What is the purpose of having an Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with UAE by India (DTAA) between UAE and India?
- In the Present Era of cross border transactions across the globe, the effect of Taxation is one of the important considerations for any Trade and Investment decisions in another countries.
- Where a taxpayer is resident in one country and but has source of income situated in another country, it gives rise to possible double taxation.
- DTAA lays down rules for taxation of the income by the Source country and the residence country.
This treaty was entered into by UAE and India with an aim to promote their economic relations and prevent tax evasion.
This DTAA agreement shall apply to persons who are residents of one or both of the Contracting States (UAE or India).
This agreement applies on the following existing taxes:
- Income Tax, Corporation Tax and Wealth Tax in UAE
- Income Tax and Wealth Tax in India
Following is the summary of the DTAA between UAE and India with respect to Professors, Teachers and Researchers:
|Area of Income||Income earned in||Income taxed in||Remarks|
|Remuneration of Professors, Teachers and Researchers||In the other state where he visits for research, teaching||In the other state where he visits if the period exceeds 2 years from the visit||Doesn’t apply to income from research if it is undertaken for the private benefit of a person.|
Article 21 – Professors, Teachers and Researchers
- An individual who is a resident of a contracting state and who at the invitation of any University, College, School or other similar educational institution recognized by the Government, a political sub-division or a local or statutory authority of that state, visits that other contracting state for a period not exceeding two years for the purpose of teaching or research or both shall be exempt from tax in respect of remuneration received.
- However this shall not apply to income from research if such research is undertaken primarily for the private benefit of a specific person or persons.
Elimination of Double Taxation
- Where a resident of India derives income or owns capital which, in accordance with the provisions of the agreement, may be taxed in UAE, India shall allow as a deduction from the tax on the income/capital of that resident an amount equal to Income tax or capital tax paid in UAE whether directly or by deduction.
- Where a resident of UAE which in accordance with the agreement may be taxed in India, UAE shall allow as a deduction from the tax on income of that person an amount equal to income tax paid in India.
- However such deduction shall not exceed that part of Income tax or capital tax as computed before the deduction is given.
Exchange of Information between the tax authorities of UAE and India
The competent authorities of contracting state shall exchange such information as is necessary for carrying out the provisions of the agreement or for the prevention or detection of evasion of taxes.
Limitation of Benefits
An entity which is a resident of a contracting state shall not be entitled to the benefits of this agreement if the main purpose of creation of such entity was to obtain the benefits of this agreement.
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