India and Kazakhstan have signed a Protocol to amend the existing Double Taxation Avoidance Convention (DTAC)

9/1/2017 529 India and the world | Indo-West Asia | View Recent Current Affairs

  • The DTAC between both countries was earlier signed in December 1996 for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income. 
  • This Protocol Provides internationally accepted standards for effective exchange of information on tax matters. Further, allows tax authorities to share information with other law enforcement agencies with prior authorisation. L
  • Imitation of Benefits Article has been inserted to provide a main purpose test to prevent misuse of the DTAC and to allow application of domestic law and measures against tax evasion or avoidance. Specific provisions to facilitate relieving of economic double taxation in transfer pricing cases also have been inserted. 
  • It is a taxpayer friendly measure and is in line with India’s commitment under Base Erosion and Profit Shifting (BEPS) Action Plan to meet standards of Mutual Agreement Procedure (MAP) access in transfer pricing cases. 
  • Service PE (PE provisions) provisions also have been inserted with a threshold and the profits to be attributed to PE will be determined on the basis of apportionment of total profits of the enterprise. 
  • It replaces existing Article on Assistance in Collection of Taxes with a new Article in order to align it with international standards.

Analysis(Indo – Kazakhstan relations):

  • Diplomatic  relations  with  independent  Kazakhstan  were  established  in  February 1992  during  the  first  visit  of  President  Nazarbayev  to  India.  This  was  followed  by  the visit  of  Prime  Minister  of  India  Shri  Narsimha  Rao  in  1993  which  gave  impetus  to bilateral  relations.
  • The   India-Kazakhstan Inter-Governmental  Commission  (IGC) established  in  1993   has been the   main   institutional   mechanism   in developing   bilateral trade, economic, scientific,  technological,  industrial  and  cultural  cooperation.  The  Ministry  of  Petroleum  and  Natural  Gas  on  the  Indian  side  and  Ministry  of  Energy  on  the  Kazakh   side are the nodal agencies with respective Ministers as the Co-Chairs.
  • India has been a consistent supporter of  Kazakhstan’s  initiative  to  convene  Conference  on  Interaction  and  Confidence-Building   Measures   in   Asia   (CICA)   and   is   actively   participating   in   the   process.   
  • Kazakhstan is supportive of India’s permanent membership to UNSC. Kazakhstan had  withdrawn its candidature for non- permanent membership of UN SC for the period 2011- 2012  in  India’s  favour.    India  supports  Kazakhstan’s  candidature  for  non- permanent  membership  of  UNSC  for  2017-18.
  • Kazakhstan is India largest trading partner in Central Asia. Bilateral trade during  2014- 15  was  US$  952.26  million.  The  exports  from  India  to  Kazakhstan  amounted  to   US$  250.59  and  exports  from  Kazakhstan  to  India  were  US$  701.67.  Major  products exported  to  Kazakhstan  are  pharmaceuticals  and  medical  products,  Tea,  telephone equipment,  tobacco  and  construction  machinery.  Major  products  imported  by  India  are oil, uranium, asbestos and titanium
  • In  the  cultural  sphere,  the  bilateral  relations  are  deep  rooted,  vibrant  and  dynamic.  India  and  Kazakhstan  have  a natural  affinity  with  each  other  as  both  are  multiethnic,  multi-cultural  and  multi-religious  secular  States.  The  friendly  relations  with  former Soviet Union positively influenced the attitudes of Kazakh people towards Indian culture,  which  continues  to  manifest  in  the  popularity  of yoga,  Indian  films,  dance  and  music in Kazakhstan. In last few years, Indian TV serials have also become popular in Kazakhstan.


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