Double Tax Avoidance Agreement between India and UAE: All You Need to Know
India and UAE, two of the fastest-growing economies in the world, have signed a double tax avoidance agreement (DTAA) to avoid double taxation of income earned in both countries. This agreement is significant for Indian businesses operating in UAE and vice versa.
What is Double Taxation?
Double taxation occurs when two countries tax the same income. This happens when a person or company generates income in one country and is taxed on that income by that country’s government, and then the same income is taxed again by another country’s government.
What is Double Tax Avoidance Agreement?
A Double Tax Avoidance Agreement (DTAA) is a pact between two countries that aims to avoid the double taxation of income and assets in both countries. The DTAA provides clarity on the taxation of income, gains, and assets of residents of one signatory country in the other signatory country.
What are the Benefits of DTAA between India and UAE?
The DTAA between India and UAE will benefit businesses, investors, and individuals by:
1. Avoiding Double Taxation: The DTAA will prevent double taxation of income and assets earned by Indian businesses and investors operating in UAE and vice versa.
2. Encouraging Investment: The DTAA will boost bilateral trade and investment by making it easier and more lucrative for businesses in both countries to invest in each other’s markets.
3. Providing Tax Certainty: Investors will have greater certainty about the tax treatment of their investments, and they will be able to plan their investments accordingly.
4. Facilitating Exchange of Information: The DTAA will facilitate the exchange of information between the tax authorities of both countries.
5. Boosting Economic Growth: The DTAA will help to remove barriers to trade and investment, which will boost economic growth in both countries.
What is the Scope of the DTAA between India and UAE?
The DTAA between India and UAE applies to various types of income, including business profits, professional income, and royalties. The agreement also applies to capital gains and income from immovable property. The DTAA will cover people who are residents in one or both of the signatory countries.
Conclusion
The double tax avoidance agreement between India and UAE is a significant step towards promoting bilateral trade and investment between the two countries. The DTAA will provide tax certainty, remove barriers to trade and investment, and facilitate the exchange of information. It will also help to attract foreign investment and promote economic growth in both countries.