By IANS,
New Delhi : India Thursday said it has notified the double tax avoidance agreement with Mozambique to only impose tax on business profits in the source country but also prevent evasion of such levies.
“The double tax avoidance agreement 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,” the finance ministry said in a statement.
Examples of permanent establishment include a branch, factory, office and the place of management, and profits of a construction, assembly and installation projects will be taxed in the source country if the they continue there for over 12 months.
“The maximum rate of tax to be charged in the country of source will not exceed 7.5 percent in the case of dividends and 10 percent in the case of interest and royalties. Capital gains from the sale of shares will be taxable in the country of source.”
The pact also calls for effective exchange of information and assistance in collection of taxes between the authorities of the two countries in line with globally accepted standards.
It will will also provide tax stability to the residents of India and Mozambique and facilitate mutual economic cooperation, besides stimulating the flow of investment, technology and services between India and Mozambique.