India has signed a double tax avoidance agreement (DTAA) with Georgia. This agreement provides a mechanism for effective exchange of information between the tax authorities of two countries, including exchange of banking information.

The DTAA was signed here today by Mr M.C. Joshi, Chairman of the Central Board of Direct Taxes (CBDT) on behalf of the Indian Government and Mr Zurab Katchkatchishvili, Ambassador of Georgia to India on behalf of the Government of Georgia.

Under this DTAA, business profits will be taxable in the source State if the activities of an enterprise constitute a permanent establishment (PE) in the Source State. The Agreement provides for fixed place PE, building site, construction and installation PE, service PE, insurance PE and agency PE. Dividends, interest, royalties and fees for technical services income will be taxed both in the country of residence and in the country of source.

The low level of withholding rates of taxation for dividend (10 per cent), interest (10 per cent) and royalties and fees for technical services (10 per cent) is expected to promote greater investments, flow of technology and technical services between the two countries.

The DTAA also incorporates anti-abuse (limitation of benefits) provisions to ensure that the benefits of the agreement could be availed by the genuine residents of both the countries.

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