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Dorina Asllani Ndreka |
The governments of Albania and India signed the agreement on the avoidance of double tax duties and the prevention of tax evasion regarding taxes on income and capital on July 8 2013. It entered into force on December 5 2014. The purpose of the agreement is to promote the economic cooperation between the two countries, as well as the establishment of a legal framework for the tax treatment, of legal and physical persons, Indians or Albanians, that have business activities or other revenues, which are under the tax jurisdiction of both countries. The provisions of this agreement have priority over the tax legislation of both countries. The competent authority who will implement this agreement in Albania is the General Directorate of Taxation.
According to the provisions of the treaty, taxes on profits from business activities will be paid only in the country where the business is resident, as long as it has a permanent office. In any case, the business can be taxed in the other country, only for the profits realised at the permanent office (establishment).
Taxes on dividends, interests, licenses and royalties, will be paid at the country where they are earned or obtained, but if the beneficial owner of these revenues is resident in the other country, the tax imposed on him/her, shall not exceed 10% of the gross amount, of the dividends, interests, licences or royalties.
When a person in Albania generates income or owns capital that in accordance with the provisions of the agreement can be taxed in India, Albania will allow a deduction from the Albanian income and capital tax, equal to the income tax paid in India. However, this deduction, in any case shall not exceed that part of the income or capital tax as calculated, before the deduction is given accordingly.
The agreement provided also the mutual information exchange (including documents), between the competent authorities of both countries, to enable the implementation of the agreement or the relevant national legislation. The contracting parties will support eachother for the collection of tax obligations, relating this agreement. Moreover, this agreement provides for certain provisions under which states can exchange information and cooperate to prevent tax evasion by entities that operate in both countries.
Considering that the agreement is already in force, in accordance with article 31, it will be effective for the incomes derived or the capital owned, on or after January 1 2014 for Albania, and after April 1 for India.
Dorina Asllani Ndreka (dorina.asllani@eurofast.eu)
Eurofast Global, Tirana Office
Tel: +355 42 248 548
Website: www.eurofast.eu
