|
||||||||||
|
|
||||||||||
|
||||||||||
Saudi Arabia Convention between the Government of The Republic of India and
the Government of The Kingdom of Saudi Arabia
Whereas the
annexed Convention between the Government of the Republic of India and the
Government of the Kingdom of Saudi Arabia for the avoidance of double taxation and
the prevention of tax evasion with respect to taxes on income shall come into
force on the 1st day of November, 2006, being the first day of the second month
following the month in which the later of the notifications after completion of
the procedures as required by the respective laws for the entry into force of
this Convention was received, in accordance with Article 28 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 645(E), dated
17-10-2006.
ANNEXURE
Convention between the Government of the
republic of India and the Government of the kingdom of Saudi Arabia for the
avoidance of double taxation and the prevention of tax evasion with respect to
taxes on income
The Government of the
Republic of India and the Government of the Kingdom of Saudi Arabia, desiring
to conclude a Convention for the avoidance of double taxation and the
prevention of tax 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
PERSONS COVERED
This Convention shall apply to persons who are
residents of one or both of the Contracting States.
Article 2
TAXES
COVERED
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Convention,
unless the context otherwise requires:
(a) 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 jurisdiction,
according to the Indian law and in accordance with international law, including
the U.N. Agreement on the Law of the Sea;
(b) the term Kingdom of Saudi Arabia means the territory of
the kingdom of Saudi Arabia which also includes the area outside the
territorial waters, where the Kingdom of Saudi Arabia exercises its sovereign
and jurisdictional rights in their waters, seabed, subsoil and natural
resources by virtue of its law and the international law;
(c) the term "a Contracting State" and "the
other Contracting State" mean the Republic of India or the Kingdom of
Saudi Arabia as the context requires;
(d)
the term "person" includes an individual, a company , any other body
of persons.
(e)
the term "company" means any body corporate or any entity that is
treated as a body corporate for tax purposes;
(f) the terms enterprise of a Contracting State and
enterprise of the other Contracting State mean 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;
(g) the term "international traffic" means any
transport by a ship or aircraft operated by an enterprise of a Contracting
State, except when the ship or aircraft is operated solely between places in
the other Contracting State;
(h)
the term "competent authority" means: (i) In the case of India: The Finance Minister, Government of India or his authorized representative;
(ii)
In the case of the Kingdom of Saudi Arabia, the Ministry of Finance represented
by the Minister of Finance or his authorized representative;
(i) 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;
2. As
regards the application of the Convention at any time by a Contracting State,
any term not defined therein shall, unless the context otherwise requires, have
the meaning that it has at that time under the law of that State for the
purposes of the taxes to which this Convention applies, any meaning under the
applicable tax laws of that State prevailing over a meaning given to the term
under other laws of that State.
Article 4
RESIDENT
1. For the purposes of this Convention, the term
"resident of a Contracting State" means
(a)
Any person who, under the laws of that State, is liable to taxes in that state 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.
(b) The
Government of any of the two contracting states or any of its political
sub-division or local authorities.
2. Where by
reason of the provisions of paragraph 1 of this Article 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 only of the
Contracting State in which he has a permanent home available to him; if he has
a permanent home available to him in both the Contracting States, he shall be
deemed to be a resident only of the Contracting State with which his personal
and economic relations are closer (centre of vital interests);
(b) if the Contracting State in which he has his centre of
vital interests cannot be determined, or if he does not have a permanent home
available to him in either Contracting State, he shall be deemed to be a
resident only of the Contracting State in which he has a habitual abode;
(c) if he has a habitual abode in both Contracting States
or in neither of them, he shall be deemed to be a resident only of the
Contracting State of which he is a National;
(d) if he is a national of both Contracting 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 of this Article a person other than an
individual is a resident of both Contracting States, then it shall be deemed to
be a resident only of the State in which its place of effective management is
situated.
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, a gas
well, a quarry or any other place of extraction of natural resources.
3. The term permanent establishment also
includes:
(a) A building site, a construction, assembly or
installation project, or supervisory activities, in connection therewith, but
only where such site, project or activities continue for a period of more than
182 days;
(b) The furnishing of services, including consultancy services,
by an enterprise through employees or other personnel engaged by the enterprise
for such purpose, but only where activities of that nature continue (for the
same or a connected project) within the country for a period or periods
aggregating more than 182 days within any 12-Month Period.
4.
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;
5. Notwithstanding the
provisions of paragraphs 1 and 2, where a person - other than an agent of an
independent status to whom paragraph 7 applies - is acting in a Contracting
State 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 th6se mentioned in paragraph 4 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;
(c)
habitually obtains orders in the first-mentioned State, wholly or almost wholly
for the enterprise itself.
6. Notwithstanding
the preceding provisions of this Article, an insurance enterprise of a
Contracting State shall 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 risks situated therein through a person other than an agent of
an independent status to whom paragraph 7 applies.
7. An
enterprise of a Contracting State shall not be deemed to have a permanent
establishment in the other Contracting State merely because it carries on
business in that other 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.
8. 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 be taxed in that other Contracting State.
2. The term
"immovable property" shall have the meaning provided for in the laws
of the Contracting State in which the property in question is situated. This
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 and aircraft shall not be regarded as immovable
property.
3. The
provisions of paragraph 1 of this Article 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 of this Article 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 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 the
determination of the profits of a permanent establishment, there shall be
allowed as deductions expenses which are incurred for the purposes of the
business 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. However, no such deduction shall be allowed in respect
of amounts, if any, paid (otherwise than towards reimbursement of actual
expenses) by the permanent establishment to the head office of the enterprise
or any of its other offices, by way of royalties, fees or other similar
payments in return for the use of patents or other rights, or by way of
commission, for specific services performed or for management, or, except in
the case of a banking enterprise, by way of income from debt-claim with regard
to moneys lent to the permanent establishment. Likewise, no account shall be
taken, in the determination of the profits of a permanent establishment, for
amounts charged (otherwise than towards reimbursement of actual expenses), by
the permanent establishment to the head office of the enterprise or any of its
other offices, by way of royalties, fees or other similar payments in return
for the use of patents or other rights, or by way of commission for specific
services performed or for management, or, except in the case of a banking
enterprise, by way of income from debt-claim with regard to moneys lent to the
head office of the enterprise or any of its other offices.
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
AIR 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. If the
place of effective management of a shipping enterprise is aboard a ship, then
it shall be deemed to be situated in the Contracting State in which the home
harbor of the ship is situated, or, if there is no such home harbor, in the
Contracting State of which the operator of the ship is a resident.
3. The term
profits derived from the operation of ships or aircraft in international
traffic" includes profits derived from the use or rental of containers and
related equipment used in international transport that is incidental to income
from the operation of ships or aircraft in international traffic.
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.
5. Nothing
contained in the foregoing provisions of this Article shall affect the existing
Agreement between the Kingdom of Saudi Arabia and the Republic of India for
Avoidance of Double Taxation by reciprocal exemption of taxes on income on the
Activities of Air Transport Enterprises signed on 14-11-1991 in respect of Air
India and Saudi Arabian Airlines Corporation.
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 Contracting 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 5 percent 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
"jouissance" shares or "jouissance" rights, mining shares,
founders' 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. The
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 company's
undistributed profits to a tax on the company's 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
INCOME FROM
DEBT-CLAIMS
1. Income
from debt-claims 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 income from debt-claims may also be taxed in the Contracting State in which
it arises and according to the laws of that Contracting State, but if the
beneficial owner of the income from debt-claims is a resident of the other
Contracting State, the tax so charged shall not exceed 10 per cent of the gross
amount of the income from debt-claims.
3.
Notwithstanding the provisions of paragraph 2, income from debt-claims arising
in a Contracting State shall be exempt from tax in that State, provided that it
is derived and beneficially owned by:
(a) the
Government, a political sub-division or a local authority of the other
Contracting State; or
(b) (i)
in the case of India, the Reserve Bank of India, the Export-Import Bank of
India, the National Housing Bank; and
(ii) in the case of
the Kingdom of Saudi Arabia, the Saudi Arabian Monetary Agency; or
(c)
any other financial institution wholly owned directly, and controlled by the
Government of the other Contracting State.
4. The term
"Income from Debt-Claims" as used in this Article means income from
government securities and bonds or debentures, including premiums and prizes
attaching to such securities, bonds or debentures, whether or not secured by
mortgage and whether or not carrying a right to participate in the debtor's
profits; and debt-claims of every kind as well as all other income included as
income from moneys lent under the taxation laws of the State in which the
income arises. Penalty charges for late payment shall not be regarded as income
from debt-claims for the purpose of this Article.
5. The
provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of
income from Debt-Claims, being a resident of a Contracting State, carries on
business in the other Contracting State in which the income from debt-claims
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 such income 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. Income
from debt-claims shall be deemed to arise in a Contracting State when the payer
is a resident of that State. Where, however, the person paying such income,
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 such income is paid was incurred, and such income is
borne by such permanent establishment or fixed base, then such income shall be
deemed to arise in the 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 income from
debt-claims, 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
1. Royalties
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 may also be taxed in the Contracting State in which they arise, and
according to the laws of that Contracting State, but if the beneficial owner of
the royalties is a resident of the other Contracting State the tax so charged
shall not exceed 10 per cent of the gross amount of the royalties.
3. 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 or films
or tape used for radio or television broadcasting, any patent, trade mark,
design or mode, plan, secret formula or process, or for the use of, or the
right to use, Industrial commercial or scientific equipment, or for information
concerning industrial commercial or scientific experience.
4. The
provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the
royalties being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties 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 are paid is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Article
7, Article 14, as the case may be, shall apply.
5. Royalties
shall be deemed to arise in a Contracting State when the payer a resident of
that State. Where, however, the person paying the royalties, 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 liability to pay the
royalties was incurred, and such royalties are borne by such permanent
establishment or fixed base, then such royalties 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, 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 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 be taxed in that other Contracting
State.
3. Gains
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 the Contracting State of which the alienator is a resident.
4. Gains
from the alienation of shares of the capital stock of a company the property of
which consists directly or indirectly principally of 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 an individual who is a resident of a Contracting State in respect of
professional services or other activities of a 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 Contracting
State; or
(b) if his stay in
the other Contracting State is for a period or periods amounting to or
exceeding in the aggregate 183 days 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, 19, 20 and 21 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 there from 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 twelve 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
SPORTSPERSONS
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
sportsperson, 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
sportsperson in his capacity as such accrues not to the entertainer or
sportsperson 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 sportsperson are exercised.
3. The
provisions of paragraphs 1 and 2, shall not apply to income from activities
performed in a Contracting State by entertainers or sportspersons if the activities
are substantially supported by public funds of one or both of the Contracting
States or of political sub-divisions or local authorities thereof or takes
place under a cultural agreement or arrangement between the Governments of the
Contracting States. In such a case, the income shall be taxable only in the
Contracting State of which the entertainer or sportsperson is a resident.
Article 18
PENSIONS
Subject to
the provisions of paragraph 2 of Article 19, pensions and other similar remuneration
paid to a resident of a Contracting State in consideration of past employment
shall be taxable only in that State.
Article 19
GOVERNMENT
SERVICE
1.
(a) Salaries, wages and other similar remuneration, other than a
pension, paid by a Contracting State or a political sub-division or a local
authority thereof to an individual in respect of services rendered to that
State or sub-division or authority shall be taxable only in that State.
(b)
However, such salaries, wages and other similar remuneration shall be taxable
only in the other Contracting State if the services are rendered in that other
State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii)
did not become a resident of that State solely for the purpose of rendering the
services.
2.
(a) Any pension paid by, or out of funds created by, a Contracting State
or a political sub-division or a local authority thereof to an individual in respect
of services rendered to that State or sub-division or authority shall be
taxable only in that State.
(b)
However, such pension shall be taxable only in the other Contracting State if
the individual is a resident of, and a national of, that other State.
3. The
provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and
other similar remuneration and to pensions in respect of services rendered in
connection with a business carried on by a Contracting State or a political
sub-division or a local authority thereof.
Article 20
STUDENTS
1. Payments,
besides grants, loans and scholarships, which a student, trainee or apprentice
who is or was immediately before visiting a Contracting State a resident of the
other Contracting State and who is present in the first-mentioned State solely
for the purpose of his education or training receives for the purpose of his
maintenance, education or training shall not be taxed in that State, provided
that such payments arise from sources outside that State.
2. Payments
received by a student, trainee or apprentice who is or was immediately before
visiting a Contracting State a resident of the other Contracting State and who
is present in the first mentioned Contracting State solely for the purpose of
his education or training and which constitute remuneration in respect of
services performed in that other Contracting State are not taxable in that
other State, provided the services are connected with education or training and
are necessary for maintenance purposes.
3. The
benefits of this Article shall extend only for such period of time as may be
reasonable or customarily required to complete the education or training
undertaken, but in no event shall any individual have the benefits of this
Article, for more than six consecutive years from the date of his first arrival
in that other State.
Article 21
TEACHERS AND
RESEARCHERS
1. A teacher
or researcher who is or was a resident of the Contracting State immediately
before being invited to or visiting the other Contracting State for the purpose
of teaching or engaging in research, or both, at a university, college or other
similar institution in that other
Contracting State shall be exempt from tax in that other State on any
remuneration for such teaching or research for a period not exceeding two years
from the date of his arrival in that other State.
2. This
Article shall apply to income from research only if such research is undertaken
by the individual in the public interest.
Article 22
OTHER INCOME
1. Items of
income of a resident of a Contracting State, wherever arising, not dealt with
in the foregoing Articles of this Convention shall be taxable only in that
Contracting State.
2. The
provisions of paragraph 1 shall not apply to income, other than income from
immovable property as defined in paragraph 2 of Article 6, if the recipient of
such income, being a resident of a Contracting State, carries on business in
the other Contracting State 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 income 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.
Article 23
METHODS FOR ELIMINATION OF DOUBLE
TAXATION
Double taxation shall be eliminated as follows:
1. Where a
resident of a Contracting State derives income which, in accordance with the
provisions of this Convention, may be taxed in the other Contracting State, the
first mentioned Contracting State shall allow as a deduction from the tax on
the income of that resident, an amount equal to the tax paid in the other Contracting
State.
Such
deduction shall not, however, exceed that portion of the tax as computed before
the deduction is given, which is attributable, as the case may be, to the
income which may be taxed in the other Contracting State.
2.Where in
accordance with any provision of the Convention income derived by a resident of
a Contracting State is exempt from tax in that Contracting State, that
Contracting State may nevertheless, in calculating the amount of tax on the
remaining income of such resident, take into account the exempted income.
Article 24
MUTUAL
AGREEMENT PROCEDURE
1. Where a
person considers that the actions of one or both of the Contracting States
result or will result for him in taxation not in accordance with the provisions
of this Convention, he may, irrespective of the remedies provided by the
domestic law of those States, present his case to the competent authority of
the contracting State of which he is a resident. The case must be presented
within three years from the first notification of the action resulting in
taxation not in accordance with the provisions of this Convention.
2. The
competent authority shall endeavour, if the objection appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to
resolve the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation which is not in
accordance with this Convention. Any agreement reached shall be implemented notwithstanding
any time limits in the domestic law of the Contracting States.
3. The
competent authorities of both Contracting States shall endeavour to resolve by
mutual agreement any difficulties or doubts arising as to the interpretation or
application of this Convention. They may also consult together for the
elimination of double taxation in cases not provided for in this Convention.
4. The
competent authorities of the Contracting States may communicate with each other
directly for the purpose of reaching an agreement in the sense of the preceding
paragraphs. When it seems advisable in order to reach agreement to have an oral
exchange of opinions, such exchange may take place through a Commission
consisting of representatives of the competent authorities of the Contracting
States.
Article 25
EXCHANGE OF
INFORMATION
1. The
competent authorities of the Contracting States shall exchange such information
as is necessary for carrying out the provisions of this Convention or of the
domestic laws of the Contracting States concerning taxes covered by this
Convention insofar as the taxation thereunder is not contrary to the
Convention. The exchange of information is not restricted by Article 1. Any
information received by a Contracting State shall be treated as secret in the
same manner as information obtained under the domestic laws of that State and
shall be disclosed only to persons or authorities (including courts and
administrative bodies) concerned with the assessment or collection of, the
enforcement or prosecution in respect of, or the determination of appeals in
relation to the taxes covered by this Convention. Such persons or authorities
shall use the information only for such purposes. They may disclose the
information in public court proceedings or in judicial decisions. 2.
In no case shall the provisions of paragraph 1 be construed so as to impose on
a Contracting State the obligation:
(a) to carry out administrative measures at variance with the
laws and administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the
laws or in the normal course of the administration of that or of the other
Contracting State;
(c) to supply information which would disclose any trade,
business, industrial, commercial or professional secret or trade process, or
information, the disclosure of which would be contrary to public policy (order
public).
Article 26
OTHER
PROVISIONS 1.
Nothing in this Convention shall affect the application of the domestic
provisions to prevent tax evasion.
2. An
enterprise of a Contracting State shall not be entitled to the benefits of this
Convention if the main purpose or one of the main purposes of the creation of
such enterprise was to obtain the benefits under this convention that would not
otherwise be available.
3. The case of legal entities
not having bona fide business activities shall be covered by the
provisions of this Article.
Article 27
MEMBERS OF DIPLOMATIC MISSIONS AND
CONSULAR POSTS
Nothing in
this Convention shall affect the fiscal privileges of members of diplomatic
missions or consular posts under the general rules of international law or
under the provisions of special agreements.
Article 28
ENTRY INTO
FORCE
1. The
Contracting States shall notify each other in writing, through diplomatic
channels, of the completion of the procedures required by the respective laws
for the entry into force of this Convention.
2. This
Convention shall enter into force on the first day of the second month
following the month in which the later of these notifications was received.
3. The provisions of this Convention
shall have effect:
(a)
In India, in
respect of income derived in any fiscal year beginning on or after the first
day of April next following the calendar year in which the Convention enters
into force; and
(b) In Saudi
Arabia:
(i)
with regard
to taxes withheld at source, in respect of amounts paid or credited on or after
the first day of January next following the Calendar Year in which the
Convention enters into force; and
(ii) with regard
to other taxes, in respect of taxable years beginning on or after the first day
of January next following the calendar year in which the Convention enters into
force.
Article 29 | ||||||||||
