India, Kazakhstan to amend treaty to avoid double taxation

New Delhi, Jan 6 (IANS) India and Kazakhstan on Friday agreed to amend an existing treaty between the two countries and effectively exchange tax information to deal with avoidance of double taxation.

"India and Kazakhstan signed here a Protocol to amend the existing Double Taxation Avoidance Convention (DTAC) for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income," the Finance Ministry said in a statement.

The DTAC was earlier signed on December 9, 1996.

The Protocol provides internationally accepted standards for effective exchange of information on tax matters.

The information received from Kazakhstan for tax purposes could now be shared with other law enforcement agencies with authorisation of the competent authority of Kazakhstan and vice versa, the statement added.

"The Protocol inserts a limitation of benefits Article, to provide a main purpose test to prevent misuse of the DTAC and to allow application of domestic law and measures against tax avoidance or evasion," it said.

It also has specific provisions to facilitate relieving of economic double taxation in transfer pricing cases.

This was a taxpayer-friendly measure and was in line with India's commitment under Base Erosion and Profit Shifting (BEPS) Action Plan to meet the minimum standard of providing Mutual Agreement Procedure (MAP) access in transfer pricing cases, it added.

The Protocol replaces existing Article on assistance in collection of taxes with a new Article to align it with international standards.