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.
Scope
This DTAA agreement shall apply to persons who are residents of one or both of the Contracting States (UAE or India).
Taxes Covered
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 Income earned by Entertainers and Athletes:
| Area of Income | Income earned in | Income taxed in | Remarks |
| Income by entertainers and Athletes | In the state by where he is resident | -In the state where the activities are performed
-If the activities are supported from public funds of the state where the entertainer is a resident, then taxable in the same state |
Article 17 – Income earned by Entertainers and Athletes
- Income derived by a resident of a contracting state as an entertainer performing activities such as theatre, motion picture, radio or television artist etc., may be taxed in the other state where the activities are performed.
However income shall be taxable in the first-mentioned contracting state if the activities in the other contracting state are supported wholly from the public funds of first-mentioned contracting state.
- Income in respect of personal activities exercised by an entertainer, as such accrues not to the entertainer but to another person, it may be taxed in the contracting state in which activities are exercised. However, income shall be taxable in the other contracting state if that other person is supported wholly from the public funds of that other state.
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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