A double tax treaty signed by India and Korea on May 18, 2015, entered into force on September 12, India’s Income Tax Department announced October 26.
In line with other treaties recently signed by India, the India-Korea tax treaty provides for source-based taxation of capital gains on stock sales that comprise more than 5 percent of share capital, the government said.
It also provides a mechanism to resolve transfer pricing disputes through a mutual agreement procedure (MAP). A related memorandum of understanding calls for the suspension of collection of taxes during the pendency of MAP proceedings.
The treaty reduces withholding tax from 15 to 10 percent on royalties, fees for technical services, and interest.
If also allows for the countries to enter into bilateral advance pricing agreements and contains a new limitation on benefits article and anti abuse provision.
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