Signing of DTAA between India and Tanzania
Circular No. No.402/92/2006-MC (10 of 2011) was issued by the Central Board of Direct Taxes on 28 May 2011. Its subject is Signing of DTAA between India and Tanzania.
This one is about a tax treaty. India’s treaties enter Indian law by notification under section 90; where the instrument below is that notification, its date decides from when the treaty may be applied, and where it is a circular, it is the Board telling its officers how it reads the treaty — which is not the same thing.
Records the signing on 27 May 2011 at Dar es Salaam of a double taxation avoidance agreement between India and Tanzania. Business profits are taxable in the source State where the enterprise has a permanent establishment there, a branch or factory being examples, and a construction, assembly or installation project becomes a permanent establishment if it continues in that State for more than 270 days. Profits from operating ships or aircraft in international traffic are taxable only in the State of residence. Dividends, interest and royalties are taxable in both States, with the source State rate capped at a two-tier 5 or 10 per cent for dividends and 10 per cent for interest and royalties. Capital gains from the sale of shares are taxable in the source State. The agreement also carries provisions for effective exchange of information, including banking information, assistance in collection of taxes, and anti-abuse provisions so that only genuine residents get its benefits.
To announce the signing, which the two Governments concluded to give tax stability to their residents and to encourage the flow of investment, technology and services between them.
Signing of DTAA between India and Tanzania
No.402/92/2006-MC (10 of 2011)
Government of India / Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi dated the 28th May, 2011PRESS RELEASE
The Government of the Republic of India signed a Double Taxation Avoidance Agreement (DTAA) with the United Republic of Tanzania for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income on 27th May, 2011 at Dar es Salaam. The Agreement was signed by Mr K V Bhagirath, High Commissioner of India on behalf of the Government of India and by Mr Pereira Ame Silima, Deputy Minister of Finance on behalf of the United Republic of Tanzania in the presence of the Prime Minister, Dr Manmohan Singh and the President of Tanzania Mr Kikwete.
The DTAA provides that business profits will be taxable in the source state if the activities of an enterprise constitute a permanent establishment in the source state. Examples of permanent establishment include a branch, factory, etc. Profits of a construction, assembly or installation projects will be taxed in the state of source if the project continues in that state for more than 270 days.
Profits derived by an enterprise from the operation of ships or aircrafts in international traffic shall be taxable in the country of residence of the enterprise. Dividends, interest and royalties income will be taxed both in the country of residence and in the country of source. However, the maximum rate of tax to be charged in the country of source will not exceed a two-tier 5% or 10% in the case of dividends and 10% in the case of interest and royalties. Capital gains from the scale of shares will be taxable in the country of source.
The Agreement further incorporates provisions for effective exchange of information and assistance in collection of taxes between tax authorities of the two countries in line with internationally accepted standards including exchange of banking information and incorporates anti-abuse provisions to ensure that the benefits of the Agreement are availed of by the genuine residents of the two countries.
The Agreement will provide tax stability to the residents of India and Tanzania and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between India and Tanzania.
At the withholding stage on a payment to a Tanzanian resident, and in the assessment of an Indian enterprise's project profits in Tanzania where permanent establishment status is in issue.
Source: the Income Tax Department’s own published text — its page for this instrument.