India–Colombia tax treaty — rates, PE and MLI

The rates, at a glance

Every figure below is taken from the article named beside it, not from a rates table. Read the condition in the same row before you use the rate — in this treaty the condition is usually the whole answer.

Income	Rate	The condition attached to it	Article
Dividends	5 per cent of the gross amount of the dividends — Art. 10(2). One of the lowest dividend ceilings in India's network. But read it with Protocol paragraph 2, which permits Colombia alone to charge up to 15 per cent in a defined case.	A single 5 per cent ceiling in the Agreement itself, with no qualifying-holding condition and no higher residual rate. Art. 10(2): "However, such dividends may also be taxed in the Contracting State of which…	Article 10, paragraph 2, and Protocol paragraph 2
Interest	10 per cent of the gross amount of the interest — Art. 11(2), conditional on the beneficial owner being a resident of the other Contracting State. A single flat ceiling, with no lower tier for bank lending.	Art. 11(3) exempts interest outright in the source State, and its structure is worth reading carefully because the operative words come last rather than first. The paragraph opens "Notwithstanding the…	Article 11, paragraph 2 and 3
Royalties	10 per cent of the gross amount — Art. 12(2), the same ceiling as for fees for technical services, both conditional on the beneficial owner being a resident of the other Contracting State.	Royalties and fees for technical services share one article, one rate paragraph, one PE carve-out, one source rule and one excess-payment rule, so the characterisation contest between the two limbs does not…	Article 12, paragraph 2 and 3(a)
Fees for technical services	10 per cent of the gross amount — Art. 12(2), inside the combined Royalties and Fees for Technical Services article and at the same rate as royalties.	There is no make-available condition, and the definition is then widened for India alone by the Protocol. Start with the Article. Art. 12(3)(b): "The term 'fees for technical services' as used in this Article…	Article 12, paragraph 2 and 3(b), read with Protocol paragraph 3

Status

In force	The Agreement was signed in India on the 13th day of May, 2011 (done in duplicate at New Delhi, each in the English, Hindi and Spanish languages, all texts equally authentic; in case of divergence of interpretation the English text prevails). It entered into force on the 7th day of July, 2014, the notification reciting that this was "the date of the later of the notifications of the completion of the procedures required by the respective laws for entry into force of the Agreement, in accordance with paragraph 2 of Article 30 of the Agreement". Article 30(3)(a) fixes effect in India: the provisions have effect "in respect of income derived in any fiscal year beginning on or after the first day of April immediately following the calendar year in which the Agreement enters into force", and "in all other matters, as of the date on which the Agreement enters into force". Entry into force falling in calendar 2014, the Indian fiscal year from which the provisions have effect is the year beginning 1 April 2015. In Colombia the provisions have effect "as of the first day of January of the calendar year immediately following that year in which the Agreement enters into force", i.e. 1 January 2015, and in all other cases from the date of entry into force.
Given effect by	S.O. 2465(E), Notification No. 44/2014, F.No. 501/3/99-ftd-II, dated 23 September 2014, Ministry of Finance, Department of Revenue (Income Tax), signed Rajat Bansal, Jt. Secy., published in the Gazette of India, Extraordinary, Part II, Section 3(ii). Made in exercise of the powers conferred by sub-section (1) of section 90 of the Income-tax Act, 1961 (43 of 1961); the Central Government "hereby notifies that all the provisions of the said Agreement, as annexed hereto, shall be given effect to in the Union of India".
Modified by the MLI	No synthesised text was found for this treaty in the source searched.
Principal purpose test	Article 28(2) is a main-purpose test, and it is drafted narrowly in two respects that are easy to miss: "An enterprise of a Contracting State shall not be entitled to the benefits of this Agreement if the main purpose or one of the main purposes of the creation of such enterprise was to obtain the benefits under this Agreement that would not otherwise be available." First, the subject is "an enterprise of a Contracting State", not "a resident" — so on its face the paragraph is directed at enterprises and does not reach an individual, a trust or a passive holding vehicle that is not carrying on an enterprise. Compare Art. 30(2) of the Georgia Agreement, which applies to "a resident of a Contracting State, or with respect to any transaction undertaken by such a resident". Second, and more significantly, the trigger is the purpose "of the creation of such enterprise" — it is creation-focused and entity-focused, not transaction-focused. A company incorporated for ordinary commercial reasons that later enters into a transaction designed to obtain treaty benefits is outside the words of Art. 28(2), because the main purpose of its creation was not to obtain benefits. There is no limb catching an arrangement or transaction as such. The closing words add a further condition: the benefits sought must be ones "that would not otherwise be available". This is not an MLI principal purposes test and there is no synthesised text for Colombia that would supply one. Two differences from the PPT are worth stating. (i) The MLI PPT denies a benefit "in respect of an item of income or capital" arising from "any arrangement or transaction" — it is income-focused and transaction-focused, and would catch precisely the case Art. 28(2) misses. (ii) The MLI PPT contains an object-and-purpose escape, allowing the benefit if it is established that granting it would accord with the object and purpose of the relevant provisions; Art. 28(2) has no such proviso, so where it does apply it is harsher. The net effect is a narrower gateway but no safety valve once through it.

Dividends

Rate	5 per cent of the gross amount of the dividends — Art. 10(2). One of the lowest dividend ceilings in India's network. But read it with Protocol paragraph 2, which permits Colombia alone to charge up to 15 per cent in a defined case.
Where this comes from	Article 10, paragraph 2, and Protocol paragraph 2

A single 5 per cent ceiling in the Agreement itself, with no qualifying-holding condition and no higher residual rate. Art. 10(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 5 per cent of the gross amount of the dividends." Two conditions and no more: the beneficial owner must be a resident of the other Contracting State — the modern formulation, which requires both beneficial ownership and residence, unlike the older "if the recipient is the beneficial owner" used in the Uganda and Mongolia treaties. There is no minimum shareholding, no holding period and no second tier, so the usual argument about whether a 10 or 25 per cent participation has been maintained does not arise at all. Because no MLI applies, no 365-day holding requirement has been imported. The asymmetric limb is in the Protocol, and it is not a general second tier — it is a Colombia-only rule addressed to a specific feature of Colombian law. Protocol paragraph 2: "In the case of Colombia, notwithstanding the provisions of paragraph 2 of Article 10, when a company resident in Colombia has not paid income tax on the profit distributed to shareholders (socios o accionistas), because of exemptions or because the profit exceeds the maximum non-taxed limit contained in Article 49 and in paragraph 1 of Article 245 of the Tax Statute of Colombia, the dividend distributed may be taxed in Colombia at a rate not exceeding 15 per cent, if the beneficial owner of the dividend is a shareholder (socio o accionista) resident in India." Four things follow. First, it operates one way only: the opening words "In the case of Colombia" mean India has no corresponding right, so an Indian company distributing out of exempt or untaxed profits to a Colombian shareholder remains capped at 5 per cent. Second, it is conditional on the underlying profit not having borne Colombian income tax, for one of two stated reasons — an exemption, or the profit exceeding the non-taxed ceiling in Article 49 and Article 245(1) of the Colombian Tax Statute. It is therefore a single-level-of-tax rule rather than an anti-abuse rule: Colombia gives up the 15 per cent where its corporate tax has already been paid. Third, it caps rather than fixes — "at a rate not exceeding 15 per cent" — so Colombian domestic law governs below that. Fourth, it preserves the beneficial-ownership and residence conditions in its own terms, requiring the beneficial owner to be a shareholder resident in India. For an Indian investor into Colombia the practical consequence is that the headline 5 per cent is reliable only to the extent the Colombian payer's distributed profit has actually been taxed in Colombia, and the effective ceiling on a distribution out of exempt profit is three times the headline. Art. 10(3) is the ordinary definition of dividends. Art. 10(4) switches the article off where the holding is effectively connected with a permanent establishment or fixed base, referring the income to Art. 7 or Art. 14 — Art. 14 being Independent Personal Services, since royalties and technical fees share Art. 12 and do not displace the numbering. Note also Art. 23(2)(a)(ii), which gives a Colombian resident an underlying tax credit on Indian dividends equal to the dividends multiplied by the Indian rate on the profits out of which they are paid, increased where the dividends are themselves taxed in India — a feature India's treaties rarely grant and which has no Indian-side counterpart in Art. 23(1).

Interest

Rate	10 per cent of the gross amount of the interest — Art. 11(2), conditional on the beneficial owner being a resident of the other Contracting State. A single flat ceiling, with no lower tier for bank lending.
Exemptions	Art. 11(3) exempts interest outright in the source State, and its structure is worth reading carefully because the operative words come last rather than first. The paragraph opens "Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State which is derived and beneficially owned by:", then lists three limbs, and only then closes with "shall not be taxed in the State where the interest arises". A reader scanning for the usual "shall be exempt from tax in that State" chapeau will not find it. The double requirement is present in the ordinary way — the claimant must both derive the interest and beneficially own it. Limb (a): "the Government, a political sub-division or a local or territorial authority of the other Contracting State" — note "local or territorial authority", the word "territorial" being added for the Colombian administrative structure and absent from most Indian treaties. Limb (b) names institutions on both sides and the Indian list is short: "(i) in the case of India, the Reserve Bank of India and the Export-Import Bank of India; and (ii) in the case of the Colombia, the Banco de la Republica and the Bancoldex". Both central banks are covered — the Reserve Bank for India, the Banco de la República for Colombia — and each side adds one development bank, exim Bank and Bancóldex respectively. On the Indian side that is all: the National Housing Bank, nabard, sidbi, ifci and idbi are outside the exemption, although the National Housing Bank is named in the Georgia and Albania interest articles. Limb (c) is the extension mechanism and it is drafted more widely than most: "any other institution as may be agreed upon between the Competent authorities of the Contracting States through exchange of letters". Unlike the Kenya formulation ("any other government financial institution/entity") and the Kyrgyz one ("Governmental financial institutions"), limb (c) is not confined to public bodies at all — the words are simply "any other institution", so a private bank or a fund is capable of being added. But it is not self-executing: it requires an exchange of letters between the competent authorities, and the notified text reproduces no such exchange. As the record stands only limb (a) and the four named banks operate. Penalty charges for late payment are excluded from the definition of interest by the closing sentence of Art. 11(4).
Where this comes from	Article 11, paragraph 2 and 3

Art. 11(4) is wider than the standard definition in one respect that matters: after the usual formula — 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, including government securities and bonds or debentures with their premiums and prizes — it adds "as well as income which is treated as interest under the laws of the Contracting State in which the income arises". That final limb imports the source State's domestic characterisation into the treaty definition, so an amount recharacterised as interest under Indian law is within Art. 11 even if it would not answer the autonomous description. It cuts both ways: it brings the payment inside the 10 per cent cap, but it also takes it out of Art. 7 and out of Art. 22. Most Indian treaties, including Uganda, Georgia, Syria and Mongolia, have no such limb. Art. 11(6) is the source rule in the narrow form: "Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State" — the government-payer limb ("that State itself, a political sub-division, a local authority") that appears in the Uganda and Mongolia source rules is absent, and there is no Protocol paragraph repairing it, unlike the Kyrgyz Agreement where Protocol paragraph 3 adds Indian political sub-divisions. Interest paid by an Indian government body to a Colombian resident is therefore arguably outside the Art. 11(6) source rule as drafted. The second sentence is the usual PE/fixed-base override where the indebtedness was incurred in connection with, and the interest is borne by, a permanent establishment or fixed base. Art. 11(5) refers effectively-connected debt-claims to Art. 7 or Art. 14, and Art. 11(7) limits the article to the arm's-length amount, leaving the excess taxable under domestic law with due regard to the other provisions of the Agreement.

Royalties

Rate	10 per cent of the gross amount — Art. 12(2), the same ceiling as for fees for technical services, both conditional on the beneficial owner being a resident of the other Contracting State.
Where this comes from	Article 12, paragraph 2 and 3(a)

Royalties and fees for technical services share one article, one rate paragraph, one PE carve-out, one source rule and one excess-payment rule, so the characterisation contest between the two limbs does not change the rate. It can still change the result, because Protocol paragraph 3 expands the FTS limb for India and does not touch the royalty limb (see fts). The royalty definition in Art. 12(3)(a) is the standard wide Indian form: "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 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." Films are inside on the copyright limb. The equipment limb repeats the words "for the use of, or the right to use" before "industrial, commercial or scientific equipment", so bare equipment rental is a royalty at 10 per cent gross, and — unlike Namibia, where the equipment limb is qualified by "involving a transfer of know-how" — no know-how transfer is required. There is no express reference to software or computer programmes (contrast Kyrgyzstan, which names "software", and Namibia, which names "computer programme"), and no satellite, cable or optic-fibre transmission limb. Art. 12(4) refers effectively-connected royalties to Art. 7 or Art. 14. Art. 12(5) is the source rule and Art. 12(6) is the special-relationship rule limiting the article to the arm's-length amount.

Fees for technical services

Rate	10 per cent of the gross amount — Art. 12(2), inside the combined Royalties and Fees for Technical Services article and at the same rate as royalties.
Make-available requirement	No
Where this comes from	Article 12, paragraph 2 and 3(b), read with Protocol paragraph 3

There is no make-available condition, and the definition is then widened for India alone by the Protocol. Start with the Article. Art. 12(3)(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 or technical assistance." The words "make available", "enable", "technical plan" and "technical design" appear nowhere in the Agreement or the Protocol. A Colombian service provider cannot argue that nothing was transmitted to the Indian payer: the charge attaches to the consideration for the service. Two features of the Article's own definition are worth isolating. First, it names four things, not the usual three: managerial, technical, consultancy — and "technical assistance", as a separate category joined by "or". "Technical assistance" is a broader and vaguer notion than "technical services" and is capable of covering help given in the course of another transaction, such as installation support or troubleshooting supplied alongside a sale of equipment, which would not obviously be a "service" of a technical nature standing alone. Very few Indian treaties carry it. Second, the carve-out is by cross-reference to Articles 14 and 15 — independent and dependent personal services — which is what keeps Art. 12 from colliding with Art. 14; the operative line is the individual/entity divide, since Art. 14(1) is expressly confined to "an individual who is a resident of a Contracting State" and a company's technical-service fee therefore cannot fall within it. Now the Protocol, which is where the article is at its widest and which is India-specific. Protocol paragraph 3: "With reference to paragraph 3(b) of Article 12, in the case of India, it is understood that the term 'fees for technical services' includes payments as consideration for provision of services of technical or other personnel in accordance with the provisions of section 9 of the Income-tax Act, 1961." Four consequences, and they are the substance of this article. (i) It is one-directional. The words "in the case of India" mean the expansion operates when India is the source State; Colombia's Art. 12(3)(b) is not correspondingly enlarged. The same payment can therefore be within the Indian FTS limb and outside the Colombian one. (ii) It adds the manpower-supply limb that Art. 12(3)(b) omits. Most Indian FTS definitions — Uganda, Georgia, Kyrgyzstan, Mongolia — include "the provision of services of technical or other personnel" in the Article itself. Colombia's Art. 12(3)(b) does not; the Protocol supplies it. So secondment and deputation arrangements are inside the Indian FTS charge by force of the Protocol and not otherwise, and a reader who stops at Art. 12(3)(b) will conclude the opposite. (iii) It ties the limb to domestic law by express reference — "in accordance with the provisions of section 9 of the Income-tax Act, 1961". That is unusual and it is significant: the treaty term takes content from an Indian statutory provision, and it is section 9 as a whole that is invoked, not a specific sub-clause. A treaty definition that incorporates a domestic charging provision by reference is capable of moving as that provision moves, which is the opposite of the usual position that a treaty term has an autonomous meaning frozen at signature. (iv) It is expressed as an inclusion — "includes payments as consideration for" — so it adds to Art. 12(3)(b) rather than replacing it, and both the Article's four categories and the Protocol's manpower limb operate together. The interaction with the PE article completes the picture, and Indian-source service income is exposed on two fronts: 10 per cent gross under Art. 12, or net-basis PE taxation under Arts. 5 and 7 where the six-month service threshold in Art. 5(3)(b) is crossed — with Protocol paragraph 1 aggregating related-enterprise time towards that threshold — in which case Art. 12(4) refers the income to Art. 7. There is no MFN clause in the Agreement or the Protocol, so no make-available limb can be imported from a later Indian treaty.

Capital gains on shares

Treatment	Full source-State taxing right over share gains, and the land-rich limb is one of the few in India's network that defines its own threshold. Art. 13(5) is the general limb and is unrestricted: "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." No percentage test, no minimum holding, no listing carve-out, no de minimis — India may tax a Colombian resident's gain on shares of an Indian company whatever the company's asset mix and whatever the size of the stake. Art. 13(4) is the land-rich limb and it is drafted with unusual care: "Gains derived by a resident of a Contracting State from the alienation of shares or other corporate rights, of the capital stock of a company the property of which consists directly or indirectly principally (more than 50 percent of the aggregate value of assets owned by the company) of immovable property situated in a Contracting State, may be taxed in that State." Two departures from the norm. The parenthesis supplies what "principally" means — more than 50 per cent of the aggregate value of assets owned by the company — where the Uganda, Kyrgyz, Georgia and Mongolia equivalents leave the word undefined and no protocol fills the gap. And the limb reaches "shares or other corporate rights", not shares alone, so a participation that is not share-shaped is caught. It does not, however, extend to interests in a partnership, trust or estate, which the Kenya and Namibia texts do reach. Art. 13(6) is the residual: gains from any property other than that in paragraphs 1 to 5 "shall be taxable only in the Contracting State of which the alienator is a resident". Art. 13(1) covers immovable property referred to in Art. 6; Art. 13(2) covers movable property of a permanent establishment or fixed base, including gains on alienating the PE itself; and Art. 13(3) allocates gains on ships or aircraft operated in international traffic, and movable property pertaining to their operation, exclusively to the alienator's State of residence — the residence test, not the place-of-effective-management test used in the Kenya and Namibia treaties.
Grandfathering	None. The Agreement fixes no grandfathering date and carries no acquisition-date cut-off for shares: there is no protective date for shares acquired before a given day and no transitional paragraph in Article 13 or Article 30. The Agreement has had effect in India from FY 2015-16 and has never been amended. Because no MLI applies, no 365-day look-back has been added to Art. 13(4) either — which matters more here than in most treaties, since the parties did define "principally" but said nothing about the period over which the more-than-50-per-cent test is applied, so a company can move in and out of Art. 13(4) with its balance sheet and there is no averaging or look-back rule to stabilise it. A disposal is otherwise tested under the same rules whenever the shares were acquired.
Conditions	Art. 13(5) is unconditional: the only requirement is that the company whose shares are alienated is a resident of the taxing State. Nothing turns on the seller's holding percentage, period of holding, or whether the shares are listed. Art. 13(4) turns on the express more-than-50-per-cent asset test written into the paragraph, and note how that test is framed — by reference to "the aggregate value of assets owned by the company", so it is a gross-asset test rather than a net-value or market-capitalisation test, and liabilities are not deducted. The paragraph is drafted by reference to where the immovable property is situated, not where the company is resident, so it can reach a company resident in neither State that holds Indian immovable property — which is the case in which Art. 13(4) does work that Art. 13(5) does not. What the Agreement does not supply is a valuation date or an averaging period for the 50 per cent test. There is no limitation-of-benefits condition attached to Article 13, but unlike the Uganda and Kyrgyz treaties there is a general anti-abuse article — Art. 28 — which applies to all benefits of the Agreement including the residence-only treatment in Art. 13(6), and Art. 28(1) additionally preserves domestic anti-avoidance law. Beneficial ownership is not required for capital gains; that condition appears only in Articles 10, 11 and 12.
Where this comes from	Article 13, paragraph 4, 5 and 6

Permanent establishment

Construction or installation PE	More than six months — Art. 5(3)(a): "a building site or construction, installation or assembly project or supervisory activities in connection therewith only if such site, project or activities last more than six months." The covered works are wide — building site, construction, installation and assembly projects with their connected supervisory activities are all named, so there is no gap for a pure installation contract of the kind the Uganda Convention leaves open. The clock runs on the duration of the site, project or activities, and the Agreement says nothing about when it starts, so there is no equivalent of the Kenya protocol's exclusion of purely preparatory mobilisation time. What the Protocol does supply is the aggregation rule, and it is the single most important gloss on this Article. Protocol paragraph 1: "With reference to paragraph 3 of Article 5, its understood that, for the purposes of computing the time limits referred to in that paragraph, such activities performed by an enterprise related to another enterprise within the meaning of Article 9, shall be added to the period during which activities are performed by the enterprise, provided that the activities of both enterprises are identical or substantially similar for the same or connected project." Four points. First, it is expressed by reference to "paragraph 3" and to "the time limits" in the plural, so it reaches both sub-paragraph (a) and sub-paragraph (b) — the construction threshold and the service threshold alike. Second, relatedness is defined by cross-reference to Article 9, so it is the associated-enterprises test — direct or indirect participation in management, control or capital, or common participation by the same persons — and not a percentage-ownership or "closely related enterprise" test. Third, the aggregation is conditional: the activities of both enterprises must be "identical or substantially similar" and must be "for the same or connected project". Splitting genuinely different workstreams between group companies is not caught; splitting the same work is. Fourth, this is a bilateral anti-splitting rule achieving much of what MLI Article 14 was designed to achieve, agreed in 2011 without needing the MLI — which matters, because no synthesised text exists for Colombia and the MLI rule is not available. A contractor structuring an Indian project across affiliates must count the group's time, not its own.
Service PE	Yes, and the Agreement states it in months rather than days: more than six months within any 12-month period. Art. 5(3)(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 six months within any 12 month period." Every element carries weight. The personnel must be "engaged by the enterprise for such purpose". Aggregation is limited to "the same or connected project", so unconnected engagements are not added together. The window is "any 12 month period", a rolling test rather than the fiscal year. The threshold is "more than" six months, so six months exactly does not create a permanent establishment. And the unit is months, not days — the treaty does not say 180 days or 183 days, and converting it to a day count is an interpretation the text does not authorise, which matters at the margin for a project running just over or just under half a year. Note the phrase "within the country", which is loose drafting for "within a Contracting State" but plainly means the State in which the services are performed. Protocol paragraph 1 aggregates related-enterprise time towards this threshold as well as towards the construction threshold, because it is expressed to apply to "the time limits" in paragraph 3 generally. Six months is a long service threshold by Indian standards — Georgia and Kenya use ninety days, Syria 183 days — so a Colombian enterprise has materially more room before a service PE arises; but the trade-off is Art. 12, which taxes technical fees at 10 per cent gross from the first rupee with no make-available filter and with the Protocol's section 9 expansion behind it.
Agency PE	Yes — Art. 5(5), in the three-limb form but without the group extension. A person other than an independent agent within Art. 5(7), acting in a Contracting State on behalf of an enterprise of the other State, creates a PE 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 are limited to those in paragraph 4 which, if exercised through a fixed place of business, would not make it a PE; (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". Limb (c) is confined to the enterprise itself — there is no extension to orders secured for enterprises controlling, controlled by or under common control with it, which the Uganda and Kyrgyz agency limbs both carry. So an Indian agent acting for a Colombian group, with no single principal dominating the activity, is outside limb (c) here where it would be caught under those treaties. Limb (a) uses the pre-beps "in the name of the enterprise" formulation and has not been replaced by the MLI commissionnaire rule. Art. 5(6) is a separate insurance PE: an insurance enterprise, "except in regard to re-insurance", is deemed to have a PE in the other State if it collects premiums in that territory or insures risks situated there through a person other than an independent agent. Art. 5(7) is the independent-agent exclusion, with the single-limb anti-exclusivity rider — exclusivity alone defeats independence, without the cumulative non-arm's-length requirement found in the Kenya text.
Where this comes from	Article 5, paragraph 2(j), 3(a), 3(b), 5, 6 and 7, read with Protocol paragraph 1

Art. 5(2) is the inclusive list and it carries one item with a duration test of its own, which is easy to overlook because the other nine have none: "(j) an installation or structure used for the exploration of natural resources provided that the activities continue for more than six months". Note the word "exploration" — not exploitation, extraction or production. An installation used to produce from a discovered field is not within sub-paragraph (j) and has to be tested under Art. 5(1) or under sub-paragraph (i), "a mine, an oil or gas well, a quarry or any other place of extraction of natural resources", which carries no duration test at all. The result is that an exploration rig gets a six-month shelter while a producing well is a PE immediately — the opposite of what a reader assuming a general natural-resources threshold would expect. There is no mineral-oils services deeming rule of the kind in Art. 5(4) of the Kyrgyz Agreement, which catches the supply of plant and machinery on hire for oilfield use with no threshold. The rest of Art. 5(2) is standard for a modern Indian treaty: place of management, branch, office, factory, workshop, "(f) a sales outlet", "(g) a warehouse in relation to a person providing storage facilities for others" and "(h) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on". Art. 5(4) is the specific-activity exclusion list and the omission in it is deliberate and consequential: sub-paragraph (a) excludes facilities used solely for "storage or display of goods or merchandise" and sub-paragraph (b) a stock held solely for "storage or display" — the word "delivery" appears in neither. A fixed place of business used for delivery is therefore not within the Art. 5(4) exclusions and is capable of constituting a permanent establishment, which is the position under the Georgia and Kenya treaties and the opposite of the Uganda and Kyrgyz treaties, where delivery is expressly excluded. Since no MLI applies there is no anti-fragmentation overlay and no "closely related enterprise" concept, but the delivery omission achieves bilaterally much of what MLI Article 13 Option A was designed to achieve, and Protocol paragraph 1 achieves much of MLI Article 14. Sub-paragraphs (c) to (f) of Art. 5(4) are standard. Art. 7(3) allows deductions for expenses incurred for the purposes of the permanent establishment including executive and general administrative expenses, and Art. 5(8)'s equivalent — the control rule — provides that parent-subsidiary control does not of itself create a PE.

Anti-abuse: limitation of benefits, and the MLI

LOB	Article 28 is headed Limitation of Benefits and has three paragraphs, in the short Indian style with no objective safe harbours and no qualified-person machinery. Paragraph 1 is a domestic-law saving: "The provisions of this Agreement shall in no case prevent a Contracting State from the application of the provisions of its domestic laws and measures concerning tax avoidance or evasion, whether or not described as such." It is drafted strongly — "in no case prevent", extending to measures "whether or not described as such" — and is wide enough on its face to cover Chapter X-A GAAR, section 94A, section 94B and specific anti-avoidance provisions that do not label themselves as anti-avoidance. Paragraph 3 is the weak form: "The case of legal entities not having bona fide business activities shall be covered by the provisions of this Article." Note what it does not say. Unlike Art. 29(3) of the Kenya Agreement — "Any person including legal entities not having bonafide business activities shall not be entitled to the benefits of this Agreement" — Colombia's paragraph 3 contains no operative denial of its own. It says only that such cases are "covered by the provisions of this Article", so it depends for its effect on paragraph 2, and it is confined to legal entities rather than reaching "any person". It is best read as a direction that a shell entity is within the reach of the main-purpose test rather than as a free-standing substance requirement. There is no objective limitation-of-benefits machinery of the American type anywhere in this Agreement — no ownership test, no base-erosion test, no stock-exchange test, no active-trade-or-business clause and no competent-authority discretion. Contrast the Albania Agreement, which carries a full qualified-person article with all of those elements. Protocol paragraph 4 is the opposite of an anti-abuse rule and belongs in the picture because it sits in the same instrument as Article 28: "It is understood that if the domestic law of a Contracting State is more beneficial to a resident of the other Contracting State than the provisions of this Agreement, then the provisions of the domestic law of the first-mentioned State shall apply to the extent they are more beneficial to such a resident." India already gives this by section 90(2) of the Income-tax Act, but few Indian treaties say it in the instrument itself. Two points follow. First, it is drafted "to the extent they are more beneficial", which permits a provision-by-provision comparison rather than requiring the taxpayer to elect the treaty or domestic law as a whole. Second, and less comfortably for the taxpayer, it sits alongside Art. 28(1), which preserves domestic anti-avoidance law "in no case ... Whether or not described as such" — so the Protocol imports the beneficial parts of domestic law while Art. 28(1) preserves the restrictive ones. There is no subject-to-tax clause, no remittance-basis limitation and no switch-over clause. Note also that Art. 23 (Methods for Elimination of Double Taxation) grants ordinary credit only on the Indian side, with exemption-with-progression at Art. 23(1)(b), and no tax-sparing credit — unlike the Uganda and Mongolia treaties, both of which deem tax spared under development incentives to have been paid.
PPT	Article 28(2) is a main-purpose test, and it is drafted narrowly in two respects that are easy to miss: "An enterprise of a Contracting State shall not be entitled to the benefits of this Agreement if the main purpose or one of the main purposes of the creation of such enterprise was to obtain the benefits under this Agreement that would not otherwise be available." First, the subject is "an enterprise of a Contracting State", not "a resident" — so on its face the paragraph is directed at enterprises and does not reach an individual, a trust or a passive holding vehicle that is not carrying on an enterprise. Compare Art. 30(2) of the Georgia Agreement, which applies to "a resident of a Contracting State, or with respect to any transaction undertaken by such a resident". Second, and more significantly, the trigger is the purpose "of the creation of such enterprise" — it is creation-focused and entity-focused, not transaction-focused. A company incorporated for ordinary commercial reasons that later enters into a transaction designed to obtain treaty benefits is outside the words of Art. 28(2), because the main purpose of its creation was not to obtain benefits. There is no limb catching an arrangement or transaction as such. The closing words add a further condition: the benefits sought must be ones "that would not otherwise be available". This is not an MLI principal purposes test and there is no synthesised text for Colombia that would supply one. Two differences from the PPT are worth stating. (i) The MLI PPT denies a benefit "in respect of an item of income or capital" arising from "any arrangement or transaction" — it is income-focused and transaction-focused, and would catch precisely the case Art. 28(2) misses. (ii) The MLI PPT contains an object-and-purpose escape, allowing the benefit if it is established that granting it would accord with the object and purpose of the relevant provisions; Art. 28(2) has no such proviso, so where it does apply it is harsher. The net effect is a narrower gateway but no safety valve once through it.
Where this comes from	Article 28 (three paragraphs), read with Protocol paragraph 4 for the more-beneficial-domestic-law rule, and Article 23 for the elimination method

The text notified by S.O. 2465(E) on 23 September 2014 — the Agreement of 13 May 2011 and its same-day Protocol — is what this record carries. The Income Tax Department publishes MLI synthesised texts for those of its treaties the MLI has modified, and a search of that collection returns no Colombia entry — Georgia has one, Colombia does not. There is therefore only one text of this Agreement and nothing to reconcile. None of the MLI overlay is established as applying: no anti-treaty-shopping preamble, no MLI principal purposes test, no saving clause, no anti-fragmentation rule on Art. 5(4), no commissionnaire rule on Art. 5(5), no 365-day look-back on immovable-property share gains under Art. 13(4), and no splitting-up-of-contracts rule on the six-month thresholds in Art. 5(3). The last of these is the one to notice, because the parties supplied their own version of it bilaterally: Protocol paragraph 1 aggregates the time of enterprises related within the meaning of Article 9 for the purposes of both Art. 5(3) thresholds, which is a good part of what MLI Article 14 was designed to achieve. Similarly, the main-purpose rule in Article 28(2) is a provision of the treaty as notified, not an MLI principal purposes test — the two are drafted differently and are compared in anti_abuse. Whether Colombia has signed or ratified the MLI, and whether India has listed this Agreement as a Covered Tax Agreement, is not established from the sources used here; the conclusion that no MLI modification applies rests on the absence of a synthesised text and on the notified text carrying no modification marker.

The protocols, in order

A treaty read without its protocols is a wrong answer.

A Protocol signed the same day, 13 May 2011, is annexed to the notification and is expressed to be an integral part of the Agreement: "At the moment of signing the Agreement this day concluded ... The undersigned have agreed upon the following provisions which shall be an integral part of the Agreement". It is four paragraphs long and three of them change answers, so it cannot be treated as commentary. Paragraph 1 aggregates the time of related enterprises for both permanent-establishment thresholds in Article 5(3) — see pe. Paragraph 2 creates a fifteen per cent Colombian dividend limb on profits that bore no Colombian income tax — see dividends. Paragraph 3 expands the meaning of fees for technical services, for India only, by reference to section 9 of the Income-tax Act, 1961 — see fts. Paragraph 4 is a treaty-level more-beneficial-domestic-law clause — see anti_abuse. The Protocol was signed by the same two signatories as the Agreement, Sudhir Chandra as Chairman of the Central Board of Direct Taxes and Juan Alfredo Pinto Saavedra as Ambassador of Colombia to India, and done in duplicate in English, Hindi and Spanish, the English text prevailing on divergence.
No amending notification and no later protocol appears in this Gazette notification. The citation line names one notification and one date, with no "as amended by", no corrigendum and no trailing footnote. The instrument notified is the Agreement of 13 May 2011 together with its same-day Protocol, and nothing else.
No synthesised text exists for Colombia, so no MLI change to this Agreement is established here. See synthesised_text.

The words themselves

Quoted from the treaty as notified.

With reference to paragraph 3 of Article 5, its understood that, for the purposes of computing the time limits referred to in that paragraph, such activities performed by an enterprise related to another enterprise within the meaning of Article 9, shall be added to the period during which activities are performed by the enterprise, provided that the activities of both enterprises are identical or substantially similar for the same or connected project.

Article Protocol, paragraph 1 of the treaty as notified.

With reference to paragraph 3(b) of Article 12, in the case of India, it is understood that the term “fees for technical services” includes payments as consideration for provision of services of technical or other personnel in accordance with the provisions of section 9 of the Income-tax Act, 1961.

Article Protocol, paragraph 3 of the treaty as notified.

In the case of Colombia, notwithstanding the provisions of paragraph 2 of Article 10, when a company resident in Colombia has not paid income tax on the profit distributed to shareholders (socios o accionistas), because of exemptions or because the profit exceeds the maximum non-taxed limit contained in Article 49 and in paragraph 1 of Article 245 of the Tax Statute of Colombia, the dividend distributed may be taxed in Colombia at a rate not exceeding 15 per cent, if the beneficial owner of the dividend is a shareholder (socio o accionista) resident in India.

Article Protocol, paragraph 2 of the treaty as notified.

Gains derived by a resident of a Contracting State from the alienation of shares or other corporate rights, of the capital stock of a company the property of which consists directly or indirectly principally (more than 50 percent of the aggregate value of assets owned by the company) of immovable property situated in a Contracting State, may be taxed in that State.

Article 13, paragraph 4 of the treaty as notified.

An enterprise of a Contracting State shall not be entitled to the benefits of this Agreement if the main purpose or one of the main purposes of the creation of such enterprise was to obtain the benefits under this Agreement that would not otherwise be available.

Article 28, paragraph 2 of the treaty as notified.

What to watch

The Protocol is four paragraphs and three of them change answers. It is expressed to be "an integral part of the Agreement", so it is not commentary and it is not optional. Paragraph 1 aggregates related-enterprise time for both PE thresholds in Art. 5(3). Paragraph 2 lets Colombia charge 15 per cent on dividends out of untaxed Colombian profits, three times the 5 per cent in Art. 10(2). Paragraph 3 widens the Indian FTS definition by reference to section 9 of the Income-tax Act. Paragraph 4 preserves more beneficial domestic law. Any answer given from Articles 5, 10 or 12 alone will be wrong.
Protocol paragraph 3 is the reason the FTS definition in Art. 12(3)(b) cannot be read on its own, and it is India-specific. Art. 12(3)(b) covers managerial, technical, consultancy services and technical assistance — but, unlike almost every other Indian FTS definition, it omits "the provision of services of technical or other personnel". The Protocol supplies that limb for India only, and ties it to section 9 of the Income-tax Act, 1961. So secondment, deputation and manpower-supply payments are inside the Indian charge by force of the Protocol and not otherwise; and because the limb is tied to a domestic provision by reference rather than defined autonomously, its content follows section 9. Note also that the Article's own list includes "technical assistance" as a fourth category, which is wider than "technical services" and rare in India's network.
Protocol paragraph 2 makes the 5 per cent dividend rate unreliable in one direction only. The Agreement's ceiling is 5 per cent flat with no holding threshold — among the lowest in India's network — but where a Colombian company distributes profit on which it paid no Colombian income tax, because of an exemption or because the profit exceeded the untaxed limit in Article 49 and Article 245(1) of the Colombian Tax Statute, Colombia may charge up to 15 per cent. The rule is one-directional: it opens with "In the case of Colombia", so India has no matching right and an Indian company's distribution out of exempt profits stays capped at 5 per cent. It is a single-level-of-tax rule, not an anti-abuse rule.
Both PE thresholds in Art. 5(3) are six months, and Protocol paragraph 1 aggregates the time of enterprises related within the meaning of Article 9 where the activities are identical or substantially similar for the same or connected project. Because the Protocol speaks of "the time limits" in paragraph 3 rather than one of them, the aggregation applies to the construction limb in (a) and the service limb in (b) alike. Splitting a contract between group companies does not defeat either threshold. Relatedness is the Article 9 associated-enterprises test — participation in management, control or capital — not a percentage test. This is a bilateral anti-splitting rule doing much of MLI Article 14's work, which matters because no MLI applies to this treaty.
Article 13(4) writes its own definition of "principally" into the text: "more than 50 percent of the aggregate value of assets owned by the company". Very few Indian treaties do this — Uganda, Kyrgyzstan, Georgia and Mongolia all leave the word bare. Note that it is a gross-asset test: the measure is the aggregate value of assets owned, so liabilities are not deducted, and the limb also reaches "shares or other corporate rights" rather than shares alone. What the paragraph does not supply is a valuation date or an averaging period, and no MLI 365-day look-back applies, so a company's status under Art. 13(4) can move with its balance sheet. In practice Art. 13(5) taxes gains on shares of any Indian-resident company anyway, without grandfathering, so Art. 13(4) matters mainly for a company resident in neither State holding Indian immovable property.
Article 28(2) is narrower than it looks and the gap is worth knowing. It denies benefits where "the main purpose or one of the main purposes of the creation of such enterprise" was to obtain benefits — creation-focused, entity-focused, and confined to "an enterprise of a Contracting State". A company created for genuine commercial reasons that later enters into a benefit-driven transaction is outside its words, and so is a person that is not an enterprise. There is no MLI principal purposes test to fill the gap, because no synthesised text exists for Colombia. What remains is Art. 28(1), which preserves domestic anti-avoidance law in strong terms, and Art. 28(3), which unlike Kenya's equivalent carries no operative denial of its own and merely brings shell entities within the Article.
Art. 5(2)(j) covers "an installation or structure used for the exploration of natural resources" with a six-month test — exploration, not exploitation or production. A producing installation falls outside (j) and is tested under Art. 5(2)(i), "a mine, an oil or gas well, a quarry or any other place of extraction of natural resources", which has no duration test at all. The exploration rig therefore gets a shelter the producing well does not. There is no mineral-oils services deeming rule of the Kyrgyz kind catching hired plant and machinery.
Two drafting points in Article 11 that change source and scope. Art. 11(4) extends the definition of interest to "income which is treated as interest under the laws of the Contracting State in which the income arises", importing domestic recharacterisation into the treaty term — most Indian treaties have no such limb. Art. 11(6), by contrast, is narrow: interest arises where "the payer is a resident of that State", with no government-payer limb, and there is no Protocol paragraph adding political sub-divisions as there is in the Kyrgyz Agreement. Interest paid by an Indian government body to a Colombian resident is arguably outside the Art. 11(6) source rule as drafted.

What this page does not tell you. This record carries the Agreement and the Protocol exactly as notified in 2014 and nothing later. It does not establish whether the Multilateral Instrument has modified any provision: no synthesised text for Colombia appears in the Income Tax Department's collection, and the conclusion that no MLI change applies rests on that absence and on the notified text carrying no modification marker, not on a check of the OECD Depositary listing, which would settle whether Colombia has signed or ratified the MLI and whether India has listed this Agreement as a Covered Tax Agreement. Nothing in the Gazette notification indicates any amending notification or subsequent protocol, but a nil entry in one notification is not proof that none was issued afterwards. Art. 11(3)(c) contemplates further exempt institutions agreed "through exchange of letters" between the competent authorities, and the limb is not confined to public bodies; whether any such exchange has taken place since 2011, and which institutions it names, is not established from the sources used here, so as matters stand only the government limb and the four named banks operate. Art. 13(4) defines "principally" as more than 50 per cent of aggregate asset value but supplies no valuation date and no averaging period, and no MLI look-back applies. Art. 5(3) says nothing about when the six-month construction clock starts, so whether purely preparatory mobilisation time counts is open on the face of the instrument. Protocol paragraph 3 ties the Indian FTS definition to "the provisions of section 9 of the Income-tax Act, 1961" without identifying a sub-clause, and the instrument gives no guidance on whether the reference is to section 9 as it stood in 2011 or as amended from time to time. Protocol paragraph 2 turns on Article 49 and Article 245(1) of the Colombian Tax Statute, whose content is a question of Colombian law and is not set out here. Domestic-law questions that decide many cases in practice — surcharge and cess on top of the treaty rate, section 206AA, and the certification requirements in Rule 21AB — are outside the notification and outside this record. The Hindi and Spanish texts printed alongside were not used; only the English, which prevails on divergence.

The India–Colombia tax treaty