New Delhi, Feb 23 (.) India and France have signed a Protocol amending the India-France Double Taxation Avoidance Convention, providing full taxing rights in respect of capital gains arising from the sale of shares of a company, to the jurisdiction where such company is a resident.
The protocol was signed during the recent visit of the President of France to India.
The Amending Protocol also deletes the so-called Most-Favoured-Nation (MFN) Clause from the Protocol to the DTAC, thereby bringing to rest all issues relating to it.
The Amending Protocol also modifies the taxation of income from dividends by replacing a single rate of 10 percent of tax with a split rate of 5 percent for those holding at least ten percent of capital and 15 percent of tax for all other cases, as per the information shared by the Ministry of Finance.
“It also modifies the definition of ‘Fees for Technical Services’ by aligning it with the definition in India US Double Taxation Avoidance Agreement, and expands the scope of ‘Permanent Establishment’ by adding Service PE,” it added.
The Amending Protocol also updates the provisions on Exchange of Information and introduces a new Article on Assistance in Collection of Taxes, as per international standards. This would enable and facilitate the seamless exchange of information and strengthen mutual tax cooperation between India and France.
The Amending Protocol also incorporates within the DTAC, the applicable provisions of the BEPS Multilateral Instrument (MLI), which had already become applicable consequent to the signing and ratification of MLI by India and France.
The changes introduced through the Amending Protocol shall enter into effect subsequent to the completion of internal procedures under the laws of both countries and subject to the terms agreed between the two countries.
The Amending Protocol will provide greater tax certainty to the taxpayers and boost the flow of investment, technology, and personnel between India and France, and thereby strengthen the economic relationship between the two countries.
The Amending Protocol was signed by Ravi Agrawal, Chairperson, Central Board of Direct Taxes, Government of India, and Thierry Mathou, Ambassador of France to India, on behalf of their respective Governments.
The Protocol amends the India-France Double Taxation Avoidance Convention, signed on 29 September 1992 (‘India-France DTAC’).
. VK VAN .