International Tax Course Outline by

International Tax Course Curriculum

Article 1

1.Introduction and Basic Concepts of Tax Treaty

2.What is Tax Treaty and Various Tax Treaty Models

3.Various Treaty Model - OECD, UN and US Model

4.Objective of tax treaty

5.Content and General Provision applicable to Tax Treaty

6.Principle and Approach to Interpret tax treaty

7.Tools to interpret Tax treaty

8. Purpose of Model Tax Commentaries

9. Different views on Taxation of Two contracting States

Article 2

Article 2 - Taxes - Overview of Article 2 in Tax Treaties

Relevance of Article 2 - New Taxes, Additional taxes and other aspects

Article 2 (1) – Taxes covered under Treaties

Article 2 (2) – Meaning of Taxes for OECD Model

Article 2 (3) – Existing Taxes covered under Treaty

Article 2 (4) – Additional Future Tax

Article 4 - Resident

Article 4 - Overview of Concept of "Residence"

Importance of Concept of Residence in Tax Treaties

Structure of Article – Resident

Article – 4(1) of OECD Model – Who is Resident ?

Article 4 – Categories of Resident

Sovereign Wealth funds - Residence and Exemption from Tax

Who is a “Person” under Tax Treaty ?

Concept of “Liable to tax therein”

Taxation of Partnership Firms - Are they Liable to tax?

 

Taxation of Charitable Trusts – Are they "Liable to tax"?

Article – Tie breaker Rule for an individual

Article – 4(2) – Tie breaker Rule for an individual

Permanent home - What constitutes Permanent Home to determine residence ?

Centre of vital interest - Importance in Determination of Residence

Habitual abode - When does it decided residence ?

Nationality - When does it decide residence ?

Mutual Agreement - Determination of Residence by Competent Authority

Article – 4(3) of OECD Model - Tie breaker other than an Individual

When would a Company can be taxed in two state ?

Place of Effective Management Concept

Article 5 - Permanent Establishment

Overview of Article 5 - Permanent Establishment

When can a PE arise in Source State - Office, Site or an Agent ?

How a Foreign Company can operate in Source State

Importance of PE Concept

Article 5 of the OECD Model - Clauses

PE - Other Important Aspects

Article 5(1) – When does a Fixed Place PE arise under DTAA ?

Key Characteristics of Fixed Place PE

Leased Immovable Property and PE

Place of Business – Examples

Article 5 (2) – Specific Places included in Fixed Place PE

Article 5(3) – Building Site, Construction or Installaton Project

Construction PE - When does it arise ?

Key Charcterstic of Construction PE

Activities Resulting in Construction PE

Installation PE – Activities Resulting in Installation PE

12 Month Test – Aspects , Computation and Anti Abuse Provision

Construction PE – Connected Activities

Case Study – Fiscally Transparent Partnership

Article 5(4) - Specific Activities Exempted from Constituting a PE

Criterion of Auxilliary or Preparatory

Article 5(4)(a) - Facilities for Storage etc

Article 5(4)(b) - Maintenance of a stock of goods or merchandise

Article 5(4)© - Maintenance of goods - processing

Article 5(4)(d) - Purchasing Goods/ Merchandise for the Enterprise

Article 5(4)(d) – Collecting Information for the Enterprise

Places constituting preparatory work activities

Article 5 (4.1) – Office constitutitng Closely related Co PE

Article 5(5)- Dependent Agent

Article 5(5) – Dependent Agent PE

Dependent Agent PE - Key Characterstics

Role of Agent in the Contract

Key Characterstics of the dependent agent PE

Case study – Conclusion of Contract

Article 5 (6)- Independent Agent not constituting a PE

Key Criterion of an Independent Agent

Article 5(7) - Subsidiary Permanent Establishment

Artcile 5(7) - Holding Subsidiary Relationship not to result in PE

Case Study - Holding Subsidiary Relationship

Article 5 (8) - Related Enterprise

Article 6 - Income From Immovable Property​

Article 6 - Income From Immovable Property​ - Key aspect and income covered

Article 6(1) – Right Of Source State To Tax Income From Immovable Property​

Article 6(2) – Meaning Of Immovable Property​

Article 6(3) – Nature Of Income Covered

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Article 6(4) – Immovable Property Of Enterprise

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Method of Computation Of Income In Source State

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Case Studies (1-3) on Article 6 – Income From Letting And Subletting​

Article 7 Business Profits

Overview of Article 7 Business Profits

Relevance of Article 7 - Business Profits

Structure of Article 7 - Business Profits

Article 7(1) - Taxing Rights of Contracting State

Article 7(1) - Taxing Rights of Contracting State

Characterstics of Article 7(1)

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PE Should be in Source State

What is Taxable under Article 7

Article 7(2) - Determination of Profits of a PE

Characterstics of Article 7(2)

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Basis of Allocating Profits

How to Assertain Profits of a PE

Deduction of Expenses - Rules violating Treaty?

Article 7(3) - Deduction and Expenses

Article 7(3) – Business Profits corresponding adjustment by Residence State

Adjustment By State of Residence or State of Source

Article 7(4) - Income Dealt with in other Article of Treaty

Article 8 - International Shipping And International Air Transport​

Article 8 - International Shipping And International Air Transport​

Article - 8(1) - Exclusive Right of State of Residence To Tax Profits​

Meaning Of “International Traffic” – Article 3(1) ( e)

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Article 8(1) – Alternative - Tax based on Place Of Effective Management​

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Specific Income which are Taxable Under Article 8​

What is Inland Waterways Transport​ and its relevance for Article 8

Permanent Establishment impact on Article 8​

Article 8(2) – Profits From Pool, Joint Business Agreements and international operating agency

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Article 9 – Associated Enterprises - Objective and Guidelines

Article 9(1) – Adjustment to Taxable Profits between Associated Enterprises

Examples of Direct or Indirect Participation

Thin Capitalisation and Application of Arm’s Length Principle

Control and Application of Arm’s Length Principle

Article 9(2) – Corresponding Adjustments

Corresponding Adjustments - Case Study, Methods and Process Flow

Secondary Adjustment – Not covered under para 2

Article 10

Overview, Meaning and Tax aspect of Dividend

Article 10(1) - Right of State of residence to Tax Dividend

What is included within the meaning of Dividend ?

What is excluded from the meaning of Dividend ?

Article 10(2) - Right of Source State to Tax Dividend

Beneficial ownership of Dividend - Meaning and case study

Third Party Beneficial Owners of Dividend

Beneficial ownership and Test of beneficial ownership

Article 10(3) - Meaning of Dividend

Article 10(4) - Taxation of Dividend Connected to PE or Fixed base

Article 10(5) - Right to tax dividend declared by Foreign Co. From income from Source State

Article 11 - interest

Article 11 - Interest - Overview of Article 11

Learning Aspects of Article 11 - Interest

Interest taxation - Important Issues

Article 11 (1) – Right of State of Residence to Tax Interest

Case Study - 1 - Interest Taxed on Payment Basis

Case Study 2 – Interest From Third State Person

Case Study 3 – Interest Attributable to PE in Third State

Deduction of interest based on Residence of Recipient of Interest

Article 11 (2) - Right of Source State to Tax Interest

Who is beneficial owner of interest ?

Case study – Third State beneficial owner of interest

Third Party Beneficial Ownership - Examples and Cases

Disadvantage of Gross Taxation – Example - Banks

Case Study – Gross WHT and impact on International Trade

Interest Exemption - Other Contracting State is Recipient

Interest Exemption - Contracting State is Payor

Interest Exemption - Export Financing Agencies and Programmes

Interest Exemption - Interest paid to financial institutions

Interest Exemption - Credit Sales and interest on Delayed payment

Interest Exemption - Tax Exempt Entities

Article 11(3) - What is regarded as Interest ?

Article 11(3) – Issues for Consideration

Whether Premium/ Discount/ Profit on Instrument amount to Interest ?

Penalty charges for Late Payment - Not Interest

Article 11 (4) - Interest and PE in Source State

PE Situation – Interest Borne by PE

PE Situation – Interest Borne by PE

Article 11 (5) – When Shall Interest Arise in a Contracting State

Case Study - 4 - Interest Borne by PE in other Contracting State

Case Study - 5 - Interest Borne by PE in Third Contracting State

Article 11 (6) - Excess Interest Payment to Related Party

Case Study - 6 - Excess Interest Payment to Related Party

Special relationship for disallowance of Excess Interest Payment to Related Party

Computation of Excess Interest Payment to Related Party

Article 12 - Taxation of Royalties​

Key Learning Points to be learnt about taxation of Royalties

Which Country has the Right to Tax Royalty Income ?

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Article 12 (1) – Right of the State of Residence to tax Royalty​

Cases Study on Royalty Arising within a Contracting State - Article 12(1)​

PE Situation – Royalty Attributable To Third State PE

Beneficial Owner – Concept And Issues​

Open Issues and important aspects of Article 12(1)​

Article 12 (2) – Meaning of Royalties

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What is included within Royalties - Examples ?

Some Issues In Article 12 Payments – Whether Royalties ?

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Article 12 (3) – Taxation of Royalties when a Permanent Establishment​ exists in Source State

Key Questions to understand Application of Article 12(3)

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Meaning of Effectively Connected

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Article 12 (4) –Excess Payment due to Special Relationship between Payor and Payee

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Article 13 Capital Gains

Article 13 Capital Gains - Key Aspects and Meaning of Capital Assets ?

Article 13(1) - Capital Gains Arising from Aliennation of Immovable Property

Meaning of Alienation of property for Capital Gains

Meaning of “capital gains” ?

Key issues in Article 13(1)

Article 13(2) OECD Model Convention - Movable Property of PE Business

Article 13(2) - Capital Gains on Sale Movable Property of PE

Meaning of Movable Property ?

Tax on Gains from Sale of Capital Asset after cessation of PE

Case Study – Transfer of Movable and Immovable Property

Article 13(3) - Capital Gains fom Sale of Ships or Aircrafts operated in International Traffic

Article 13(4) - Capital Gains Arising From Alienation of Shares of Real Estate Company

Case Study 1 - Value from Immovable Property

Case Study 2 - Less than 50% value from IP

Case Study 3- Value from IP - Comprehensive

Article 13(5) - Alienation of any Other Property

Assets Whose Transfer Could Be Covered Under Residuary Clause

Factors Not Considered To Be Relevant While Applying Article 13(5)

Computation of Income in Source State

Article 15 – Dependent Personal Services

Article 15 (1) – Income from Employment

Key issues in Article 15

Salaries, Wages & Other Similar Remuneration - Meaning

Some Payments Covered Under Article 15 ?

What is Place of Exercise of Employment

Taxation of Bonus For past Services

Article 15 (2) – Short Stay Exemption

Meaning of certain terms used in Article 15(2)

Article 15 (3) – Remuneration of Crews of Ships or Aircraft

ARTICLE 16

Overview of Article 16 - Directors Fees

Meaning of director’s fees and other similar payments

Case Study - Director in dual capacity

Article 17 - Entertainers and Sportspersons

Overview of Article 17 - Entertainers and Sportspersons

Article - 17(1) – Right of Source State to Tax income

What is covered under Article 17 ?

What are Personal Activities of Atheletes and Sportsperson ?

What is covered under Article 17?

Who is an Entertainer ?

Who is a Sportsperson ?

Taxation of Combined income ?

Key Income taxable under Article 17(1) and Related issues

Article 17(2) - Income Accrues to Another Person

Article 23A & 23B - Methods for elimination of Double Taxation

Applicability of Article 23

Types of relief from Double Taxation

Exemption Method - Article 23A(1) - Obligation of state of Residence

Article 23A(2) - Dividend and Interest Income - Tax credit

Article 23A(3) - Exemption with progression Method

Article 23A(4) - Limitation on exemption of income

Article 23B(1) - Credit Method - Credit for taxes paid in source state

Tax Sparing

Underlying Credit

Article 23B(2) – Exempt income considered for tax rate

Article 24 – Non - Discrimination under Tax Treaties

Article 24(1) - Non Discrimination based on Nationality

Article 24(2)- Non Discrimination in case of Stateless person

Article 24(3)- Discrimination for taxation of Permanent Establishment

Article 24(4)- Non Discrimination for deduction of expenses for Payor when payments to NR

Article 25 - Mutual Agreement Procedure

Mutual Agreement Procedure - Meaning

Applicability of MAP on various article

Article 25(1) - Applicability of MAP

When can MAP be invoked by a Tax Payer ?

Article 25(2) – Action of competent authority to whom MAP application has been filed

Article 25(3) - Consultation by authorities on issues arising out of MAP

Article 25(4)- Rules for consultataion between authorities on issues arising out of MAP

Article 25(5) - Can a tax payer invoke "Arbitration". If issues are not decided under MAP ?

Article 26 - Exchange of information

Article 26(1) - Obligation to exchange information on Contracting States'

Nature of requested information

Article 26(2) - Use and secrecy of information obtained under Exchange of Information

Article 26(3)- Limitation on obligation of requested state to provide information requested under Article 26

Article 26(4) - Use of information by Requested State not necessary

Article 26(5) - Request of information available with Banks etc under Article 26

Scope of Article 27 - Assistance in Collection of Taxes​

Article 27(1)- Contracting States​ - Obligations To Lend Assistance

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Article 27(2)- Meaning of Revenue Claim that can be enforced

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Article 27(3)- Request for Assistance​

Article 27(4) - Measures Of Conservancy

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Article 27(5)- Priority Of Revenue Claim

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Article 27(6)- Proceeding Before Courts

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Article 27(7)- Revenue Claim Ceases To Exist​

Article 27(8) - Limitation On Obligation​

Article 28 - Members of Diplomatic Missions and Consular Posts

Article 28 - Members of Diplomatic Missions and Consular Posts

Article 29- Entitlement of Tax Treaty Benefits

Article 29- Entitlement of Tax Treaty Benefits

Article 29(1) - Restriction to Tax Treaty Avail Benefits

Article 29(2) - Qualified Persons eligible to avail Tax Benefits

Article 29(3)- Treaty Benefits To Resident Engaged In Active Conduct Of Business

Article 29(4)- Ownership By Person Entitled To Benefits

Article 29(5)- Headquarters Company

Article 29(6) - Discretionary Relief

Article 29(7) – Definitions

Article 29(8)- Permanent Establishment

Article 29(9)- Underlying Principles

Article 30 - Territorial Extension

Article 31 - Entry into Force

Article 31 - Entry into Force

Article 31(1)- Ratification

Article 31(2) - Enter into Force

Entry into force and date when convention shall take effect

Article 32 - Termination

Article 32 - Termination

GMT

What is Global Minimum Tax​ ?

Developments on GMT in international front

Objectives of Global Minimum Tax and Scope Of Application​ of Global Minimum Tax

Key Rules​ under the Global Minimum Tax

Income Inclusion Rule - IIR ​of Global Minimum Tax

Income Inclusion Rule - Top-Down Approach

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Switch Over-Rule​ - Global Minimum Tax

Under Taxed Payment Rule - Global Minimum Tax

Income Inclusion Rule Vs Under Taxed Payment Rule

Example On Global Minimum Tax​ and Assumptions

Example 1 – UPE Has Implemented IIR

Example 2 – UPE Has Not Implemented IIR​

Example 3 – Comprehensive Example 1​

Example 4 – Comprehensive Example 2​

Example 5​ - Comprehensive Example 23

Impact of GMT on Low-Tax ​Countries