No.402/92/2006-MC (03 of 2010)
Government of India / Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi dated the 15th January 2010
A revised Agreement and Protocol between the Republic of India and the Republic of Finland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (DTAA) was signed by Sh. S.S.N.Moorthy, Chairman, CBDT on behalf of Government of India and Ms Terhi Hakala, the Ambassador of Finland to India, on behalf of Government of Finland.
2. As per the revised Agreement, withholding tax rates have been reduced on dividends from 15 percent to 10 percent, and on royalties and fees for technical services from 15 or 10 percent to a uniform rate of 10 percent. Lowering of withholding tax will promote greater investments, flow of technology and technical services between the two countries.
3. The revised Agreement also expands the ambit of Article concerning Exchange of Information to provide effective exchange of information in line with current international standards. The Article inter-alia provides that a Contracting State shall not deny furnishing of the requested information solely on the ground that it does not have any domestic interest in that information or such information is held by a bank etc. An Article for Limitation of Benefits to the residents of the contracting countries has also been included to prevent misuse of the DTAA.
4. Other features of the revised Agreement are:-
a) Provisions regarding Service PE has been included in the Article concerning PE.
b) Paragraph 2 to Article 9 has been included to increase the scope for relieving double taxation through recourse to Mutual Agreement Procedure (MAP).
c) A new Article on assistance in collection of taxes has been added to ensure assistance in collection of taxes when such taxes are due under the domestic laws and regulation.
d) The time test for Independent Personal Service has been extended from 90 days or more in the relevant fiscal year to 183 days or more in any period of 12 months commencing or ending in the fiscal year concerned.
5. The revised DTAA will enter into force after completion of internal processes in both the countries.
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