India and Finland today signed a revised agreement for avoidance of double taxation and prevention of fiscal evasion with regard to tax on income.
According to the revised agreement, withholding tax rates on dividends have been reduced from 15 per cent to 10 per cent. On royalties and fees for technical services, the rate has been reduced from 15 or 10 per cent to a uniform rate of 10 per cent.
“Lowering of withholding tax will promote greater investments, flow of technology and technical services between the two countries,” the finance ministry said in a statement.
The double taxation avoidance agreement, or DTAA, was signed by Central Board of Direct Taxes Chairman S S N Moorthy on behalf of the central government and Terhi Hakala, the Ambassador of Finland to India. The agreement will come into force after internal processes in both the countries are completed.
The revised agreement also expands the ambit of exchange of information in line with current international standards. An Article for limiting benefits to the residents of the contracting countries has also been included to prevent misuse of DTAA.
Other features of the revised agreement include increasing the scope for relieving double taxation through recourse to the Mutual Agreement Procedure and addition of a new Article to ensure assistance in collection of taxes when such taxes are due under the domestic laws and regulation.
