Dear Sir, we had provided services to one of our clients in Zambia and increased our dollar bill. We have just learned that the client has stated that he will pay after deduction of tax. However, we are also required to pay income tax for the expected income from the aforementioned service. In this case, we have to double the tax on the same income. Can you advise us to avoid such double taxation? I would like to know how, for DBAA from India, the double taxation agreements are divided among the following headings The dispute over whether the amounts collected by the Japanese Petronet group for the offshore supply of equipment and materials are taxable under the Indian Income Tax Act and the double taxation agreement between India and Japan. The Ruling Authority (Income Tax) decided that the Japanese company was required to pay direct taxes under the agreement. That`s why the company transferred the Supreme Court. It argued that the transactions took place outside the country. The contract was divisible and was therefore not taxable for offshore services and offshore deliveries. The government said it was a composite contract. The supply of goods, whether offshore or onshore, and the provision of services were due to the turnkey project. The Double Tax Avoidance Agreement (DBAA) is essentially a bilateral agreement between two countries. The fundamental objective is to promote and promote economic trade and investment between two countries by avoiding double taxation.
The UN model gives more weight to the source principle than to the residency principle of the OECD model. In accordance with the principle of withholding tax, the articles of the model agreement assume that the source country recognizes that: (a) the taxation of foreign capital income takes into account the expenses attributable to income from income, so that such income is taxed net- (b) that taxation would not be sufficiently high to discourage investment, and (c) it would take into account the adequacy of the distribution of revenues with the country providing the capital. In addition, the UN Model Convention embodies the idea that it would be appropriate for the country of residence to extend a double taxation exemption measure, either through foreign tax credits or exemptions, as in the OECD Model Convention. In India, pursuant to Section 90 of the Income Tax Act, the central government has been authorized to enter into double taxation treaties (hereinafter referred to as tax treaties) with other countries. In the secular language, a treaty is an agreement formally concluded between two or more independent nations. The Oxford Companion to Law defines a treaty as “an international agreement, normally in writing, concluded under different titles (treaty, convention, protocol, covenant, covenant, law, act, declaration, concordat, exchange of notes, agreed minute, memorandum of understanding) between two or more States on the object of international law, purported to create rights and obligations between them and falling under international law. Examples of agreements are the CTBT, the Viennese agreements and tax treaties such as the DBAA, etc. (ii) The public source may tax up to a maximum amount: the agreement here sets a ceiling for the amount of withholding tax. .