DTAA BETWEEN INDIA & MACEDONIA
SECTION 90 OF THE INCOME-TAX ACT, 1961 - DOUBLE TAXATION AGREEMENT - AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION WITH FOREIGN COUNTRIES - MACEDONIA
NOTIFICATION NO.
94/2015 [F.NO.503/08/2004-FTD-I] / SO 3499(E), DATED 21-12-2015
Whereas, an
Agreement was entered into between the Government of the Republic of India and
the Government of the Republic of Macedonia for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
that was signed at Delhi on the 17th December, 2013 as set out in the Annexure
to this notification (hereinafter referred to as the said Agreement):
And whereas, the
date of enter into force of the said Agreement is the 12th September, 2014.
being the date of the later of the notifications of completion of the
procedures as required by the respective laws for entry into force of the said
Agreement, in accordance with paragraph 1 of Article 30 of the said Agreement;
And whereas,
clause (a) of paragraph 3 of Article 30 of the said Agreement provides that the
provisions of the said Agreement shall have effect in India in respect of taxes
withheld at source, to income paid or credited on or after the first day of
April of the calendar year next following the year in which the said Agreement
enters into force, and in respect of other taxes on income chargeable for any
fiscal year beginning on or after the first day of April of the calendar year next
following the year in which the said Agreement enters into force.
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 between the Government of the Republic of India and the
Government of the Republic of Macedonia for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income. as set
out in the Annexure hereto, shall be given effect to in the Union of India from
the first day of April, 2015 being the first day of the fiscal year next
following the year in which the said Agreement entered into force.
ANNEXURE
AGREEMENT
BETWEEN
THE GOVERNMENT
OF THE REPUBLIC OF INDIA
AND GOVERNMENT OF REPUBLIC OF MACEDONIA
FOR THE
AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF
FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The Government
of the Republic of India and the Government of the Republic of Macedonia,
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 cooperation between the two countries, have agreed as
follows:
ARTICLE 1
PERSONS COVERED
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 or of its political subdivisions or local authorities, 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.
(a) In India:
the
income tax (including any surcharge thereon)
(hereinafter
referred to as "Indian tax");
(b) in
Macedonia:
i. the profit
tax;
ii. the personal
income tax;
(hereinafter
referred to as "Macedonian tax").
4. The Agreement
shall apply also to any identical or substantially similar taxes that are
imposed after the date of signature of the Agreement 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 that 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 U.N. Convention on the
Law of the Sea;
(b) the term
"Macedonia" means the territory of the Republic of Macedonia, over
which it has jurisdiction or sovereign rights for the purpose of exploring,
exploiting, conserving and managing natural resources, pursuant to internal
jurisdiction and international law;
(c) the terms
"Contracting State" and "the other Contracting State" mean
the Republic of India or the Republic of Macedonia as the context requires;
(d) 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;
(e) the term
"company" means any body corporate or any entity that is treated as a
body corporate for tax purposes;
(f) the term
" enterprise" applies to the carrying on of any business;
(g) 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;
(h) the term
"international traffic" means any transport by a ship or aircraft
operated by an enterprise of a Contracting State, except when the ship or
aircraft is operated solely between places in the other Contracting State;
iii. in the case
of India: the Finance Minister, Government of India, or his authorized
representative;
iv. in the case
of Macedonia: the Ministry of Finance or its authorized representative;
(j) 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;
(k) the term
"tax" means Indian or Macedonian 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;
(l) The term
"fiscal year" means:
i. in the case
of India: the financial year beginning on the 1st day of April.
ii. in the case
of Macedonia: the calendar year beginning on the 1st day of January;
2. As regards
the application of the Agreement at any time by a Contracting State any term
not defined therein shall, unless the context otherwise requires, have the
meaning that it has at that time under the law of that State for the purposes
of the taxes to which the Agreement applies and any meaning under the
applicable tax laws of that State prevailing over a meaning given to the term
under other laws of that State.
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 and also includes that State and any
political subdivision or local authority thereof. This term, however, 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) be shall be
deemed to be a resident only 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 only 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 only 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 only 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 endeavor to 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
only 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
endeavor to settle the question by mutual agreement. In the absence of such
agreement, such person shall not be considered to be a resident of either
Contracting State for the purposes of enjoying benefits under this 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.
(a) a place of
management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a sales
outlet;
(g) a warehouse
in relation to a person providing storage facilities for others;
(h) a farm,
plantation or other place where agricultural, forestry, plantation or related
activities are carried on; and
(i) a mine, an
oil or gas well, a quarry or any other place of extraction of natural
resources.
3. (a) A
building site or construction, installation or assembly project or supervisory
activities in connection therewith constitutes a permanent establishment only
if such site, project or activities last more than nine months.
(b) The
furnishing of services, including consultancy services, by an enterprise
through employees or other personnel engaged by the enterprise for such
purpose, but only where activities of that nature continue (for the same or
connected project) within the country for a period or periods aggregating more
than 90 days within any 12-month period.
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 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 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;
(f) the
maintenance of a fixed place of business solely for any combination of
activities mentioned in subparagraphs (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
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 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, 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.
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 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
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 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.
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 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 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. However, no such deduction shall be
allowed in respect of amounts, if any, paid (otherwise than towards
reimbursement of actual expenses) by the permanent establishment to the head
office of the enterprise or any of its other offices, by way of royalties, fees
or other similar payments in return for the use of patents, know-how or other
rights, or by way of commission or other charges for specific services
performed or for management, or, except in the case of banking enterprises, by
way of interest on moneys lent to the permanent establishment. Likewise, no
account shall be taken, in the determination of the profits of a permanent
establishment, for amounts charged (otherwise than toward reimbursement of
actual expenses), by the permanent establishment to the head office of the
enterprise or any of its other offices, by way of royalties, fees or other
similar payments in return for the use of patents, know-how or other rights, or
by way of commission or other charges for specific services performed or for
management, or, except in the case of a banking enterprise, by way of interest
on moneys lent to the head office of the enterprise or any of its other
offices.
4. Insofar as it
has been customary in a Contracting State 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 Contracting 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 contained in this Article.
5. 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.
6. 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.
7. 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
SHIPPING AND AIR
TRANSPORT
1. Profits
derived by an enterprise of a Contracting State from the operation of ships or
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. If the place
of effective management of a shipping enterprise is aboard a ship, then it
shall be deemed to be situated in the Contracting State in which the home
harbor of the ship is situated, or, if there is no such home harbor, in the
Contracting State of which the operator of the ship is a resident.
3. 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.
4. For the
purposes of this Article interest on investments directly 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 if they are
integral to the carrying on of such business, and the provisions of Article 11
shall not apply in relation to such interest.
5. 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 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 a
Contracting State includes in the profits of an enterprise of the 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 beneficial owner of the dividends is a resident of the other Contracting
State, the tax so charged shall not exceed ten 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 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 beneficial owner of the
interest is a resident of the other Contracting State, the tax so charged shall
not exceed ten 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 that it is
derived and beneficially owned by:
(a) the
Government, a political sub-division or a local authority of the other
Contracting State, or
(b) (i) in the
case of India, the Reserve Bank of India, the Export-Import bank of India, the
National Housing bank; and
ii)
in the case of Macedonia, the National Bank of the Republic of Macedonia; or
(c) any other
institution as may be agreed upon from time to time between the Competent
authorities of the Contracting States through exchange of letters.
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 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 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
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
beneficial owner of the royalties or fees for technical services is a resident
of the other Contracting State the tax so charged shall not exceed ten 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 cinematograph films or films
or tapes used for television or radio 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.
(b) The term
"fees for technical services" as used in this Article means payments
of any kind, other than those mentioned in Articles 14 and 15 of this Agreement
as consideration for managerial or technical or consultancy services, including
the provision of services of technical or other personnel.
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
case the provisions of Article 7 or Article 14, as the case may be, shall
apply.
5. (a) Royalties
and 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 Contracting State in which the permanent establishment or fixed base is
situated.
(b) Where under
sub-paragraph (a) royalties or fees for technical services do not arise in one
of the Contracting States, and the royalties relate to the use of, or the right
to use, the right or property, or the fees for technical services relate to services
performed, in one of the Contracting States, the royalties or fees for
technical services shall be deemed to arise in that Contracting State.
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 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 from
the alienation of ships or aircraft operated in international traffic, or
movable property pertaining to the operation of such ships or aircraft shall be
taxable only in the Contracting State of which the alienator 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 in 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 an individual who is a resident of a Contracting State from the
performance of professional services or other independent activities of a
similar 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 Contracting State is for a period or periods amounting to or
exceeding in the aggregate 183 days in any period of 12 -months; 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, 19, 20 and 21, 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 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 twelve 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.
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 in 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, 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
-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
activities are substantially supported by public funds of one or both of the
Contracting States or of political subdivisions or local authorities thereof.
In such a case, the income shall be taxable only in the Contracting State of
which the entertainer or sportsperson is a resident.
ARTICLE 18
PENSIONS
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
shall be taxable only in that State.
ARTICLE 19
GOVERNMENT
SERVICE
1. (a) Salaries,
wages and other similar remuneration, other than a pension, paid by a
Contracting State or a political subdivision or a local authority thereof to an
individual in respect of services rendered to that State or subdivision 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
subdivision or a local authority thereof to an individual in respect of
services rendered to that State or subdivision 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, 17 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 subdivision or a
local authority thereof.
ARTICLE 20
PROFESSORS,
TEACHERS AND RESEARCH SCHOLARS
1. A professor,
teacher or research scholar who is or was a resident of the Contracting State
immediately before visiting the other Contracting State for the purpose of
teaching or engaging in research, or both, at a university, college or other
similar 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 apply to income from research only if such research is undertaken by the
individual in the public interest and not primarily for the benefit of some
private person or persons.
3. For the
purposes of this Article, an individual shall be deemed to be a resident of a
Contracting State if he is a resident in that State in the fiscal year in which
he visits the other Contracting State or in the immediately preceding fiscal
year.
ARTICLE 21
STUDENTS
1. A student who
is or was a resident of one of the Contracting States 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
which he derives from an employment which he exercises in the other Contracting
State if the employment is directly related to his studies.
2. The benefits
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 six consecutive years from the date of his first arrival in that other
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 form of
lotteries, crossword puzzles, races including horse races, card games and other
games of any sort or gambling or betting of any nature whatsoever, such income
may be taxed in the other Contracting State.
ARTICLE 23
METHODS FOR
ELIMINATION OF DOUBLE TAXATION
1. In India, the
double taxation shall be eliminated as follows:
(a) Where a
resident of India derives income which, in accordance with the provisions of
this Agreement, may be taxed in Macedonia, India shall allow as a deduction
from the tax on the income of that resident, an amount equal to the income tax
paid in Macedonia. Such deduction shall not, however, exceed that portion of
the tax as computed before the deduction is given, which is attributable, as
the case may be, to the income which may be taxed in Macedonia.
(b) Where in
accordance with any provision of the Agreement income derived by a resident of
India is exempt from tax in India, India may nevertheless, in calculating the
amount of tax on the remaining income of such resident, take into account the
exempted income.
2. In Macedonia,
the double taxation shall be eliminated as follows:
(a) Where a
resident of Macedonia derives income which, in accordance with the provisions
of this Agreement, may be taxed in India, Macedonia shall allow as a deduction
from the tax on the income of that resident, an amount equal to the income tax
paid in India. Such deduction shall not, however, exceed that portion of the
tax as computed before the deduction is given, which is attributable, as the
case may be, to the income which may be taxed in India.
(b) Where in
accordance with any provision of the Agreement income derived by a resident of
a Macedonia is exempt from tax in Macedonia, Macedonia 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 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 favorably 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 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.
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.
3. Except where
the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or
paragraph 7 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 profits of such enterprise,
be deductible under the same conditions as if they had been contracted to a
resident of the first-mentioned State.
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 the first-mentioned State are or may be subjected.
5. The
provisions of this Article shall apply to taxes covered by this Agreement.
ARTICLE 25
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 his case 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 endeavor, 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 Agreement. 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 Agreement. They may also consult together 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
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 26
EXCHANGE OF
INFORMATION
1, The competent
authorities of the Contracting States shall exchange such information
(including documents or certified copies of the documents) as is necessary for
carrying out the provisions of this Agreement or of the domestic laws
concerning taxes of every kind and description imposed on behalf of the
Contracting States, or of their political subdivisions or local authorities
insofar as the taxation thereunder is not contrary to the Agreement. The
exchange of information is not restricted by Articles 1 and 2.
2. Any
information received under paragraph 1 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, administrative bodies, law enforcement and investigative agencies)
concerned with the assessment or collection of, the enforcement or prosecution
in respect of, the determination of appeals in relation to the taxes referred
to in paragraph 1, or the oversight of the above. 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.
Notwithstanding the foregoing, information received by a Contracting State may
be used for other purposes when such information may be used for such other
purposes under the laws of both States and the competent authority of the
supplying State authorises such use.
3. 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 (including documents or certified copies of the 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).
4. If
information is requested by a Contracting State in accordance with this
Article, the other Contracting State shall use its information gathering
measures to obtain the requested information, even though that other State may
not need such information for its own tax purposes. The obligation contained in
the preceding sentence is subject to the limitations of paragraph 3 but in no
case shall such limitations be construed to permit a Contracting State to
decline to supply information solely because it has no domestic interest in
such information.
5. In no case
shall the provisions of paragraph 3 be construed to permit a Contracting State
to decline to supply information solely because the information is held by a
bank, other financial institution, nominee or person acting in an agency or a
fiduciary capacity or because it relates to ownership interests in a person.
6. A Contracting
State may allow representatives of the competent authority of the other
Contracting State to enter the territory of the first-mentioned Contracting
State to interview individuals and examine records with the written consent of
the persons concerned. The competent authority of the second-mentioned
Contracting State shall notify the competent authority of the first-mentioned
Contracting State of the time and place of the meeting with the individuals
concerned.
7. At the
request of the competent authority of one Contracting State, the competent
authority of the other Contracting State may allow representatives of the
competent authority of the first-mentioned Contracting State to be present at
the appropriate part of a tax examination in the second-mentioned Contracting
State.
8. If the
request referred to in paragraph 7 is acceded to, the competent authority of
the Contracting State conducting the examination shall, as soon as possible,
notify the competent authority of the other Contracting State about the time
and place of the examination, the authority or official designated to carry out
the examination and the procedures and conditions required by the
first-mentioned Contracting State for the conduct of the examination. All
decisions with respect to the conduct of the tax examination shall be made by
the Contracting State conducting the examination.
ARTICLE 27
ASSISTANCE IN
THE COLLECTION OF TAXES
1. The
Contracting States shall lend assistance to each other in the collection of
revenue claims. This assistance is not restricted by Articles 1 and 2. The
competent authorities of the Contracting States may by mutual agreement settle
the mode of application of this Article.
2. The term
"revenue claim" as used in this Article means an amount owed in
respect of taxes of every kind and description imposed on behalf of the
Contracting States, or of their political subdivisions or local authorities,
insofar as the taxation thereunder is not contrary to this Agreement or any
other instrument to which the Contracting States are parties, as well as
interest, administrative penalties and costs of collection or conservancy
related to such amount.
3. When a revenue
claim of a Contracting State is enforceable under the laws of that State and is
owed by a person who, at that time, cannot, under the laws of that State,
prevent its collection, that revenue claim shall, at the request of the
competent authority of that State, be accepted for purposes of collection by
the competent authority of the other Contracting State. That revenue claim
shall be collected by that other State in accordance with the provisions of its
laws applicable to the enforcement and collection of its own taxes as if the
revenue claim were a revenue claim of that other State.
4. When a
revenue claim of a Contracting State is a claim in respect of which that State
may, under its law, take measures of conservancy with a view to ensure its
collection, that revenue claim shall, at the request of the competent authority
of that State, be accepted for purposes of taking measures of conservancy by
the competent authority of the other Contracting State. That other State shall
take measures of conservancy in respect of that revenue claim in accordance
with the provisions of its laws as if the revenue claim were a revenue claim of
that other State even if, at the time when such measures are applied, the
revenue claim is not enforceable in the first-mentioned State or is owed by a
person who has a right to prevent its collection.
5.
Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted
by a Contracting State for purposes of paragraph 3 or 4 shall not, in that
State, be subject to the time limits or accorded any priority applicable to a
revenue claim under the laws of that State by reason of its nature as such. In
addition, a revenue claim accepted by a Contracting State for the purposes of
paragraph 3 or 4 shall not, in that State, have any priority applicable to that
revenue claim under the laws of the other Contracting State.
6. Proceedings
with respect to the existence, validity or the amount of a revenue claim of a
Contracting State shall only be brought before the courts or administrative
bodies of that State. Nothing in this Article shall be construed as creating or
providing any right to such proceedings before any court or administrative body
of the other Contracting State.
7. Where, at any
time after a request has been made by a Contracting State under paragraph 3 or
4 and before the other Contracting State has collected and remitted the
relevant revenue claim to the first-mentioned State, the relevant revenue claim
ceases to be:
(a) in the case
of a request under paragraph 3, a revenue claim of the first-mentioned State
that is enforceable under the laws of that State and is owed by a person who,
at that time, cannot, under the laws of that State, prevent its collection, or
(b) in the case
of a request under paragraph 4, a revenue claim of the first-mentioned State in
respect of which that State may, under its laws, take measures of conservancy
with a view to ensure its collection, the competent authority of the
first-mentioned State shall promptly notify the competent authority of the
other State of that fact and, at the option of the other State, the
first-mentioned State shall either suspend or withdraw its request.
8. In no case
shall the provisions of this Article 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 carry out
measures which would be contrary to public policy (ordre public);
(c) to provide assistance
if the other Contracting State has not pursued all reasonable measures of
collection or conservancy, as the case may be, available under its laws or
administrative practice;
(d) to provide
assistance in those cases where the administrative burden for that State is
clearly disproportionate to the benefit to be derived by the other Contracting
State.
ARTICLE 28
LIMITATION OF
BENEFITS
1. Nothing in
this Agreement shall affect the application of the domestic provisions to
prevent tax evasion or tax avoidance.
2. Benefits of
this Agreement shall not be available to a resident of a Contracting State, or
with respect to any transaction undertaken by such a resident, if the main
purpose or one of the main purposes of the creation or existence of such a
resident or of the transaction undertaken by him, was to obtain benefits under
this Agreement that would not otherwise be available.
3. The case of
legal entities not having bona fide business activities shall be covered by the
provisions of this Article.
4. Where by
reason of this Article a resident of a Contracting State is denied the benefits
of this Agreement in the other Contracting State, the competent authority of
the other Contracting State shall notify the competent authority of the
first-mentioned Contracting State.
ARTICLE 29
MEMBERS OF
DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this
Agreement shall affect the fiscal privileges of members of diplomatic missions
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, of the completion of the procedures required by the respective laws
for the entry into force of this Agreement.
2. This
Agreement shall enter into force on the date of the later of the notifications
referred to in paragraph 1 of this Article.
3. The
provisions of this Agreement shall have effect:
(a) In the case
of India:
(i) in respect
of taxes withheld at source, to income paid or credited on or after the first
day of April of the calendar year next following the year in which the
Agreement enters into force;
(ii) in respect
of other taxes on income chargeable for any fiscal year beginning on or after
the first day of April of the calendar year next following the year in which
the Agreement enters into force; and
(b) In the case
of Macedonia:
(i) in respect
of taxes withheld at source, to income paid or credited on or after the first
day of January of the calendar year next following the year in which the
Agreement enters into force;
(ii) in respect
of other taxes on income chargeable for any fiscal year beginning on or after
the first day of January of the calendar year next following the year in which
the Agreement enters into force.
ARTICLE 31
TERMINATION
This Agreement
shall remain in force indefinitely until terminated by a Contracting State.
Either Contracting State may terminate the Agreement, through diplomatic
channels, by giving notice of termination at least six months before the end of
any calendar year beginning 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:
(b) In the case
of India:
(i) in respect
of taxes withheld at source, to income paid or credited on or after the first
day of April of the calendar year next following the year in which the notice
is given;
(ii) in respect
of other taxes on income chargeable for any fiscal year beginning on or after
the first day of April of the calendar year next following the year in which
the notice is given; and
(a) In the case
of Macedonia:
(i) in respect
of taxes withheld at source, to income paid or credited on or after the first
day of January of the calendar year next following the year in which the notice
is given;
(ii) in respect
of other taxes on income chargeable for any fiscal year beginning on or after
the first day of January of the calendar year next following the year in which
the notice was given.
IN WITNESS
WHEREOF the undersigned, duly authorized thereto, have signed this Agreement.
DONE in
duplicate at Delhi this 17th day of December 2013, each in the Macedonian,
Hindi and English languages, all texts being equally authentic. In case of
divergence of interpretation, the English text shall prevail.
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NOTIFICATION
December 17th 2013. Republic of India and Republic of Macedonia have signed an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. The agreement was signed by External Affairs Minister Salman Khurshid and his Macedonian counterpart Nikola Poposki. The DTAA will provide relief to taxpayers from double taxation and, thereby, stimulate the flow of capital, technology and personnel between both the countries and will further strengthen the economic relationship between the two countries.
The salient features of the agreement are:-
1. The agreement provides relief from double taxation to residents of India earning income in Macedonia and residents of Macedonia earning income in India.
2. The agreement provides that taxation of dividend, interest and royalty in the source country will not exceed 10 %.
3. The agreement provides for taxation of business income in the source country if the taxpayer has a permanent establishment there
4. The agreement provides for taxation of capital gains from securities in the source country.
5. The agreement has a ‘limitation’ of benefit article which provides that the benefit of this agreement will not be available to entity which has formed mainly to obtain benefits under this agreement.
6. The agreement is based on international standard of transparency and exchange of information and provides for exchange of information (including banking information)concerning taxes.
7. The agreement has a specific provision that the requested party shall use its information-gathering measures to obtain the requested information even though that Party may not need such information for its own tax purposes.
8. The agreement provides for the representatives of the competent authority of the requesting Party to enter the territory of the requested Party to interview individuals and examine records.
9. The agreement provides for mutual assistance in collection of taxes due in other country.
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