DTAA BETWEEN INDIA & LATVIA
DOUBLE TAXATION AVOIDANCE AGREEMENT WITH LATVIA
(Notification No.12/2014 [ F.NO.503/02/1997-FTD-I ], DATED 5-3-2014)
Whereas, an Agreement was entered into between the Government of the Republic of India and the Government of the Republic of Latvia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income which was signed at New Delhi on the 18th day of September, 2013 (hereinafter referred to as the said Agreement);
2. And whereas, the date of entry into force of the said Agreement is the 28th day of December, 2013, being the date of later of the notifications of the completion of the procedures required by the respective laws for entry into force of the said Agreement, in accordance with paragraph 2 of Article 30 of the said Agreement;
3. And whereas, sub-paragraph (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 income derived in any fiscal year beginning on or after the first day of April next following the calendar year in which the said Agreement enters into force;
4. Now, therefore, in exercise of the powers conferred by section 90 of the Income- tax Act, 1961 (43 of 1961), the Central Government hereby notifies that all the provisions of said Agreement between the Government of the Republic of India and the Government of the Republic of Latvia 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 with effect from the lst day of April, 2014.
ANNEXURE
The Government of the Republic of India and the Government of the Republic of Latvia, 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.
3. The existing taxes to which the Agreement shall apply are in particular:
(a) in India, the income-tax, including any surcharge thereon; (hereinafter referred to as "Indian tax");
(b) in Latvia:
(i) the enterprise income-tax (uznemumu ienakuma nodoklis);
(ii) the personal income-tax (iedzivotaju ienakuma nodoklis); (hereinafter referred to as "Latvian 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 U.N.
Convention on the Law of the Sea;
(b) the
term "Latvia" means the Republic of Latvia and, when used in the geographical
sense, means the territory of the Republic of Latvia and any other area
adjacent to the territorial waters of the Republic of Latvia within which under
the laws of Latvia and in accordance with international law, the rights of
Latvia may be exercised with respect to the sea bed and its sub-soil and their
natural resources;
(c) the
terms "a Contracting State"
and "the other Contracting State"
mean the Republic of India
or the Republic of Latvia,
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 State;
(e) the
term "company" means any body corporate or any entity that is treated
as a body corporate for tax purposes;
(f) 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;
(g) 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;
(h) the
term "competent authority" means:
(i) in
India, the
Finance Minister, Government of India, or his authorised representative;
(ii) in
Latvia, the
Ministry of Finance or its authorised representative;
(i) 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;
(j) the
term "tax" means Indian or Latvian 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;
(k) The
term "fiscal year" means:
(i) in
India, the
financial year beginning on the first day of April;
(ii) in
Latvia, the
taxation period beginning on or after the first 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, 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, place of incorporation 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 or capital situated therein.
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) he 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 endeavour
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, the competent authorities of the Contracting States shall endeavour to
settle the question by mutual agreement having regard to the person's place of
effective management, the place where it is incorporated and any other relevant
factors. 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 the 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.
2.
The term "permanent establishment" includes especially:
(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. The term "permanent
establishment" shall also include:
(a) a building site or construction,
installation or assembly project, or supervisory activity connected therewith,
but only if such site, project or activity lasts more than nine months;
(b) the furnishing of services, including
consultancy services, by an enterprise of a Contracting State through its
employees or other personnel engaged by the enterprise for such purpose, but
only where such activities continue (for the same or a connected project) in
the other Contracting State for a period or periods exceeding in the aggregate
six months in any twelve month period;
(c) activities carried on offshore in a
Contracting State in connection with the exploration or exploitation of the sea
bed and sub-soil and their natural resources, but only if such activities are
carried on for a period or periods exceeding in the aggregate 30 days in any
twelve 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 or delivery 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,
display or delivery;
(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 sub-paragraphs
(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 6 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. 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, where the activities of such an
agent are devoted wholly or almost wholly on behalf of that enterprise, and
where the conditions between the agent and the enterprise differ from those
which would be made between independent persons, such agent shall not be
considered an agent of an independent status within the meaning of this
paragraph. In such case, provisions of paragraph 5 shall apply.
7. 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 rights in connection
with immovable property, 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, rights
to assets to be produced by the exploration or exploitation of the sea bed and
sub-soil and their natural resources, including rights to interests in or to
the benefit of such assets; 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 a banking
enterprise, 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 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 a banking enterprise, by
way of interest on moneys lent to the head office of the enterprise or any of
its other offices.
4. 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..
5. 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.
6. 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 that State.
2. Profits of an enterprise of a Contracting
State described in paragraph 1 from
the use, maintenance, or rental of containers (including trailers, barges and
related equipment for the transport of containers) used for the transport of
goods or merchandise in international traffic shall be taxable only in that
State.
3. For the purposes of this Article
interest on investments which are made in a Contracting State as integral part of
carrying on the business of \operation of ships or aircraft in international
traffic shall be regarded as profits derived from the operation of such ships
or aircraft, and the provisions of Article 11 shall not apply in relation to
such interest.
4. The provisions of paragraphs 1, 2 and 3
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 that 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 10 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 which is subject 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 10 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 it is derived and beneficially owned by:
(a) the Government, a political subdivision
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
and the National Housing Bank; or
(ii) in
the case of Latvia,
the Bank of Latvia, the Mortgage and Land Bank of Latvia
and the Latvian Guarantee Agency; or
(c) any other similar institution as may be
agreed upon from time to time between the competent authorities of the
Contracting States through exchange of letters; or
(d) a resident of India, if the interest is
paid in respect of a loan made, guaranteed or insured or a credit extended,
guaranteed or insured by the Government, a political subdivision or a local
authority of India or by any of the bodies mentioned in sub-paragraph (b) (i)
or (c);or
(e) a resident of Latvia,
if the interest is paid in respect of a loan made, guaranteed or insured or a
credit extended, guaranteed or insured by the Government or a local authority
of Latvia or by
any of the bodies mentioned in sub-paragraph (b) (ii) or (c).
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. The term "interest" shall not
include any income which is treated as a dividend under the provisions of
Article 10. Penalty charges for late payment shall not be regarded as interest
for the purpose of this Article.
5. The provisions of paragraphs 1, 2 and 3
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 : ROYALTIES
AND FEES FOR TECHNICAL SERVICES
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 10 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 and 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
or fees for technical services shall be deemed to arise in a Contracting State
when the payer is 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 or 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 State in which the permanent stablishment
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 : INCOME
OR GAINS ON ALIENATION OF PROPERTY
1. Income or 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 uch
a permanent establishment alone or with
the whole enterprise) or of such fixed base, may be taxed in that other State.
3. Gains derived by an enterprise of a
Contracting State operating ships or aircraft in international traffic 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 that State.
4. Gains from the alienation of shares 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 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 in respect of professional services or other
activities of an independent character shall be taxable only in that State
unless he has a fixed base regularly available to him in the other Contracting
State for the purpose of performing
his activities. If he has such a fixed base, the income may be taxed in the
other State but only so much of it as is attributable to that fixed base. For
this purpose, where an individual who is a resident of a Contracting State
stays in the other Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve month
period commencing or ending in the fiscal year concerned, he shall be deemed to
have a fixed base regularly available to him in that other State and the income
that is derived from his activities referred to above that re performed in that
other State shall be attributable to that fixed base.
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, 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 there from 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.
3. Notwithstanding the preceding
provisions of this Article, remuneration derived in respect of an employment
exercised aboard a ship or aircraft operated
in international traffic by an enterprise of a Contracting
State may be taxed in that 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 or any other similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.
ARTICLE 17 : ARTISTES AND SPORTS PERSONS
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 his 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 case, the income shall be taxable only in the Contracting State of which the entertainer or sportsperson is a resident.
ARTICLE 18 : PENSIONS
1. 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.
2. Notwithstanding the provisions OT paragraph 1 of this Article and paragraph 2 of Article 19, pensions and other similar remuneration paid under the social security legislation of a Contracting State 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 sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division 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 sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division 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 sub-division or a local authority thereof.
ARTICLE 20 : PROFESSORS, TEACHERS AND RESEARCH SCHOLARS
1. An individual who visits a Contracting State for the purpose of teaching or carrying out research at a university, college or other recognized educational institutions in that Contracting State and who is or was immediately before that visit a resident of the other Contracting State, shall be exempted from taxation in the first-mentioned Contracting State on remuneration for such teaching or research for a period not exceeding two years from the date of his first visit for that purpose.
2. The provisions of paragraph 1 of this Article shall not apply to income from research if such research is undertaken not in the public interest, but primarily for the private benefit of a specific person or persons.
ARTICLE 21 : STUDENTS
1. Payments which a student, an apprentice or a trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training, receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.
2. Notwithstanding the provisions of Article 15, remuneration which a student, or an apprentice or trainee who is or was, immediately before visiting a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training, receives for dependent personal services rendered in that first-mentioned State shall not be taxable in that State, provided that such services are directly related, and incidental, to his education or training or the remuneration for those services is necessary to supplement the resources for his maintenance. However, in any case the benefits of this paragraph shall not be granted for a period of more than five consecutive years from the date of his first arrival in the first-mentioned 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 winnings from 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
Double taxation shall be eliminated as follows:
1. In India:
(a) Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in Latvia, India shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in Latvia.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 Latvia.
(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 Latvia:
(a) Where a resident of Latvia derives income which, in accordance with the provisions of this Agreement, has been taxed in India, Latvia shall, subject to the provisions of sub-paragraphs (b) and (c), exempt such income from tax.
(b) Where a resident of Latvia derives income which in accordance with the provisions of paragraph 2 of Articles 10, 11 and 12 may be taxed in India, Latvia shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in India. Such deduction shall not, however, exceed the part of the tax, as computed before the deduction is given, which is attributable to the income which may be taxed in India.
(c) Where in accordance with any provision of the Agreement income derived by a resident of Latvia is exempt from tax in Latvia, Latvia 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. Stateless persons who are residents of a Contracting State shall not be subjected in either 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 the State concerned in the same circumstances, in particular with respect to residence, are or may be subjected.
3. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably 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. However, the difference in tax rate shall not exceed 1 percentage points.
4. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties, fees for technical services and other disbursements paid by an enterprise of a Contracting State to 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.
5. 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.
6. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
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 endeavour, 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 ("information" includes 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 sub-divisions 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. Any information received 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 and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in the first sentence. 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.
2. 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 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).
3. 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 2 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.
4. In no case shall the provisions of paragraph 2 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.
ARTICLE 27 : ASSISTANCE IN COLLECTION
1. The Contracting States undertake to lend assistance to each other in the collection of the taxes owed by a taxpayer to the extent that the amount thereof has been finally determined according to the laws of the Contracting State making the request for assistance.
2. In the case of a request by a Contracting State for the collection of taxes which has been accepted for collection by the other Contracting State, such taxes shall be collected by that other State in accordance with the laws applicable to the collection of its own taxes and as if the taxes to be so collected were its own taxes.
3. Any request for collection by a Contracting State shall be accompanied by such certificate as is required by the laws of that State to establish that the taxes owed by the taxpayer have been finally determined.
4. Where the tax claim of a Contracting State has not been finally determined by reason of it being subject to appeal or other proceeding, that State may, in order to protect its revenues, request the other Contracting State to take such interim measures for conservancy on its behalf as are available to the other State under the laws of that other State. If such request is accepted by the other State, such interim measures shall be taken by it as if the taxes owed to the first-mentioned State were the own taxes of that other State.
5. A request under the preceding paragraphs of this Article shall only made by a Contracting State to the extent that sufficient property of the taxpayer owing the taxes is not available in that State for recovery of the taxes owed.
6. The Contracting State in which tax is recovered in accordance with the provisions of this Article shall forthwith remit to the Contracting State on behalf of which the tax was collected the amount so recovered minus, where appropriate, the amount of extraordinary costs referred to in sub-paragraph (b) of paragraph 7.
7. It is understood that unless otherwise agreed by the competent authorities of both Contracting States,
(a) ordinary costs incurred by a Contracting State in providing assistance shall be borne by that State;
(b) extraordinary costs incurred by a Contracting State in providing assistance shall be borne by the other State and shall be payable regardless of the amount collected on behalf of the other State.
As soon as a Contracting State anticipates that extraordinary costs may be incurred, it shall so advise the other Contracting State and indicate the estimated amount of such costs.
8. In this Article, the term "taxes" means taxes to which the paragraph 1 of Article 26 applies and includes any interest and penalties relating thereto.
9. 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. The competent authorities upon their mutual agreement, may deny the benefits of this Agreement to a resident of a Contracting State, or with respect to any transaction undertaken by such a resident, if in their opinion the main purpose of the creation or existence of such a resident or of the transaction undertaken by him, was to obtain the benefits under this Agreement that would not otherwise be available.
2. The competent authorities of the Contracting States may consult together with a view to develop a commonly agreed application of the provisions of this Article.
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 India, in respect of income derived in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enter into force;
(b) in Latvia:
(i) in respect of taxes withheld at source, on income derived on after the first day of January in the calendar year next following the year in which the notice has been given;
(ii) in respect of other taxes on income for taxes chargeable for any fiscal year beginning on or after the first day of January in the calendar year next following the year in which the notice has been given.
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:
(a) in India, in respect of income derived in any fiscal year on or after the first day of April next following the calendar year in which the notice is given;
(b) in Latvia:
(i) in respect of taxes withheld at source, on income derived on or after the first day of January in the calendar year next following the year in which the notice has been given;
(ii) in respect of other taxes on income for taxes chargeable for any fiscal year beginning on or after the first day of January in the calendar year next following the year in which the notice has been given.
In witness whereof, the undersigned, duly authorised thereto, have signed this Agreement.Done in duplicate at New Delhi this 18th day of September, 2013, each in the Hindi, Latvian and English languages, all texts being equally authentic. In the case of divergence of interpretation, the English text shall prevail.
At the signing of the Agreement between the Government of the Republic of India and the Government of the Republic of Latvia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (hereinafter referred to as "the Agreement") the undersigned have agreed upon the following provisions with purpose to clarify the application of the Agreement.
1. With reference to Article 5:
It is understood that on the date of signature of this Agreement none of the agreements for the avoidance of double taxation concluded by Latvia provide for special provision deeming an insurance enterprise of a Contracting State to have a permanent establishment in the other Contracting State if it collects premiums or insures risks in the territory of that other State through a dependent agent.However, if after that date, such special provision is included in any agreement for the avoidance of double taxation concluded by Latvia, then, after consultations between the competent authorities of the both States, such provision shall also be considered for this Agreement.
2. With reference to paragraph 4 of Article 5:
It is understood that the provisions of paragraph 4 of Article 5 are designed to prevent an enterprise of one Contracting State from being taxed in the other State, if it carries on in that other State, activities of a purely preparatory or auxiliary character.
3. With reference to paragraph 3 of Article 5:
It is understood that the supervisory activities or services referred to in paragraph 3 of Article 5 does not include activities or services covered under sub-paragraph (b) of paragraph 3 of Article 12.
Done in duplicate at New Delhi this 18th day of September, 2013, each in the Hindi, Latvian and English languages, all texts being equally authentic. In the case of divergence of interpretation, the English text shall prevail.
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