Indian employers will pay a lower withholding tax on royalty and interest income thanks to a new double taxation avoidance agreement (DTAA) that has been signed with Hong Kong.
The pact is expected to boost investment flows, prevent double taxation and also provide for a more effective exchange of information. It will create a more level playing field with Indian domestic law as the withholding tax will be just 10% on interest, royalty and fees for technical services. Until now, it has been as high as 40%.
Rakesh Nangia, managing partner at Nangia & Co told The Hindu Business: "The DTAA will give protection against double taxation to over 1,500 Indian companies and businesses that have a presence in Hong Kong, and also to Hong Kong-based companies providing services in India."
The agreement includes a provision for taxing the indirect transfer of a company’s capital assets, enabling any gains from the sale of immovable property to be taxed by the country from where 50% of the asset value is derived. It also provides exemptions to airline and shipping companies: profits gained from operating ships on an international basis may be taxed in the other country but will be cut by 50%.
Articles on Permanent Establishment and Dependent Personal Service are expected to provide certainty and stability when administrating tax related to business activity.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
Indian employers will pay a lower withholding tax on royalty and interest income thanks to a new double taxation avoidance agreement (DTAA) that has been signed with Hong Kong.
The pact is expected to boost investment flows, prevent double taxation and also provide for a more effective exchange of information. It will create a more level playing field with Indian domestic law as the withholding tax will be just 10% on interest, royalty and fees for technical services. Until now, it has been as high as 40%.
Rakesh Nangia, managing partner at Nangia & Co told The Hindu Business: "The DTAA will give protection against double taxation to over 1,500 Indian companies and businesses that have a presence in Hong Kong, and also to Hong Kong-based companies providing services in India."
The agreement includes a provision for taxing the indirect transfer of a company’s capital assets, enabling any gains from the sale of immovable property to be taxed by the country from where 50% of the asset value is derived. It also provides exemptions to airline and shipping companies: profits gained from operating ships on an international basis may be taxed in the other country but will be cut by 50%.
Articles on Permanent Establishment and Dependent Personal Service are expected to provide certainty and stability when administrating tax related to business activity.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
