India and United Arab Emirates (UAE) have signed a Double Taxation Avoidance Agreement (DTAA) on 17th February 2021. This agreement is expected to promote trade and investment between the two countries by avoiding double taxation of income and providing a clear tax framework for businesses.
The signing of the DTAA is a significant milestone in India-UAE bilateral relations. The UAE is India`s third-largest trading partner and the fourth-largest exporter of crude oil to India. The agreement is expected to provide greater certainty to taxpayers in both countries and enhance the competitiveness of Indian and UAE businesses.
The DTAA will cover income tax, corporate tax, and capital gains tax. It will also provide for exchange of information between the tax authorities of both countries and assistance in the collection of taxes. The agreement will help to eliminate double taxation of income earned by residents of the two countries, reduce tax evasion, and provide greater transparency in tax matters.
One of the key features of the DTAA is the reduction of withholding tax on dividends, interest, and royalties. This reduction will make it easier for Indian businesses to invest in the UAE and vice versa. The agreement will also provide for the resolution of disputes related to tax matters through mutual agreement procedures.
The signing of the DTAA is expected to have a positive impact on Indian businesses operating in the UAE. The agreement will provide greater certainty in tax matters and reduce the tax burden on businesses. It will also enable Indian businesses to plan their operations more efficiently and take advantage of the growing opportunities in the UAE.
In conclusion, the Double Taxation Avoidance Agreement between India and United Arab Emirates is a welcome development for businesses in both countries. It will provide greater certainty in tax matters, promote trade and investment, and enhance the competitiveness of Indian and UAE businesses. The agreement is expected to create a more favorable tax environment for businesses and facilitate the growth of bilateral trade and investment.