India and the United Kingdom have agreed to make changes to their agreement regarding double taxation. The adjustments should help to improve the ways in which tax authorities from the two nations work together and should also assist businesses and individuals doing business in both countries.
Business relationships or investments that involve more than one nation must sometimes contend with conflicting tax rules that can produce an effect commonly referred to as ‘double taxation’. The original agreement that attempted to regulate double taxation was signed in 1993. The agreement will help residents of both India and the UK to enjoy a higher level of stability and predictability in their tax obligations.
The agreement is also expected to increase financial cooperation between the UK and India, particularly with regard to the transfer of investment funds, technological developments, and services. The Exchequer Secretary to the Treasury, David Gauke, and the High Commissioner of India, Jaimini Bhagwati, signed the protocol containing the new double taxation rules.
Among the key changes is an adjustment to withholding taxes for earnings that could be classified as dividends. Such taxes will now be at the 10% or 15% level and will apply equally to both nations. Measures for the collection of taxes have also been altered so that conservancy can be used in both India and the UK when necessary, while an anti-abuse provision seeks to make sure that the new rules are used responsibly.
 

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