India and Kazakhstan on Friday signed a protocol to amend the existing double taxation avoidance convention (DTAC) between the two countries.
The protocol has among other things inserted a limitation of benefits (LOB) article to provide a main purpose test to prevent misuse of the DTAC and to allow application of domestic law and measures against tax avoidance or evasion.
The original DTAC was signed on December 9, 1996.
The protocol also inserts specific provisions to facilitate relieving of economic double taxation in transfer pricing cases. This is a taxpayer-friendly measure and is in line with India's commitment under Base Erosion and Profit Shifting (BEPS) action plan to meet the minimum standard of providing mutual agreement procedure (MAP) access in transfer pricing cases.
The protocol has inserted service Permanent Establishment (PE) provisions with a threshold and also provides that the profits to be attributed to PE will be determined on the basis of apportionment of total profits of the enterprise.
It has also replaced existing Article on Assistance in collection of Taxes with a new Article to align it with international standards.
The Protocol provides internationally accepted standards for effective exchange of information on tax matters. Further, the information received from Kazakhstan for tax purposes can be shared from other law enforcement agencies with authorisation of the competent authority of Kazakhstan and vice-versa.