting State and paid to a resident of the
other Contracting State may be taxed in that other State.
2. However, such royalties
or fees for technical services may also be taxed in the Contracting State in
which they arise, and according to the laws of that State, but if the recipient
is the beneficial owner of the royalties or fees for technical services, the
tax so charged shall not exceed 15 per cent of the gross amount of the
royalties or fees for technical services.
3. (a) The term
"royalties" as used in this Article means payments of any kind
received as a consideration for:--
(i) the use of, or the right to use, any
copyright of literary, artistic or scientific work including software,
cinematograph and video films or records or tapes for television or radio;
(ii) any patent, design or model, plan, secret
formula or process, trade mark or for information (know-how) concerning
industrial, commercial or scientific experience; or
(iii) the use
of, or right to use, any industrial, commercial or scientific equipment.
(b) The term "fees
for technical services" as used in this Article, means payment of any kind
in consideration for the rendering of any managerial, technical or consultancy
services including the provision of services by technical or other personnel
but does not include payments for services mentioned in Articles 14 and 15 of
this Agreement.
4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or
fees for technical services being a resident of a Contracting State, carries on
business in the other Contracting State in which the royalties or fees for
technical services arise, through a permanent establishment situated therein,
or performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the royalties
or fees for technical services are paid is effectively connected with such
permanent establishment or fixed base. In such a case the provisions of Article
7 or Article 14, as the case may be, shall apply.
5. Royalties or fees for
technical services shall be deemed to arise in a Contracting State when the
payer is that State itself or a resident of that State. Where, however, the
person paying the royalties or fees for technical services, whether he is a
resident of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the liability to pay the
royalties or fees for technical services was incurred, and such royalties or
fees for technical services are borne by such permanent establishment or fixed
base, then such royalties or fees for technical services shall be deemed to
arise in the State in which the permanent establishment or fixed base is
situated.
6. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the royalties or fees for
technical services, having regard to the use, right or information for which
they are paid, exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In
such case, the excess part of the payments shall remain taxable according to
the laws of each Contracting State, due regard being had to the other
provisions of this Agreement.
Article 13
Capital gains
1. Gains derived by a
resident of a Contracting State from the alienation of immovable property
referred to in Article 6 and situated in the other Contracting State may also
be taxed in that other State.
2. Gains from the
alienation of movable property forming part of the business property of a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services, including such
gains from the alienation of such a permanent establishment (alone or with the
whole enterprise) or of such fixed base, may be taxed in that other State.
3. Gains derived by a
resident of Contracting State from the alienation of aircraft operated in
international traffic or movable property pertaining to the operation of such
aircraft, shall be taxable only in the Contracting State in which the
enterprise is a resident.
4. Gains from the
alienation of shares of the capital stock of a company the property of which
consists directly or indirectly principally of immovable property situated in a
Contracting State may be taxed in that State.
5. Gains from the
alienation of shares other than those mentioned in paragraph 4 of a company
which is a resident of a Contracting State may be taxed in that State.
6. Gains from the
alienation of any property other than that referred to in paragraphs 1, 2, 3, 4
and 5 shall be taxable only in the Contracting State of which the alienator is
a resident.
Article 14
Independent personal
services
1. Income derived by a
resident of a Contracting State in respect of professional services or other
activities of an independent character shall be taxable only in that State
except in the following circumstances, when such income may also be taxed in
the other Contracting State:--
(a) if he has a fixed base regularly
available to him in the other Contracting State for the purpose of performing
his activities, in that case, only so much of the income as is attributable to
that fixed base may be taxed in that other Contracting State; or
(b) if his stay in the other State is for a
period or periods aggregating 183 days or more in any 12-month period
commencing or ending in the fiscal year concerned; in that case, only so much
of the income as is derived from his activities performed in that other State
may be taxed in that other State.
2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
Article 15
Dependent personal
services
1. Subject to the
provisions of Articles 16, 18 and 19, salaries, wages and other similar
remuneration derived by an individual who is a resident of a Contracting State
in respect of an employment shall be taxable only in that State unless the
employment is exercised in the other Contracting State. If the employment is so
exercised, such remuneration as is derived there from may be taxed in that
other State.
2. Notwithstanding the
provisions of paragraph 1, remuneration derived by a resident of a Contracting
State in respect of an employment exercised in the other Contracting State
shall be taxable only in the first-mentioned State if:--
(a) the recipient is present in the other State
for a period or periods not exceeding in the aggregate 183 days in any 12-month
period commencing or ending in the fiscal year concerned; and
(b) the remuneration is paid by, or on
behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a
permanent establishment or a fixed base which the employer has in the other
State.
3. Notwithstanding the
preceding provisions of this Article, remuneration derived in respect of an
employment exercised aboard an aircraft operated in international traffic by an
enterprise which is a resident of a Contracting State may be taxed in that
State.
Article 16
Directors' fees
Directors' fees and other
similar payments derived by a resident of a Contracting State in his capacity
as a member of the board of directors of a company which is a resident of the
other Contracting State may be taxed in that other State.
Article 17
Artistes and sportspersons
1. Notwithstanding the
provisions of Articles 14 and 15, the income derived by a resident of a
Contracting State as an entertainer, such as a theatre, motion picture, radio
or television artiste, or a musician, or as a sportsperson, from his personal
activities as such exercised in the other Contracting State, may be taxed in that
other State.
2. Where income in respect
of personal activities exercised by an entertainer or a sportsperson in his
capacity as such accrues not to the entertainer or sportsperson himself but to
another person, that income may, notwithstanding the provisions of Articles 7,
14 and 15, be taxed in the Contracting State in which the activities of the
entertainer or sportsperson are exercised.
3. The provisions of
paragraphs 1 and 2, shall not apply to income from activities performed in a
Contracting State by entertainers or sportspersons if the visit to that State
is substantially supported by public funds of one or both of the Contracting
States or the activity is exercised within the framework of cultural or sports
co-operation agreement between the Contracting States. In such a case, the
income is taxable only in the Contracting State of which the entertainer or
sportsperson is a resident.
Article 18
Pensions and other
payments
1. Subject to the
provisions of paragraph 2 of Article 19, pensions and other similar
remuneration and annuities paid to a resident of a Contracting State shall be
taxable only in that State.
2. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.
Article 19
Government service
1. (a) Remuneration, other
than a pension, paid by a Contracting State or a political sub-division or a
local authority thereof to an individual in respect of services rendered to
that State or sub-division or authority shall be taxable only in that State.
(b) However, such
remuneration shall be taxable only in the other Contracting State if the
services are rendered in that other State and the individual is a resident of
that other State who:--
(i) is a national of that State; or
(ii) did not
become a resident of that State solely for the purpose of rendering the
services.
2. (a) Any pension paid by,
or out of funds created by, a Contracting State or a political sub-division or
a local authority thereof to an individual in respect of services rendered to
that State or sub-division or authority shall be taxable only in that State.
(b) However, such pension
shall be taxable only in the other Contracting State if the individual is a
resident of, and a national of, that State.
3. The provisions of
Articles 15, 16 and 18 shall apply to remuneration and pensions, in respect of
services rendered in connection with a business carried on by a Contracting
State or a political sub-division or a local authority thereof.
Article 20
Students
1. A student or business
apprentice who is or was a resident of a Contracting State immediately before
visiting the other Contracting State and who is present in that other
Contracting State solely for the purpose of his education or training shall be
exempt from tax in that other State on:--
(a) payments made to him by persons residing
outside that other State for the purposes of his maintenance, education or
training; and
(b) remuneration from employment in that other State for an amount not exceeding the amount which is exempt from tax under the laws of that other Contracting State for any fiscal year, as the case may be, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance.
2. The benefit of this
Article shall extend only for such period of time as may be reasonably or
customarily required to complete the education or training undertaken, but in
no event shall any individual have the benefits of this Article for more than
five consecutive years from the date of his first arrival in that other
Contracting State.
Article 21
Professors, teachers and
research scholars
1. A professor or teacher
who is or was a resident of a Contracting State immediately before visiting the
other Contracting State for the purpose of teaching or engaging in research, or
both, at a university, college, school or other approved institution in that
other Contracting State shall be exempt from tax in that other State on any
remuneration for such teaching or research for a period not exceeding two years
from the date of his arrival in that other State.
2. This Article shall not
apply to income from research, if such research is undertaken primarily for the
private benefit of a specific person or persons.
3. For the purposes of
this Article and Article 20, an individual shall be deemed to be a resident of
a Contracting State if he is resident in that State in the fiscal year in which
he visits the other Contracting State or in the immediately preceding fiscal
year.
4. For the purposes of
paragraph 1:--
(a) the teaching or research assignment
should be approved by the Governments of the Contracting States;
(b) "approved institution" means
an institution which has been approved in this regard by the Government of the
concerned State.
Article 22
Other income
1. Items of income of a
resident of a Contracting State, wherever arising, not dealt with in the
foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of
paragraph 1 shall not apply to income, other than income from immovable
property as defined in paragraph 2 of Article 6, if the recipient of such
income, being a resident of a Contracting State, carries on business in the
other Contracting State through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the income is
paid is effectively connected with such permanent establishment or fixed base.
In such case the provisions of Article 7 or Article 14, as the case may be,
shall apply.
3. Notwithstanding the
provisions of paragraph 1, if a resident of a Contracting State derives income
from sources within the other Contracting State in the form of lotteries,
crossword puzzles, races including horse races, card games and other games or
any sort of gambling or betting of any form or nature whatsoever, such income
may be taxed in the other Contracting State.
Article 23
Method for elimination of
double taxation
1. Where a resident of a
Contracting State derives income which, in accordance with the provisions of
this Agreement, may be taxed in the other Contracting State, the
first-mentioned State shall allow as a deduction from the tax on the income of
that resident, an amount equal to the income-tax paid in that other State. Such
deduction shall not, however, exceed that part of the income-tax as computed
before the deduction is given, which is attributable to the income which may be
taxed in that other State.
2. In the case of India, the tax payable in the Contracting State mentioned in paragraph 1 of this Article shall be deemed to include the tax which would have been payable but for the tax incentives granted under the laws of the Contracting State and which are designed to promote economic development.
3. Where in accordance
with any provision of the Agreement income derived by a resident of a
Contracting State is exempt from tax in that State, such State may
nevertheless, in calculating the amount of tax on the remaining income of such
resident, take into account the exempted income.
Article 24
Non-discrimination
1. Nationals of a
Contracting State shall not be subjected in the other Contracting State to any
taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of
that other State in the same circumstances in particular with respect to
residence, are or may be subjected. This provision shall, notwithstanding the
provisions of Article 1, also apply to persons who are not residents of one or
both the Contracting States.
2. The taxation on a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State carrying on the same
activities. This provision shall not be construed as preventing a Contracting
State from charging the profits of a permanent establishment which a company of
the other Contracting State has in the first-mentioned State at a rate of tax
which is higher than that imposed on the profits of a similar company of the
first-mentioned Contracting State, nor as being in conflict with the provisions
of paragraph 3 of Article 7 of this Agreement. This provision shall not be
construed as obliging a Contracting State to grant to residents of the other
Contracting State any personal allowances, relief’s and reductions for taxation
purposes on account of civil status or family responsibilities which it grants
to its own residents.
3. Enterprises of a
Contracting State, the capital of which is wholly or partly owned or
controlled, directly or indirectly, by one or more residents of the other
Contracting State, shall not be subjected in the first-mentioned State to any
taxation or any requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to which other similar
enterprises of the first-mentioned State are or may be subjected.
4. Except where the
provisions of paragraph 1 of Article 9, paragraph 7 of Article 11 or paragraph
6 of Article 12 apply, interest, royalties and other disbursements paid by an
enterprise of a Contracting State to a resident of the other Contracting State
shall, for the purpose of determining the taxable profits of such enterprise,
be deductible under the same conditions as if they had been paid to a resident
of the first-mentioned State.
Mutual agreement procedure
1. Where a person
considers that the actions of one or both of the Contracting States result or
will result for him in taxation not in accordance with the provisions of this
Agreement, he may, irrespective of the remedies provided by the domestic law of
those States, present his case to the competent authority of the Contracting
State of which he is a resident or, if he comes under paragraph 1 of Article
24, to that of the Contracting State of which he is a national. The case must
be presented within three years from the first notification of the action
resulting in taxation not in accordance with the provisions of the Agreement.
2. The competent authority
shall endeavour, if the objection appears to it to be justified and if it is
not itself able to arrive at a satisfactory solution, to resolve the case by
mutual agreement with the competent authority of the other Contracting State,
with a view to the avoidance of taxation which is not in accordance with this
Agreement. Any agreement reached shall be implemented notwithstanding any time
limits in the domestic law of the Contracting State.
3. The competent
authorities of the Contracting States shall endeavour to resolve by mutual
agreement any difficulties or doubts arising as to the interpretation or
application of the Agreement. They shall also consult each other for the
elimination of double taxation in cases not provided for in the Agreement.
4. The competent
authorities of the Contracting States may communicate with each other directly,
including through a joint commission consisting of themselves or their
representatives, for the purpose of reaching an agreement in the sense of the
preceding paragraphs.
Article 26
Exchange of information
1. The competent authorities of the Contracting States shall exchange such information (including certified copies of documents) as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting State concerning taxes covered by the Agreement, in so far as the taxation there under is not contrary to the Agreement. The exchange of information is not restricted by Article 1. Any information received by the competent authority of a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes to which the Agreement applies and shall be used only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on the competent authority of a Contracting State the obligation:--
(a) to carry out administrative measures at
variance with the laws or administrative practice of that or of the other
Contracting State;
(b) to supply information (including
certified copies of documents) which is not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting State;
(c) to supply information which would
disclose any trade, business, industrial, commercial or professional secret or
trade process or information, the disclosure of which would be contrary to
public policy.
Article 27
Collection assistance
1. The Contracting States
undertake to lend assistance to each other in the collection of taxes to which
this Agreement relates together with interest, costs, and civil penalties
relating to such taxes, referred to in this Article as a "revenue
claim".
2. Request for assistance
by the competent authority of a Contracting State in the collection of a
revenue claim shall include a certification by such authority that, under the
laws of that State, the revenue claim has been finally determined. For the
purposes of this article, a revenue claim is finally determined when a
Contracting State has the right under its internal law to collect the revenue
claim and the taxpayer has no further rights to restrain collection.
3. Amounts collected by the
competent authority of a Contracting State pursuant to this article shall be
forwarded to the competent authority of the other Contracting State. However,
the first-mentioned Contracting State shall be entitled to reimbursement of
costs, if any, incurred in the course of rendering such assistance to the
extent mutually agreed between the competent authorities of the two States.
4. Nothing in this article
shall be construed as imposing on either Contracting State the obligation to
carry out administrative measures of a different nature from those used in the
collection of its own taxes or those which would be contrary to its public
policy.
Nothing in this Agreement
shall affect the fiscal privileges of diplomatic or consular officials under
the general rules of international law or under the provisions of special
agreements.
1. The Contracting State
shall notify each other in writing through diplomatic channels, the completion
of the procedure required by the respective laws for the entry into force of
this Agreement. It shall enter into force thirty days after the date of receipt
of the latter of the notifications.
2. The provisions of this
Agreement shall have effect:--
(a) in India, in respect of income arising
in any fiscal year beginning on or after the first day of April next following
the calendar year in which the Agreement enters into force; and
(b) in
Kyrgyzstan;
(i) in respect of taxes withheld at source,
in relation to taxable amount paid on or after the first day of January
following the calendar year in which the Agreement enters into force;
(ii) in respect of other Kyrgyz taxes in
relation to profits and income arising in the calendar year following the
calendar year in which the Agreement enters into force and in subsequent
calendar years.
Article 30
Termination
This Agreement shall
remain in force until terminated by one of the Contracting States. Either
Contracting State may terminate the Agreement, through diplomatic channels by
giving written notice of termination at least six months before the end of any
calendar year after the expiration of five years from the date of entry into
force of the Agreement. In such event, the Agreement shall cease to have effect:--
(a) in India, in respect of income arising
in any previous year on or after the first day of April next following the
calendar year in which the notice of termination is given; and
(b) in
Kyrgyzstan;
(i) in respect of taxes withheld at source,
in relation to taxable amount paid on or after the first day of January
following the calendar year in which the notice of termination is given;
(ii) in respect of other Kyrgyz taxes in
relation to profits and income arising in the calendar year following the calendar
year in which the notice of termination is given and in subsequent calendar
years.
IN WITNESS WHEREOF, the
undersigned, being duly authorized thereto, have signed this Agreement.
Done in duplicate at New
Delhi, this thirteenth day of April, 1999, in Hindi, Kyrgyz, Russian and
English languages, all four texts being equally authentic. In case of
divergence between the texts, the English text shall prevail.
At the signing of the
Agreement between the Government of the Republic of India and the Government of
the Kyrgyz Republic for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income and on capital, the undersigned
have agreed that the following shall form an integral part of the Agreement.
1. With reference to
Article 6 it is understood that income from immovable property may be taxed in
both the Contracting States.
2. With reference to
Article 11, paragraph 3(i) it is understood that Government in the case of
India shall include a political sub-division.
3. With reference to
Article 11, paragraph 6 and Article 12, paragraph 5 it is understood that in
the case of India interest, royalties or fees for technical services shall be
deemed to arise in a Contracting State if the payer is a political sub-division
of that State.
IN WITNESS WHEREOF, the
undersigned, being duly authorised thereto, have signed this Protocol.
Done in duplicate at New
Delhi, this thirteenth day of April, 1999, in Hindi, Kyrgyz, Russian and
English languages, all four texts being equally authentic. In case of
divergence between the texts, the English text shall prevail.