no
100 Points
Joined December 2009
The practice of structuring a multinational business to take advantage of more favorable tax treaties available in certain jurisdictions. A business that resides in a home country that doesn't have a tax treaty with the source country from which it receives income can establish an operation in a second source country that does have a favorable tax treaty in order to minimize its tax liability with the home country. Most countries have established anti-treaty shopping laws to circumvent the practice
In simple word suppose i Mr A a resident of USA providing certain service in india and as per INCOME TAX it will taxed(TDS) at the rate of 25% and as per DTAA with USA it will be tax at the rate of 15% SOTDS that shuld be deducted on such service is 15% as its more beneficial to the assesee(as per DTAA Rule)
Similar Service as per DTAA With let says CHINA taxed(TDS) at the rate of 10% So in that case the foreign resident Mr A established on branch in china and rendered such service from there to get the lower rate TDS
This whole process of Reducing the tax is Called Treaty Shopping