2-YEAR M.A. (INTERNATIONAL TAXATION)

SEMESTER-III TAX TREATIES-PART II

2.3.9 INCOME FROM EQUITY AND DEBT INVESTMENT

Module I Dividends (Art.10)- Definition (Art. 10, Paragraph 3)- Allocation Rule (Art. 10 and 1)- concept of ‘paid’ , ‘may be taxed’ and ‘beneficial owner’ - Taxing rights of source country (Art. 10, Paragraph 2) Reduced treaty withholding tax on outbound dividends-Beneficial owner of dividends,- Definition of ‘dividends’ (Art. 10, paragraph 3)- Characterization of dividends based on the domestic laws of the Source Country- Force of attraction on outbound dividends effectively connected to a PE (Art. 10, paragraph 4)- Prohibition of extra-territorial taxation of dividends (Art. 10, paragraph 5)-Interplay of Art. 10 and Art. 5, Special rule for undistributed dividends of a CFC

Module II Interest (Art.11)- Scope and accrual of interest - allocation rule for interest (Art. 11, paragraph 1)- Interest ‘paid’- Scope of Art. 11- Withholding tax clause (Art. 11, paragraph 2)- Definition of ‘interest’ (Art. 11, paragraph 3)- - Force of attraction on outbound interest effectively connected to a PE (Art. 11, paragraph 4)- Interest effectively connected to, and borne by, a PE (Art. 11, paragraph  5) - Arm’s length rule for interest (Art. 11, paragraph 6), Specific situations and hybrid instruments, Penalty charges –Sec.9(1)(v) under the Income-tax Act, 1961, Withholding tax under Sec. 194LC

2.3.10 ROYALTIES AND FEES FOR TECHNICAL SERVICES

Module I Royalties Scope of Art 12- Source Rule Allocation Rule (Art.12, paragraph 1)- Scope of Art 12- ‘Use of rights’ difference between copyright and copyrighted articles, Royalty and Payments for embedded software - Royalty and business profits - Royalty and software-related payments-Royalty and Payments for know-how- Definition of ‘know-how’, Know-how vs provision of services-Payments for mixed contracts, Payments for embedded software- Payments for digital products (images, sounds or text)- Force of attraction on outbound royalties effectively connected to a PE (Art.12, paragraph 3)-Arm’s length rule for royalties (Art.12, paragraph 4) Royalty income under Sec. 9(1)(vi)- Definition of Royalties under the Income-tax Act, 1961.

Module II Fee for technical services – Scope of Fees for Technical Services under the DTAA- Definition of FTS- FTS and business profits – FTS and DTAA- make available concept - Income from Fees for Technical Services under Sec. 9(1)(vii)- Definition of Fees for Technical Services under the Income-tax Act, 1961- Withholding tax on FTS and Royalty under Sec. 194J

2.3.11 TAXATION OF DIGITAL ECONOMY

Module I Challenges of Digital Economy- BEPS Action Plan 1 Characterisation of income, Nexus with the tax jurisdiction, Attribution of value to the data- Tax Avoidance in Digital Economy, The Task Force on Digital Economy (TFDE) -Virtual PE- BEPS Pillar 1

Module II Domestic Law Responses Significant Equalisation Presence, Equalisation Levy- Withholding Tax under Sec. 194-O of the Income-tax Act, 1961, Digital Service Tax in UK and Australia, USTR Sec. 301 Digital Tax Investigations

2.3.12 TAX AVOIDANCE

Module I General- Tax Evasion-Tax Avoidance-Tax Mitigation- Indian Jurisprudence and Comparative Jurisprudence on Tax Avoidance, General Anti-avoidance Rules, Principle Purpose Test- Chapter XA of the Income-tax Act, 1961

Module II Limitations of Existing Tax Treaties treaty override- treaty shopping – LOB Rule- Tax havens- Beneficial ownership Rule, Global Intangible Low-taxed Income (GILTI) regime of the USA Indo-Mauritius, Indo-Singapore, Indo-Cyprus DTAA

Module III Tackling Tax Avoidance with Withholding Taxes- Normative aspects of withholding, Issues and controversies on Withholding tax on foreign payments in India (Sec. 192, 195, 197, 194C, 194J)