New Delhi, Nov 27 : The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the signing of the Double Taxation Avoidance Agreement and Protocol between India and Chile for the elimination of double taxation and the prevention of fiscal evasion and avoidance with respect to taxes on income.
The DTAA will facilitate elimination of double taxation. Clear allocation of taxing rights between Contracting States through the Agreement will provide tax certainty to investors and businesses of both countries while augmenting the flow of investment through fixing of tax rates in source State on interest, royalties and fees for technical services.
The Agreement and Protocol implements minimum standards and other recommendations of G-20 OECD Base Erosion Profit Shifting (BEPS) Project.
After this decision, Inclusion of Preamble Text, a Principal Purpose Test, a general anti-abuse provision in the Agreement along with a Simplified Limitation of Benefits Clause as per BEPS Project will result in curbing of tax planning strategies which exploit gaps and mismatches in tax rules.
After the Cabinet approval, necessary formalities for bringing the Agreement and Protocol into force will be completed. Implementation would be watched and reported by the Ministry. (UNI)