India–Uzbekistan 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	15%	A single flat ceiling with no qualifying-holding split: "the tax so charged shall not exceed 15 per cent of gross amount of the dividends", provided the recipient is the beneficial owner. Article 10(4)…	Article 10, paragraph 2
Interest	15%	Article 11(3)(a) exempts interest derived and beneficially owned by (i) the Government, a political sub-division or a local authority of the other State, or (ii) the Central Bank of the other State. Article…	Article 11, paragraph 2
Royalties	15%	Royalties have their own article, separate from technical fees. The Article 12(3) definition covers copyright, cinematograph films or films or tapes used for radio or television broadcasting, patents, trade…	Article 12, paragraph 2
Fees for technical services	15%	This treaty uses a separate Article 13 headed "Technical fees", not a combined royalties-and-FTS article. Article 13(3): "payments of any kind to any person other than to an employee of the person making the…	Article 13, paragraph 2

Status

In force	The Agreement was signed at New Delhi on 29 July 1993 — "done at New Delhi in duplicate this 29th day of July, One thousand nine hundred and ninety-three in Hindi, Uzbek and English languages, all the texts being equally Authentic. In case of divergence between any of the texts, the English text shall be the operative one." Entry into force is fixed by Article 30: "Each of the Contracting State shall notify to the other the completion of the procedures required by it law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications". The notification records that it "has entered into force on the 25th January, 1994". Article 30 fixes effect by calendar date rather than by reference to the year of entry into force: in India "in respect of income arising in any previous year beginning on or after the 1st April, 1993, and in respect of capital which is held at the expiry of any previous year beginning on or after 1st April, 1993"; in Uzbekistan from 1 January 1993. The Agreement therefore reaches back to the previous year beginning 1 April 1993 (assessment year 1994-95).
Given effect by	Notification No. SO 790(E) [No. 10222/96 (F. No. 501/8/92-ftd)], dated 13-11-1996, made in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961) and section 44A of the Wealth-tax Act, 1957 (27 of 1957), directing that all the provisions of the said Agreement 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	No principal purpose test in the notified text.

Dividends

Rate	15%
Where this comes from	Article 10, paragraph 2

A single flat ceiling with no qualifying-holding split: "the tax so charged shall not exceed 15 per cent of gross amount of the dividends", provided the recipient is the beneficial owner. Article 10(4) switches off the cap where the holding is effectively connected with a PE or fixed base, and refers to Article 7 or Article 15 (independent personal services is Article 15 in this treaty, not Article 14).

Interest

Rate	15%
Exemptions	Article 11(3)(a) exempts interest derived and beneficially owned by (i) the Government, a political sub-division or a local authority of the other State, or (ii) the Central Bank of the other State. Article 11(3)(b) adds an exemption to the extent approved by the Government of the source State for any other resident of the other State, provided the transaction giving rise to the debt-claim has been approved by that Government.
Where this comes from	Article 11, paragraph 2

Penalty charges for late payment are excluded from "interest" by Article 11(4).

Royalties

Rate	15%
Where this comes from	Article 12, paragraph 2

Royalties have their own article, separate from technical fees. The Article 12(3) definition covers copyright, cinematograph films or films or tapes used for radio or television broadcasting, patents, trade marks, designs, secret formulae and processes, equipment rental and know-how.

Fees for technical services

Rate	15%
Make-available requirement	No
Where this comes from	Article 13, paragraph 2

This treaty uses a separate Article 13 headed "Technical fees", not a combined royalties-and-FTS article. Article 13(3): "payments of any kind to any person other than to an employee of the person making the payments, in consideration for any services of a technical, managerial or consultancy nature." There is no make-available condition. Note the drafting slip in Article 13(5), which says technical fees arise in a State "when the payee is that State itself" where the parallel royalty provision says payer.

Capital gains on shares

Treatment	Source-State taxation of share gains, in Article 14 rather than the usual Article 13 (capital gains is Article 14 in this treaty because technical fees occupy Article 13). Article 14(4) allows the situs State to tax gains on shares of a company whose property consists directly or indirectly principally of immovable property there; Article 14(5) allows gains on shares other than those in paragraph 4, in a company which is a resident of a Contracting State, to be taxed in that State. Article 14(6) leaves all other property to residence-State taxation only.
Grandfathering	None in the notified text.
Conditions	No holding threshold; paragraph 5 depends only on the company being a resident of the taxing State.
Where this comes from	Article 14, paragraph 5

Permanent establishment

Construction or installation PE	12 months
Agency PE	Article 5(4): a dependent person who has and habitually exercises authority to conclude contracts on behalf of the enterprise, subject to the preparatory-or-auxiliary carve-out. An agent devoted wholly or almost wholly to the enterprise is not of independent status (Article 5(5)).
Where this comes from	Article 5, paragraph 2(g)

The twelve-month construction threshold sits inside the inclusive list in Article 5(2)(g), not in a separate paragraph, and is the longest of the ordinary construction thresholds in India's treaties of this period. There is no service PE and no oil-services or insurance deeming rule; services short of a fixed place or agency PE fall to Article 7, Article 13 (technical fees) or Article 15 (183 days in the relevant fiscal year, or a fixed base).

Anti-abuse: limitation of benefits, and the MLI

LOB	No limitation of benefits article in the notified text.
PPT	No principal purpose test in the notified text.

The Gazette/Income Tax Department text notified under section 90 is what this page carries. Nothing in the pdf shows any MLI modification of this treaty, and the MLI position has not been checked from this source.

The protocols, in order

A treaty read without its protocols is a wrong answer.

No Protocol is annexed to this notification, and no amending notification or later protocol appears in this pdf.

The words themselves

Quoted from the treaty as notified.

a building site or a construction or an assembly project or supervisory activities in connection therewith, but only where such site, project or activity continues for a period of more than twelve months

Article 5, paragraph 2(g) of the treaty as notified.

The term "technical fees" as used in this Article means payments of any kind to any person other than to an employee of the person making the payments, in consideration for any services of a technical, managerial or consultancy nature.

Article 13, paragraph 3 of the treaty as notified.

In India : in respect of income arising in any previous year beginning on or after the 1st April, 1993, and in respect of capital which is held at the expiry of any previous year beginning on or after 1st April, 1993;

Article 30, paragraph (a) of the treaty as notified.

interest arising in a Contracting State shall be exempt from tax in that Contracting State to the extent approved by the Government of that State if it is derived and beneficially owned by any person other than a person referred to in sub-paragraph (a) who is a resident of the other Contracting State

Article 11, paragraph 3(b) of the treaty as notified.

What to watch

The article numbering is shifted from the usual pattern: royalties are Article 12, technical fees have their own Article 13, capital gains is Article 14 and independent personal services is Article 15. Cross-references inside the treaty are to Article 15, not Article 14, and a citation to "Article 13" in this treaty is to technical fees.
Royalties and technical fees are both capped at 15 per cent, so characterisation between them does not change the rate, but the source rules differ and Article 13(5) as printed says "when the payee is that State itself" where the royalty article says payer — a drafting slip worth flagging if source is in issue.
The twelve-month construction threshold is the longest among India's treaties of this vintage, and there is no service PE at all, so a contractor's exposure turns almost entirely on the duration of the site.
Effect is fixed by hard calendar dates — 1 April 1993 for India — even though the Agreement entered into force on 25 January 1994 and was notified only in November 1996.
Interest at 15 per cent is high; the practical relief is Article 11(3)(b), which exempts interest to the extent the source-State Government approves the transaction giving rise to the debt-claim. Approval is the question, not the rate.
The Agreement covers capital as well as income (Article 24, and section 44A of the Wealth-tax Act in the notification).

What this page does not tell you. The text used is the Income Tax Department's pdf of the notification and annexed Agreement; it is machine-readable and complete, and no page was illegible. The printed text carries some evident typographic slips — "he Government" in Article 11(3)(a)(i), "aricraft" in Article 14(3), "payee" for payer in Article 13(5) — which are reproduced faithfully here rather than silently corrected. This page does not set out Articles 15 to 29 in detail and does not carry the Hindi or Uzbek texts. No Protocol is annexed. The MLI position is unchecked from this source, and the absence of any amending notification in this file is not proof that none exists.

The India–Uzbekistan tax treaty