Cap­i­tal Gains

Southasia - - Briefing -

Re­cently, Bhutanese Fi­nance Min­is­ter, Ly­onpo Wangdi Nor­bum signed the Dou­ble Tax­a­tion Avoid­ance Agree­ment (DTAA) with the In­dian Fi­nance Min­is­ter, P. Chi­dambaram. This will fa­cil­i­tate the bi­lat­eral ex­change of bank­ing in­for­ma­tion and help mon­i­tor tax eva­sion. This is for the first time that Bhutan has signed a DTAA with any other coun­try. Both min­is­ters are con­fi­dent that the agree­ment will pro­vide tax sta­bil­ity to the In­dian and Bhutanese res­i­dents and fa­cil­i­tate mu­tual eco­nomic co­op­er­a­tion. In ad­di­tion, the DTAA will stim­u­late the flow of in­vest­ment, tech­nol­ogy, and ser­vices be­tween the two coun­tries.

Ac­cord­ing to the pact, busi­ness prof­its will only be tax­able in the coun­try of its ori­gin. Div­i­dends, in­ter­est, roy­alty in­come and fees for tech­ni­cal or pro­fes­sional ser­vices will be taxed in the coun­try of res­i­dence and in the coun­try of source of in­come. Fur­ther­more, the pact en­tails that the max­i­mum rate of tax in the source coun­try will not ex­ceed 10 per cent while the cap­i­tal gains from the sale of shares will be tax­able in the coun­try of source. In­dia and Bhutan en­joy healthy re­la­tions where the DTAA pact will bridge the two neigh­bors closer to cre­ate bi­lat­eral trade op­por­tu­ni­ties, which will ben­e­fit the re­gion as well.

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