The Hindu Business Line : Double taxation pact between India, Philippines modified

THE double taxation avoidance agreement (DTAA) between India and the Philippines has undergone a change with more clarity having been brought into the Article of taxation of income from professional services. Sources said that authorities from both the countries had agreed to the modification, which has now come into force.

The amendment to the DTAA related to the Article on taxation of income derived from professional services, which include independent scientific, literary, artistic, educational or teaching activities as well as independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants.

"The bug in the DTAA has been corrected. There would now be more clarity on the Article on taxation of income from professional services," Mr Rahul Garg, Executive Director, PricewaterhouseCoopers, told Business Line.

Prior to the latest modification, the DTAA provided that income derived by a resident of a contracting State from professional services would be taxable only in that contracting State.

Certain exceptional circumstances were, however, specified where such income may also be taxed in the other contracting State.

The DTAA has now been modified with respect to the exceptional circumstances.

Income derived by a resident of a contracting State from professional services can also now be taxed in the other contracting State if the recipient is present in the other State for a period exceeding 183 days in the relevant "previous year" in the case of India or "calendar year" in the case of the Philippines.

So far, the DTAA had held that the income derived by a resident of a contracting State from professional services may also be taxed in the other contracting state even if the stay was less than 183 days.

Prior to the latest amendment, professionals faced the prospect of being taxed in both the countries even if they provided services for short durations like, for example, in the case of musicians performing in a few concerts.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Marketing can be done without a patent: Madras HC

Larger firms post sizeable growth in profits — Results reflect fresh capacities going on stream

Double taxation pact between India, Philippines modified

`EU-India business summit to open new vistas for trade ties with Finland'

`Adopt constructive approach to facilitate Doha trade talks'

`Foreign trade share poised to double by 2009'

Psychotropic drugs — Finance Ministry asked to go slow on raids

`Give priority to drug affordability'

Pharma SSIs in a quandary over excise duty on MRP

5,000 MW of fresh power capacity planned in 2 years

Govt plans dedicated steel capacities for exports

VAT will bring down prices: Shome

`Time right for textile players to grow fast'

Boycott Australian wool, Maneka Gandhi urges Indian cos

Labour Minister meets PM on EPF rate issue

Education cess not applicable for imports under advance licences

Contributions to The Hindu Relief Fund

Action plan for tourism revival in tsunami-hit nations