Australia and India new tax treaty

On 16 December 2011, Australia and India signed a new tax protocol.

The protocol will amend an existing agreement which had not been revised since 1991.

Under the revised arrangements:

• cross-border services will be taxable in the country of source where those services are performed in that other country for more than 183 days in 12 months
• source country taxation will apply to profits derived from natural resource exploration or exploitation activities - where those activities are undertaken for more than 90 days in 12 months
• source country taxation will apply to profits derived from the operation of substantial equipment - where such operation continues for more than 183 days in 12 months
• only the profits attributable to an enterprise's permanent establishment (branch) in Australia or India may be taxed in that country. This will remove the force of attraction rule in the existing treaty which allows for the taxation of indirect profits connected with a permanent establishment
• a new non-discrimination article will protect nationals and businesses of one country from tax discrimination in the other country
• the exchange of information article has been updated to the current international standard and will also allow the revenue authorities of Australia and India to exchange taxpayer information on a wider range of taxes
• a new assistance in the collection of taxes article will allow the revenue authorities of Australia and India to assist each other in the collection of outstanding tax debts.

It will come into force when both countries have completed their domestic requirements and exchanged diplomatic notes.

Media release

For more information, refer to the Treasury's media release on 22 December 2011.

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