International taxation refers to the calculation of tax against an individual or a business entity w.r.t. the tax laws dominant in the resident’s country or in the country where the business is running. An International tax is broadly classified into 2 verticals:
- Tax calculation on the income of residents or corporations which has arisen in a foreign country, also known as Taxation of Foreign Income.
- Tax calculation on an income of non-residents that are arising in the domestic country, also known as Taxation of Non-Resident.
It can be clearly understood that Taxation of Foreign Income for one country is Taxation of Non-Resident for another country. This gives rise to the dual taxation of income, one in the resident country where the income is being taxed and other in the source country which also levies a fixed percentage of tax on the same income. Thus, so that double taxation is avoided the government came up with Double Tax Avoidance Agreement (DTAA). Though Double Tax Avoidance Agreement (DTAA) is not new to the economy it might be possible that most of you are unaware of the term or if you are aware you don’t know how DTAA can help you to store a major part of your income with yourself. Thus, we come to your rescue. Our international tax advisor not only enlighten you about Double Tax Avoidance Agreement (DTAA) but if you are someone who is earning income in the foreign base our international tax accountant will also guide you about how you can use Double Tax Avoidance Agreement (DTAA) to avoid double taxation.
We Help You To Determine If DTAA Is Applicable To You Or Not
Before you read us further to know if DTAA is applicable to you or not you must first understand the concept of residents.
A resident is divided into 2 parts:
- An Individual
- A legal organization/a company
If you are the individual who enjoys double residency then it is necessary for you to break your dual residency and become a resident of one of the two states. Now how to determine if you are a dual resident or not? Our international tax consultant will bring into your notice certain factors of residency that will help you to determine if you are a dual resident or not.
A Legal Organization/A Company
In order to determine the residential status of your business organization, you must check the place of incorporation of your business or the place of effective management. “Place of incorporation” is preferred over the “place of effective management” in order to determine the residential status of a business organization as the “place of incorporation” remains same over a period of time unlike the “place of effective management”. “Place of effective management” is often unclear as in today’s time a business is managed from multiple countries.
Our International Tax Advisor Helps You to Identify the DTAA to be Applicable
The following Steps need to be followed in order to determine the DTAA applicably:
- Check if you have cracked a transaction that is incurring the income that is taxable under the Income Tax (IT) Act.
- Check the residential status of the parties involved in the transaction. If one of the parties involved is an NRI or a foreign entity then the Double Tax Avoidance Agreement (DTAA) will be applicable.
- Find out the residential status of a non-resident or a foreign company.
- If a non-resident or a foreign company is shown as the resident of the country in the tax treaty b/w India and the country.
In case the income incurring from a transaction is taxable under IT Act, the parties involved in the transaction are non-residents, and the non-resident or a foreign company is shown as the resident of the country then DTAA is applicable for you.
Our International Tax Consultant Helps You to Apply DTAA
Our international tax advisor undertakes the following methodology to help you to apply DTAA:
- Our international tax consultant finds out the nature of income arising to you as per DTAA and the Income Tax (IT) Act.
- We determine the amount of income tax payable by you under the Income Tax (IT) Act.
- In case you have a permanent establishment (PE) in India then your income will be taxable under the general taxation law.
We are a known name for providing international taxation services from over a decade. Our Double Taxation Avoidance Agreement (DTAA) service under international taxation services is famous amongst one of the elite clients of Delhi-NCR. If you are looking for international taxation services in Delhi-NCR or Noida feel free to contact.