Dtaa Agreement between India and Philippines

India and the Philippines have recently signed a Bilateral Taxation Agreement (DTAA) that aims to boost economic cooperation and investment between the two countries. The agreement, which was signed on March 12, 2021, replaces the existing DTAA that was signed in 1994.

The new agreement aims to promote transparency and certainty in taxation matters, and reduce tax evasion and avoidance. It also includes provisions for the exchange of information between the two countries to prevent double taxation and to resolve disputes.

One of the major highlights of the new agreement is the reduction of withholding tax rates on dividends, interest, and royalties. The withholding tax on dividends has been reduced from 15% to 10%, and the withholding tax on interest and royalties has been reduced from 15% to 10% and 20% to 15%, respectively. This reduction in withholding tax rates is expected to encourage cross-border investments and enhance business opportunities between India and the Philippines.

The new DTAA also provides for the elimination of taxation on capital gains from the sale of shares. This means that capital gains tax will not be levied on the sale of shares of companies in India or the Philippines, provided the seller does not have a significant presence in the other country.

India and the Philippines are both emerging markets with vast potential for growth and development. The new DTAA is expected to attract more investment from Indian companies in the Philippines and vice versa. The agreement also provides for the exchange of technical expertise in tax matters and for the resolution of tax disputes, which will further enhance business confidence between the two countries.

In conclusion, the signing of the new DTAA between India and the Philippines is a significant step towards strengthening economic ties and promoting bilateral trade, investment, and cooperation between the two countries. The reduction of withholding tax rates and the elimination of taxation on capital gains are expected to encourage more cross-border investments and create new business opportunities for companies in both countries. The agreement also underscores the commitment of India and the Philippines towards promoting transparency and fairness in taxation matters, which will benefit businesses and taxpayers alike.

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