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India and Fiji signed Double Taxation Avoidance Agreement 


January 30th, 2014. Government of India and the Government of Fiji on 30 January 2014 signed a Double Taxation Avoidance Agreement (DTAA) for avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income. On  behalf of India the agreement was signed by P. Chidambaram, Union Minister of Finance and on behalf of Fiji it was signed by Aiyaz Sayed-Khaiyum, Attorney General and Minister of Justice, Anti-Corruption, Public Enterprises, Communications, Civil Aviation, Tourism, Industry and Trade. The negotiation on the DTAA was reached in 2011 and this agreement will provide tax stability to the residents of India and Fiji. It will also facilitate in mutual economic cooperation as well as stimulate the flow of investment, technology and services between the two countries. It also incorporates provisions for an effective exchange of information and assistance in collection of taxes between tax authorities of the two countries including exchange of banking information. The maximum rate of tax that should be charged in the country of source will not exceed the prescribed limit for such dividends, royalties, interest and fees for technical services. The capital gains that are earned by the sale of shares will be taxable in the country of source. The anti-abuse provisions have been incorporated in the agreement to ensure that the benefits of Agreement are availed of only by the residents of the two countries and to prevent any abuse of treaty.

The agreement will also help the two countries in

•    As per the DTAA the business profit will be taxable in the source state if the activities of an enterprise constitute a permanent establishment in the source country
•    Profits derived by an enterprise from the operation of aircraft in international traffic shall be taxable in the country of place of effective management of the enterprise
•    Dividends, interest, royalty income and fees for technical or professional services will be taxed both in the country of residence and in the country of source

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This blog is Created by CA Anil Kumar Jain.