Basics of international taxation - WIRC-ICAI

Basics of international taxation

ICAI - WIRC 16th December 2017

Arjun Khandelwal

Contents

1. Introduction 2. Residence 3. Scope of total income 4. DTAA 5. Interpretation of treaties 6. Key articles of tax treaties 7. Place of effective management (`POEM')

December 2017

Basics of international taxation

Page 2

Introduction

Why does double taxation occur?

? Movement ? Carrying on of a business activity ? Earning of income

State A

State B

? Residence ? Connecting factor is residence ? Unlimited taxing rights due to

"personal attachment"

? Source ? Connecting factor is income ? Limited taxing rights due to

"economic attachment" of a person

Certain countries tax world-wide income of their citizens, e.g. USA

December 2017

Basics of international taxation

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Economic Double Taxation ..... Contd

Investment in shares of XYZ

A

Tax on dividend in the hands of shareholders

Dividend paid to A

XYZ Pvt Ltd

Corporate tax on income

Same economic transaction, item of income is taxed in the hands of different tax payers

December 2017

Basics of international taxation

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