Double-Taxation-Avoidance-Agreement

DTAA rates applicable for various countries

An overview of the Double Taxation Avoidance Agreement

In this post we will discuss the DTAA rates applicable for various countries. We will cover the following:

What is DTAA in India?

DTAA in India stands for “Double Taxation Avoidance Agreement.” It is a bilateral tax treaty signed between India and another foreign country or jurisdiction. Double Taxation Avoidance Agreements (DTAAs) apply to individuals who are residents of one country and earning income in another. This means that the two countries involved have agreed on how to tax income earned in each country. 

The primary purpose of DTAA is to eliminate the possibility of a person or entity being taxed for the same income in India and foreign countries.

Benefits of DTAA

DTAA offers many benefits for taxpayers. The main one is that you don’t have to pay taxes twice on the same income. Here are some other benefits:
  1. Lower Taxes Upfront: You might have to pay less tax when tax is taken out of your income (called withholding tax or TDS).
  2. Tax Credits: You can get credits for taxes you’ve already paid in another country, so you don’t pay twice.
  3. No Tax in Some Cases: Some DTAA agreements can even mean you don’t pay certain taxes, like capital gains tax.
The idea behind DTAA is to make it hard for people to dodge taxes in either of the countries that signed the agreement. So, DTAA can save you money by lowering taxes or ensuring you’re not taxed twice on the same money.

DTAA Rates

DTAA agreements between India and other countries set fixed tax deduction rates for income earned by residents of those countries in India. So, when NRIs earn income in India, the DTAA with their country determines the TDS rate. The same shall also apply when an Indian citizen or Indian entity earns an income in another foreign country.

Countries with which India has DTAA

The DTAA between India and other countries are as below. The description of the Note 1, Note 2 Note 3 and Note 4 given in after the table.

Sl No

Country Name

Dividend (not being covered u/s 115-O)

Interest

Royalty

Fee for Technical Services

1

Albania

10%

10% (Note1)

10%

10%

2

Armenia

10%

10% (Note1)

10%

10%

3

Australia

15%

15%

10% / 15% (Note 2)

10% / 15% (Note 2)

4

Austria

10%

10% (Note1)

10%

10%

5

Bangladesh

a) 10% (if at least 10% of the capital of the company paying the dividend is held by the recipient company);

b) 15% in all other cases

10% (Note1)

10%

No separate provision

6

Belarus

a) 10%, if paid to a company holding 25% shares;

b) 15%, in all other cases

10% (Note1)

15%

15%

7

Belgium

10%

10% (Note1)

10%

10%

8

Botswana

a) 7.5%, if the shareholder is a company and holds at least 25% of shares in the investee company;

b) 10%, in all other cases

10% (Note1)

10%

10%

9

Brazil

15%

15% (Note 1)

a) 25% for use of the trademark;

>b) 15% for others

No separate provision

10

Bulgaria

15%

15% (Note 1)

a) 15% of royalty relating to literary, artistic, scientific works other than films or tapes used for radio or television broadcasting;

b) 20%, in other cases

20%

11

Canada

a) 15%, if at least 10% of the voting powers in the company, paying the dividends, is controlled by the recipient company;

b) 25%, in other cases

15% (Note 1)

10%-15%

10%-15%

12

China

10%

10% (Note 1)

10%

10%

13

Columbia

10%

10% (Note 1)

10%

10%

14

Czech Republic [Note5]

10%

10% (Note 1)

10%

10%

15

Denmark

a) 15%, if at least 25% of the shares of the company paying the dividend is held by the recipient company;

b) 25%, in other cases

a) 10% if the loan is granted by the bank;

b) 15% for others (Note1)

20%

20%<

16

Estonia

10%

a) 10% (Note 1)

10%

10%

17

Ethiopia

7.5%

10% (Note 1)

10%

10%

18

Finland

10%

10% (Note1)

10%

10%

19

Fiji

5%

10% (Note1)

10%

10%

20

France

10%

10% (Note1)

10%

10%

21

Georgia

10%

10% (Note1)

10%

10%

22

Germany

10%

10% (Note1)

10%

10%

23

HongKong

5%

10% (Note1)

10%

10%

24

Hungary

10%

10% (Note1)

10%

10%

25

Indonesia

10%

10% (Note1)

10%

10%

26

Iceland

10%

10% (Note1)

10%

10%

27

Ireland

10%

10% (Note1)

10%

10%

28

Israel

10%

10% (Note1)

10%

10%

29

Italy

a) 15% if at least 10% of the shares of the company paying a dividend is beneficially owned by the recipient company.

b) 25% in other cases

10% (Note1)

20%

20%

30

Japan

10%

10% (Note1)

10%

10%

31

Jordan

10%

10% (Note1)

20%

20%

32

Kazakhstan

10%

10% (Note1)

10%

10%

33

Kenya

10%

10%

10%

10%

34

Korea

15%

10%

10%

10%

35

Kuwait

10% (Note1)

10%

10%

10%

36

Kyrgyz Republic

10%

10% (Note1)

15%

15%

37

Latvia

10%

10% (Note1)

10%

10%

38

Lithuania

5%*, 15%

10% (Note1)

10%

10%

39

Luxembourg

10%

10% (Note1)

10%

10%

40

Malaysia

5%

10% (Note1)

10%

10%

41

Malta

10%

10% (Note1)

10%

10%

42

Mongolia

15%

15% (Note1)

15%

15%

43

Mauritius

a) 5%, if at least 10% of the capital of the company paying the dividend is held by the recipient company

b) 15%, in other cases

7.5%

15%

10%

44

Montenegro

5% (in some cases 15%)

10% (Note1)

10%

10%

45

Myanmar

5%

10% (Note1)

10%

No separate provision

46

Morocco

10%

10% (Note1)

10%

10%

47

Mozambique

7.5%

10% (Note1)

10%

No separate provision

48

Macedonia

10%

10% (Note1)

10%

10%

49

Namibia

10%

10% (Note1)

10%

10%

50

Nepal

5%**, 10%

10% (Note1)

15%

No separate provision

51

Netherlands

10%

10% (Note1)

10%

10%

52

New Zealand

15%

10% (Note1)

10%

10%

53

Norway

10%

10% (Note1)

10%

10%

54

Oman

a) 10%, if at least 10% of shares are held by the recipient company

b) 12.5%, in other cases

10% (Note1)

15%

15%

55

Philippines

a) 15%, if at least 10% of the shares of the company paying the dividend is held by the recipient company;

b) 20%, in other cases

a) 10%, if interest is received by a financial institution or insurance company;

b) 15% in other cases

[Note1]

15% if it is payable in pursuance of any collaboration agreement approved by the Government of India

No separate provision

56

Poland

10%

10% (Note1)

15%

15%

57

Portuguese Republic

10%***/15%

10%

10%

10%

58

Qatar

a) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company;

b) 10%, in other cases

10% (Note1)

10%

10%

59

Romania

10%

10% (Note1)

10%

10%

60

Russian Federation

10%

10% (Note1)

10%

10%

61

Saudi Arabia

5%

10% (Note1)

10%

No separate provision

62

Serbia

a) 5%, if recipient is company and holds 25% shares;

b) 15%, in any other case

10% (Note1)

10%

10%

63

Singapore

a) 10%, if at least 25% of the shares of the company paying the dividend is held by the recipient company;

b) 15%, in other cases

a) 10%, if loan is granted by a bank or similar institute including an insurance company;

b) 15%, in all other cases

10%

10%

64

Slovenia

a) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company;

b) 15%, in other cases

10%

10%

10%

65

South Africa

10%

10% (Note1)

10%

10%

66

Sri Lanka

7.5%

15% (Note1)

10%/20%[Note 3]

20%[Note 3]

67

Sudan

10%

10% (Note1)

10%

10%

68

Sweden

10%

10% (Note1)

10%

10%

69

Swiss Confederation

10%

10% (Note1)

10%

10%

70

Syrian Arab Republic

a) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company

b) 10%, in other cases

10% (Note1)

10%

No separate provision

71

Tajikistan

a) 5%, if at least 25% of the shares of the company paying the dividend is held by the recipient company

b) 10%, in other cases

10% (Note1)

10%

No separate provision

72

Tanzania

5%****, 10%

10%

10%

No separate provision

73

Thailand

10%

10% (Note1)

10%

No separate provision

74

Trinidad and Tobago

10%

10% (Note1)

10%

10%

75

Turkey

15%

a) 10% if loan is granted by a bank, etc.;b) 15% in other cases [Note1]

15%

15%

76

Turkmenistan

10%

10% (Note1)

10%

10%

77

Uganda

10%

10% (Note1)

10%

10%

78

Ukraine

a) 10%, if at least 25% of the shares of the company paying the dividend is held by the recipient company;

b) 15%, in other cases

10% (Note1)

10%

10%

79

United Arab Emirates

10%

a) 5% if loan is granted by a bank / similar financial institute;

b) 12.5%, in other cases

10%

No separate provision

80

United Mexican States

10%

10% (Note1)

10%

10%

81

United Kingdom

15%/10%(Note 4)

a) 10%, if interest is paid to a bank;

b) 15%, in other cases [Note1]

  

82

United States

a) 15%, if at least 10% of the voting stock of the company paying the dividend is held by the recipient company;

b) 25% in other cases

a) 10% if loan is granted by a bank/similar institute including insurance company;

b) 15% for others

10%/15%[Note 2]

10%/15%[Note 2]

83

Uruguay

5%

10% (Note1)

10%

10%

84

Uzbekistan

10%

10% (Note1)

10%

10%

85

Vietnam

10%

10% (Note1)

10%

10%

86

Zambia

a) 5%, if at least 25% of the shares of the company paying the dividend is held by a recipient company for a period of at least 6 months prior to the date of payment of the dividend

b) 15% in other cases

10% (Note1)

10%

10%

*If the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends.

**5% if the beneficial owner of shares is a company and it holds at least 10% of shares of the company paying the dividends.

***If the beneficial owner is a company that, for an uninterrupted period of two fiscal years prior to the payment of the dividend, owns directly at least 25% of the capital stock of the company paying the dividends.

****5% if the recipient company owns at least 25% share in the company paying the dividend.

Note 1 – Dividend / interest earned by the Government and certain specified institutions, inter-alia, Reserve Bank of India is exempt from taxation in the country of the source (subject to certain condition).

Note 2 – Royalties and fees for technical services would be taxable in the country of the source at the rates prescribed for different categories of royalties and fees for technical services. These rates shall be subject to various conditions and nature of services / royalty for which payment is made.

Note 3 – Royalties and fees for technical services would be taxable in the country of the source at the following rates:

  • 10% in case of royalties relating to the payments for the use of, or the right to use industrial, commercial or scientific equipment;
  • 20% in case of fees for technical services and other royalties.

Note 4

  • 15% of the gross amount of the dividends where those dividends are paid out of income (including gains) derived directly or indirectly from immovable property within the meaning of Article 6 by an investment vehicle which distributes most of this income annually and whose income from such immovable property is exempted from tax;
  • 10% of the gross amount of the dividends, in all other cases

Note 5 – The Central Board of Direct Taxes has clarified that DTAA signed with the Government of the Czech Republic on the 27th January 1986 continues to be applicable to the residents of the Slovak Republic. [Notification No. 25, dated 23-03-2015].

This post on the  DTAA rates applicable for various countries has come to an end. Please share your views and opinions with us in the comment section below.

FAQ

1. Who falls under DTAA's coverage?

Ans: People who are citizens of one country while earning income in another are eligible for coverage under the Double Taxation Avoidance Agreement (DTAA).

2. How can I avail DTAA advantages?

Ans: NRIs fall under the purview of DTAA. They must provide their “Tax Residency Certificate (TRC)” to the deductor, along with Form-10F and PAN No.

3. How many nations have signed DTAA agreements with India?

Ans: India currently has operational Double Taxation Avoidance Agreements (DTAA) with 86   out of a total of 88 countries.

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