Millennium Post

India revises tax treaty with Indonesia

India on Friday inked revised Double Taxation Avoidance Agreement (DTAA) with Indonesia which provides for exchange of tax and banking information.

The revised DTAA was signed by external affairs minister S M Krishna and his Indonesian counterpart Marty M Natalegawa on Friday. The revised tax agreement would provide for effective exchange of information, including banking details and information that does not have any domestic tax interest, official sources said.

The treaty also provides for assistance in collection of taxes and incorporates Limitation of Benefit clause and anti-abuse provisions to ensure that benefits of the agreement are availed of by the genuine residents, sources said.

The treaty would give taxation rights to the state in which the capital gain arises.

‘The agreement further provides for rationalisation of the tax rates on dividend, royalties and fees for technical services in the source state up to 10 per cent threshold limit,’ sources said.

It would also give tax stability to the resident of India and Indonesia and facilitate mutual cooperation and stimulate flow of investment, technology and services between India and Indonesia.
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