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Swiss tax treaty on

business Updated: Aug 30, 2010 23:06 IST
PTI
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India and Switzerland on Monday signed the revised Double Taxation Avoidance Agreement (DTAA), a move that will help the government seek details about illicit wealth allegedly stashed away by Indians in Swiss banks.

Finance Minister Pranab Mukherjee and Swiss Foreign Minister Micheline Calmy-Rey signed the revised pact.

"The revised DTAA contains provisions on the exchange of information in accordance with the OECD (Organisation for Economic Cooperation and Development) standard, which were negotiated in line with the parametres decided by the Swiss Federal Council," the Swiss Federal Department of Finance said in a statement.

Switzerland is entering into revised tax pacts with many countries in accordance with OECD's Model Tax Convention, to facilitate bilateral exchange of information related to bank account details of tax evaders.

What's in the deal

In case of dividends, interest, royalties and payments for technical services, the treaty makes a provision for the lowest withholding tax rate — which India has with another OECD nation — automatically applying to Switzerland.

The revised treaty would also ensure that in future, shipping companies operating internationally would have to pay tax on their profits only in their country of domicile.

"It is now possible to come to an agreement with India on an automatic and extensive most- favoured nation clause," a FDF statement said.

In case of dividends, interest, royalties and payments for technical services, the clause makes provision for the lowest withholding tax rate — which India has with another OECD nation — automatically applying to Switzerland. The revised treaty would also ensure that in future, shipping companies operating internationally would have to pay tax on their profits only in their country of domicile.

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