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UGANDA 1656A. Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with foreign countries - With Uganda Whereas the annexed Convention between the Government of the Republic of India and the Government of Uganda for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, has come into force on the 27th August, 2004, on the notification by both the Contracting States to each other, under article 29 of the said Convention of the completion of the procedures required by their respective laws for bringing into force of the said Convention; Now, therefore, in exercise of the powers conferred by section 90 of the
Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that
all the provisions of the said Convention shall be given effect to in the Union
of India. Notification No.
GSR 666(E), Dated 12-10-2004
Annexure
Convention between the
Government of the Republic of India The Government of the Republic of India and the Government of the
Republic of Uganda, desiring to conclude a Convention for the avoidance of
double taxation and the prevention of fiscal evasion with respect to taxes on
income and with a view to promoting economic cooperation between the two
countries, have agreed as follows : Article 1 : PERSONAL
SCOPE - This
Convention shall apply to persons who are residents of one or both of the
Contracting States : Article 2 : TAXES
COVERED - 1.
This Convention shall apply to taxes on income imposed on behalf of a
Contracting State or of its political sub-divisions or local authorities
irrespective of the manner in which they are levied. 2.
There shall be regarded as taxes on income all taxes imposed on total income,
or on elements of income, including taxes on gains from the alienation of
movable or immovable property, taxes on the total amounts of wages or salaries
paid by enterprises. 3.
The existing taxes to which the Convention shall apply are in particular : (a) In Uganda : the income-tax (hereinafter
referred to as Ugandan tax); (b) In India : the income-tax, including any
surcharge hereon (hereinafter referred to as Indian tax). 4.
The Convention shall apply also to any identical or substantially similar taxes
which are imposed after the date of signature of the Convention in addition to,
or in place of, the existing taxes referred to in paragraph 3. The competent
authorities of the Contracting States shall notify each other of significant
changes which have been made in their respective taxation laws. Article 3 : GENERAL
DEFINITIONS
- 1. For the purposes of this Convention, unless the context otherwise
requires : (a) the term Uganda means : the Republic of
Uganda; (b) the term India means the territory of India
and includes the territorial sea and airspace above it, as well as any other
maritime zone in which India has sovereign rights, other rights and
jurisdiction, according to the Indian law and in accordance with international
law, including the UN Convention on the Law of the Sea; (c) the term person includes an individual, a
company, a body of persons and any other entity which is defined as a person
under the taxation laws in force in the respective Contracting States; (d) the term company means any body corporate or
any entity which is treated as a body corporate for tax purposes; (e) the term enterprise of a Contracting State
and enterprise of the other Contracting State means respectively an
enterprise carried on by a resident of a Contracting State and an enterprise
carried on by a resident of the other Contracting State; (f) the term international traffic means any
transport by a ship or aircraft operated by an enterprise which is a resident
of a Contracting State, except when the ship or aircraft is operated solely
between places in the other Contracting State; (g) the term competent authority means : (i) In Uganda : The Minister for Finance or his
authorised representative; (ii) In India : The Central Government in the Ministry
of Finance (Department of Revenue) or their authorised representative. (h) the term national means : (i) any individual possessing the nationality of
a Contracting State; (ii) any legal person, partnership or association
deriving its status as such from the laws in force in a Contracting State. (i) the term fiscal year means : (i) in the case of Uganda, the year of income
as defined under section 3 of the Income-tax Act, 1997; (ii) in the case of India, previous year as
defined under section 3 of the Income-tax Act, 1961; (j) the term tax means Indian tax or Ugandan
tax, as the context requires, but shall not include any amount which is payable
in respect of any default or omission in relation to the taxes to which this
Convention applies or which represents a penalty imposed relating to those
taxes; (k) the terms a Contracting State and the other
Contracting State mean the Republic of Uganda or the Republic of India as the
context requires. 2. As
regards the application of the Convention by a Contracting State any term not
defined therein shall, unless the context otherwise requires, have the meaning
which it has under the law of that State concerning the taxes to which the
Convention applies. Article 4 : RESIDENT - 1. For the purposes
of this Convention, the term resident of a Contracting State means any person
who, under the laws of that State, is liable to tax therein by reason of his
domicile, residence, place of management or any other criterion of a similar
nature. This term, however, does not include any person who is liable to tax in
that State in respect only of income from sources in that State. 2.
Where by reason of the provisions of paragraph 1 an individual is a resident of
both Contracting States, then his status shall be determined as follows : (a) he shall be deemed to be a resident of the
State in which he has a permanent home available to him if he has a permanent
home available to him in both States, he shall be deemed to be a resident of
the State with which his personal and economic relations are closer (centre of
vital interest); (b) if the State in which he has his centre of
vital interests cannot be determined, or if he has not a permanent home
available to him in either State, he shall be deemed to be a resident of the
State in which he has an habitual abode; (c) if he has an habitual abode in both States or
in neither of them, he shall be deemed to be a resident of the State of which
he is a national; (d) if he is a national of both States or of
neither of them, the competent authorities of the Contracting States shall
settle the question by mutual agreement. 3.
Where by reason of the provisions of paragraph 1 a person other than an
individual is a resident of both Contracting States, then it shall be deemed to
be a resident of the State in which its place of effective management is
situated. If the State in which its place of effective management is situated
cannot be determined, then the competent authorities of the Contracting States
shall settle the question by mutual agreement. Article 5 : PERMANENT
ESTABLISHMENT
- 1. For the purposes of this Convention, the term permanent
establishment means a fixed place of business through which the business of an
enterprise is wholly or partly carried on. 2. The
term permanent establishment includes especially : (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, an oil or gas well, a quarry or any
other place of extraction of natural resources; (g) a sales outlet; (h) a warehouse in relation to a person providing
storage facilities for others; (i) a farm, plantation or other place where
agricultural forestry, plantation or related activities are carried on; (j) a building site or construction or assembly
project or supervisory activities in connection therewith constitute a
permanent establishment only if such site, project or activity lasts more than
six months. 3.
Notwithstanding the preceding provisions of this article, the term permanent
establishment shall be deemed not to include : (a) the use of facilities solely for the purpose
of storage or display of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display; (c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise; (d) the maintenance of a fixed place of business
solely for the purpose of purchasing goods or merchandise or of collecting
information, for the enterprise; (e) the maintenance of a fixed place of business
solely for the purpose of carrying on, for the enterprise, any other activity
of a preparatory or auxiliary character, (f) the maintenance of a fixed place of business
solely for any combination of activities mentioned in sub-paragraphs (a)
to (e), provided that the overall activity of the fixed place of
business resulting from this combination is of a preparatory or auxiliary
character. 4.
Notwithstanding the provisions of paragraphs 1 and 2, where a person other than
an agent of an independent status to whom paragraph 6 applies - is acting on
behalf of an enterprise of the other Contracting State, that enterprise shall be
deemed to have a permanent establishment in the first mentioned Contracting
State, 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 of such person are limited to those mentioned in paragraph 3 which,
if exercised through a fixed place of business would not make this fixed place
of business a permanent establishment under the provisions of that paragraph;
or (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 or for
the enterprise and other enterprises controlling, controlled by, or subject to
the same control, as that enterprise. 5.
Notwithstanding the preceding provisions of this article, an insurance
enterprise of a Contracting State shall, except in regard to re-insurance, be
deemed to have a permanent establishment in the other Contracting State if it
collects premiums in the territory of that other State or insures risk situated
therein through a person other than an agent of an independent status to whom
paragraph 6 applies. 6. An
enterprise shall not be deemed to have a permanent establishment in a
Contracting State merely because it carries on business in that State through a
broker, general commission agent or any other agent of an independent status,
provided that such persons are acting in the ordinary course of their business.
However, when the activities of such an agent are devoted wholly or almost
wholly on behalf of that enterprise, he will not be considered an agent of an
independent status within the meaning of this paragraph. 7.
The fact that a company which is a resident of a Contracting State controls or
is controlled by a company which is a resident of the other Contracting State,
or which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other. Article 6 : INCOME
FROM IMMOVABLE PROPERTY - 1. Income derived by a resident of a Contracting State from
immovable property (including income from agriculture or forestry) situated in
the other Contracting State may also be taxed in that other State. 2.
The term immovable property shall have the meaning which it has under the law
of the Contracting State in which the property in question is situated. The
term shall in any case include property accessory to immovable property,
livestock and equipment used in agriculture and forestry, rights to which the
provisions of general law respecting landed property apply, usufruct of
immovable property and rights to variable or fixed payments as consideration
for the working of, or the right to work, mineral deposits, sources and other
natural resources; ships, boats, aircraft and motor vehicles shall not be
regarded as immovable property. 3.
The provisions of paragraph 1 shall apply to income derived from the direct use
letting or use in any other form of immovable property. 4. The
provisions of paragraphs 1 and 3 shall also apply to the income from immovable
property of an enterprise and to income from immovable property used for the
performance of independent personal services. Article 7 : BUSINESS
PROFITS - 1.
The profits of an enterprise of a Contracting State shall be taxable only in
that State unless the enterprise carries on business in the other Contracting
State through a permanent establishment situated therein. If the enterprise
carries on business as aforesaid, the profits of the enterprise may also be
taxed in the other State but only so much of them as is attributable to that
permanent establishment. 2.
Subject to the provisions of paragraph 3, where an enterprise of a Contracting
State carries on business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting State be
attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment. 3. In
determining the profits of a permanent establishment, there shall be allowed as
deductions expenses which are incurred for the purposes of the permanent
establishment, including executive and general administrative expenses so
incurred, whether in the State in which the permanent establishment is situated
or elsewhere, in accordance with the provisions of and subject to the
limitations of the tax laws of that State. 4. No
profits shall be attributed to a permanent establishment by reason of the mere
purchase by that permanent establishment of goods or merchandise for the
enterprise. 5. For
the purposes of the preceding paragraphs, the profits to be attributed to the
permanent establishment shall be determined by the same method year by year
unless there is good and sufficient reason to the contrary. 6.
Where profits include items of income which are dealt with separately in other
Articles of this Convention, then the provisions of those Articles shall not be
affected by the provisions of this Article. Article 8 : SHIPPING
AND TRANSPORT
- 1. Profits derived by an enterprise of a Contracting State from the
operation of ships or aircraft in international traffic shall be taxable only
in that State. 2.
Profits derived by a transportation enterprise referred to in paragraph 1 which
is a resident of a Contracting State from the use, maintenance, or rental of
containers (including trailers and other equipment for the transport of
containers) used for the transport of or merchandise in international traffic
shall be taxable only in that Contracting State unless the containers are used
solely within the other Contracting State. 3.
For the purposes of this Article, interest on funds connected with the
operation of ships or aircraft in international traffic shall be regarded as
profits derived from the operation of such ships or aircraft, and the provisions
of article 11 shall not apply in relation to such interest. 4.
The provisions of paragraph 1 shall also apply to profits from the
participation in a pool, a joint business or an international operating agency. Article 9 : ASSOCIATED
ENTERPRISES
- 1. Where (a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or (b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State and in either case conditions are made or imposed between the two
enterprises in their commercial or financial relations which differ from those
which would be made between independent enterprises, then any profits which
would, but for those conditions have accrued to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly. 2.
Where a Contracting State includes in the profits of an enterprise of that
State - and taxes accordingly - profits on which an enterprise of the other
Contracting State has been charged to tax in that other State and the profits
so included are profits which would have accrued to the enterprise of the first
mentioned State if the conditions made between the two enterprises had been
those which would have been made between independent enterprises, then that
other State shall make an appropriate adjustment to the amount of the tax
charged therein on those profits. In determining such adjustment, due regard
shall be had to the other provisions of this Convention and the competent
authorities of the Contracting States shall, if necessary, consult each other. Article 10 : DIVIDENDS - 1. Dividends paid
by a company which is a resident of a Contracting State to a resident of the
other Contracting State may be taxed in that other State. 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 recipient is the beneficial owner of the dividends the tax so
charged shall not exceed 10 per cent of the gross amount of the dividends. This
paragraph shall not affect the taxation of the company in respect of the
profits out of which the dividends are paid. 3.
The term dividends as used in this Article means income from shares or other
rights, not being debt-claims, participating in profits, as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the company making the
distribution is a resident. 4.
This provisions of paragraphs 1 and 2 shall not apply if the beneficial owner
of the dividends, being a resident of a Contracting State, carries on business
in the other Contracting State of which the company paying the dividends is a
resident, through a permanent establishment situated therein, or performs in
that other State independent personal services from a fixed base situated
therein, and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment or fixed base. In such
case the provisions of Article 7 or Article 14, as the case may be, shall
apply. 5.
Where a company which is a resident of a Contracting State derives profits or
income from the other Contracting State, that other State may not impose any
tax on the dividends paid by the company, except insofar as such dividends are
paid to a resident of that other State or insofar as the holding in respect of
which the dividends are paid is effectively connected with a permanent
establishment or a fixed base situated in that other State nor subject the
companys undistributed profits to a tax on the companys undistributed
profits, even if the dividends paid or the undistributed profits consist wholly
or partly of profits or income arising in such other State. Article 11 : INTEREST - 1. Interest arising
in a Contracting State and paid to a resident of the other Contracting State
may be taxed in that other State. 2.
However, such interest may also be taxed in the Contracting State in which it
arises and according to the laws of that State, but if the recipient is the
beneficial owner of the interest the tax so charged shall not exceed 10 per
cent of the gross amount of the interest. The competent authorities of the
Contracting States shall by mutual agreement settle the mode of application of
this limitation. 3.
Notwithstanding the provisions of paragraph 2, interest arising in a
Contracting State shall be exempt from tax in that State provided it is derived
and beneficially owned by : (i) the Government, a political sub-division or a
local authority of the other Contracting State; or (ii) the Central Bank of the other Contracting
State; or any other bank or governmental financial institutions/agencies that
may be mutually agreed upon between the two contracting States. 4. The
term interest as used in this Article means income from debt claims of every
kind, whether or not secured by mortgage and whether or not carrying a right to
participate in the debtors profits, and in particular, income from Government
securities and income from bonds or debentures, including premiums and prizes
attaching to such securities, bonds or debentures. Penalty charges for late
payment shall not be regarded as interest for the purpose of this Article. 5.
The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of
the interest, being a resident of a Contracting State, carries on business in
the other Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Article 7
or Article 14, as the case may be, shall apply. 6.
Interest shall be deemed to arise in a Contracting State when the payer is that
State itself, a political sub-division, a local authority or a resident of that
State. Where, however, the person paying the interest, whether he is a resident
of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the indebtedness on
which the interest is paid was incurred and such interest is borne by such
permanent establishment or fixed base, then such interest shall be deemed to
arise in the Contracting State in which the permanent establishment or fixed
base is situated. 7.
Where, by reason of a special relationship between the payer and the beneficial
owner or between both of them and some other person, the amount of the
interest, having regard to the debt-claim for which it is paid, exceeds the
amount which would have been agreed upon by the payer and the beneficial owner
in the absence of such relationship, the provisions of this Article shall apply
only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of this Convention. Article 12 : ROYALTIES
AND FEES FOR TECHNICAL SERVICES - 1. Royalties or fees for technical services
arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State. 2.
However, such royalties or fees for technical services may also be taxed in the
Contracting State in which they arise, and according to the laws of that State,
but if the recipient is the beneficial owner of the royalties or fees for
technical services, the tax so charged shall not exceed 10 per cent of the
gross amount of the royalties or fees for technical services. 3. (a)
The term royalties as used in this Article means 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, and
films or tapes for television or radio broadcasting, any patent, trade mark,
design or model, plan, secret formula or process, or any industrial, commercial
or scientific equipment, or for information concerning industrial, commercial
or scientific experience. (b) The term fees for technical services means payment of any
kind in consideration for the rendering of any managerial, technical or
consultancy services including the provisions of services by technical or other
personnel but does not include payments for services mentioned in Articles 14
and 15 of this Convention. 4.
The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of
the royalties or fees for technical services being a resident of a Contracting
State, carries on business in the other Contracting State in which the
royalties or fees for technical services arise, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the right or property
in respect of which the royalties or fees for technical services are paid is
effectively connected with such permanent establishment or fixed base. In such
case the provisions of Article 7 or Article 14, as the case may be, shall
apply. 5.
Royalties or fees or technical services shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the royalties or fees for technical services, whether he is
resident of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the liability to pay the
royalties or fees for technical services was incurred, and such royalties or
fees for technical services are borne by such permanent establishment or fixed
base, then such royalties or fees for technical services shall be deemed to
arise in the State in which the permanent establishment or fixed base is
situated. 6.
Where, by reason of a special relationship between the payer and the beneficial
owner or between both of them and some other person, the amount of the
royalties or fees for technical services, having regard to the use, right or
information for which they are paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall remain taxable
according to the laws of each Contracting State, due regard being had to the
other provisions of this Convention. Article 13 : CAPITAL
GAINS - 1.
Gains derived by a resident of a Contracting State from the alienation of
immovable property referred to in Article 6 and situated in the other
Contracting State may also be taxed in that other State. 2.
Gains from the alienation of movable property forming part of the business property
of a permanent establishment which an enterprise of a Contracting State has in
the other Contracting State or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services, including such
gains from the alienation of such a permanent establishment (alone or with the
whole enterprise) or of such fixed base, may also be taxed in that other State. 3.
Gains derived by an enterprise of a Contracting State from the alienation of
ships or aircraft operated in international traffic or movable property
pertaining to the operation of such ships or aircraft shall be taxable only in
that State. 4.
Gains from the alienation of shares of the capital stock of a company the
property of which consists directly or indirectly principally or immovable
property situated in a contracting State may be taxed in that State. 5.
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. 6.
Gains from the alienation of any property other than that referred to in
paragraphs 1, 2, 3, 4 and 5, shall be taxable only in the Contracting State of
which the alienator is a resident. Article 14 : INDEPENDENT
PERSONAL SERVICES - 1. Income derived by a resident of a Contracting State in
respect of professional services or other activities of an independent
character shall be taxable only in that State except in the following
circumstances, when such income may also be taxed in the other Contracting
State : (a) if he has a fixed base regularly available to
him in the other Contracting State for the purpose of performing his
activities; in that case, only so much of the income as is attributable to that
fixed base may be taxed in that other State; or (b) if his stay in the other State is for a period
or periods aggregating 183 days or more in any 12-month period commencing or
ending in the fiscal year concerned, in that case only so much of the income as
is derived from his activities performed in that other State may be taxed in
that other State. 2.
The term professional services includes especially independent scientific,
literary, artistic, educational or teaching activities as well as the
independent activities of physicians, lawyers, engineers, architects, surgeons,
dentists and accountants. Article 15 : DEPENDENT
PERSONAL SERVICES - 1. Subject to the provisions of Articles 16, 18 and 19, salaries,
wages and other similar remuneration derived by a resident of a Contracting
State in respect of an employment shall be taxable only in that State unless
the employment is exercised in the other Contracting State. If the employment
is so exercised, such remuneration as is derived therefrom may be taxed in that
other State. 2.
Notwithstanding the provisions of paragraph 1, remuneration derived by a
resident of a Contracting State in respect of an employment exercised in the
other Contracting State shall be taxable only in the first mentioned State, if
: (a) the recipient is present in the other State
for a period or periods not exceeding in the aggregate 183 days in any 12-month
period commencing or ending in the fiscal year concerned, and (b) the remuneration is paid by, or on behalf of,
an employer who is not a resident of the other State, and (c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the other State. 3.
Notwithstanding the preceding provisions of this Article, remuneration derived
in respect of an employment exercised aboard a ship or aircraft operated in
international traffic, by an enterprise of a Contracting State may be taxed in
that State. Article 16 : DIRECTORS
FEES -
Directors fees and other similar payments derived by a resident of a
Contracting State in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State. Article 17 : ARTISTES
AND SPORTS-PERSONS - 1. Notwithstanding the provisions of Articles 14 and 15,
income derived by a resident of a Contracting State as an entertainer, such as
a theatre, motion picture, radio or television artiste, or a musician, or as a
sports-person, from his personal activities as such exercised in the other
Contracting State, may be taxed in that other State. 2.
Where income in respect of personal activities exercised by an entertainer or a
sports-person in his capacity as such accrues not to the entertainer or
sports-person himself but to another person, that income may, notwithstanding
the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in
which the activities of the entertainer or sports-person are exercised.
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