IT companies fume over double taxation avoidance treaty with Australia

India is the leading sourcing destination across the world, accounting for approximately 55 per cent market share of the $185-190 billion global services sourcing business in 2017-18

Information technology majors have blamed the current Double Taxation Avoidance Treaty (DTAA) with Australia as a major constraint on plans to grow operations Down Under.

Income from IT services is being taxed as royalties under the DTAA, industry body Nasscom has told the government. The loss for companies is estimated at $1 billion since 2012, along with related job losses. This comes at a time when services exporters have resisted government efforts to prod them into new markets, by pointing out that significant market access barriers in major markets like China exist.

DTAAs are tax treaties signed between two or more countries