With India and Mexico signing the double taxation avoidance agreement on Monday, companies using Mexico to route investments into India will have to be ready for a differently structured tax regime.
The DTAA has provided for a limitation of benefits clause, which would mean that only genuine investors in the country would get a tax benefit. Tax consultants say such a clause usually means that companies must have a “physical economic presence in the country “ to avail its lower rate of tax. The income tax department have been increasingly concerned about the misuse of such treaties.
The agreement aims at avoiding double taxation, preventing tax evasion and increasing the economic cooperation and trade between the two countries. The incidence of double taxation will be avoided by one country giving credit for taxes paid by its residents in the other country. Trade between the two countries has increased rapidly over the last few years, touching $ 1.8 billion in 2006-07.
The DTAA will cover income tax, including surcharge in India and the federal income tax for Mexico. It also provides for taxation of dividend, interest, royalties and fees for technical services in both countries.
However, the tax rate in the source country should not exceed 10% of gross amount of payment if the beneficial owner of the payments is a resident of the other contracting state.
“It will stimulate the flow of capital, technology and personnel and contribute to tax stability,” a statement said.
DTAA between INDIA and MEXICO !
Last updated: 16 September 2007
Follow on
Google News
News posted by
CCI News Desk
Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.
Comments
Recent News :
- CBDT Notifies TDS Exemption for Specified Payments to IFSC Units Under Income Tax Act 2025
- ICAI Renews MRA with CPA Australia to Boost Global Mobility for Accountants
- Income Tax Department Releases ITR-7 Excel Utility for AY 2026-27
- CBDT Authorises DGIT (Systems) to Upload Global Financial Information in AIS Under Income Tax Act, 2025
- ICAI Invites Public Comments on Revised Guidance Note for Tax Audit under Section 44AB of IT Act 1961
- MCA Extends CCFS-2026 Deadline to 31st August 2026 Amid Data Centre Restoration
- ITR-5 Excel Utility for AY 2026-27 Released
- PFMS Users Can Now Authenticate Using PAN or Bank Account Under Revised Aadhaar Rules
- CBDT Grants Tax Exemption to NCCL's Core Settlement Guarantee Fund Till AY 2026-27
- Centre Expands NPS Investment Options for Employees of Autonomous Bodies
Popular News
- GSTN Revises Amendment of Aggregate Annual Turnover (AATO) Amendment Timeline for FY 2025-26
- CBDT Condones Delay in Filing Form 10AB for 80G Approval Applications Till 31st March 2026
- ICAI Strengthens AI Push with Sarvam AI Partnership and New AI Certification Course
- CBDT Notifies TDS Exemption on Aircraft Lease Rentals Paid to IFSC Units Under Income Tax Act, 2025
- GSTN Releases FAQs on Mandatory Ship-to Field and Voluntary E-Way Bill Closure 2026
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
