27. Agreement for Avoidance of
Double Taxation and Prevention of Fiscal Evasion with
Whereas the annexed Agreement between the
Government of the Republic of India and the Government of Malaysia for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to Taxes on income has come into force on the 14th August, 2003, on the
notification by both the Contracting States to each other, under Article 28 of
the said Agreement, of the completion of the procedures required by their
respective laws for bringing into force of the said Agreement.
Now, therefore, in exercise of the powers
conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central
Government hereby directs that all the provisions of the said Agreement shall
be given effect to in the Union of
Notification: No. GSR 667(E), dated 12-10-2004.
Annexure
Agreement between the Government of Malaysia
and the Government of the republic of India for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
The Government
of Malaysia and the Government of the Republic of India Desiring to conclude an
Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to taxes on income and with a view to promoting economic
co-operation between the two countries, have agreed as follows :
Article 1 : PERSONAL
SCOPE - This Agreement shall apply to persons who are
residents of one or both of the Contracting States.
Article 2 : TAXES
COVERED - 1. This Agreement shall apply to taxes on income imposed by a
2. The taxes which are the subject of this
Agreement are :
(a) in
(i) the income-tax; and
(ii) the petroleum income-tax;
(hereinafter referred to as
“Malaysian Tax”);
(b) in
the income-tax including
any surcharge thereon;
(hereinafter referred to as
“Indian tax”).
3. This Agreement shall also apply to any
identical or substantially similar taxes on income which are imposed after the
date of signature of this Agreement in addition to, or in place of, the
existing taxes. The competent authorities of the Contracting States shall
notify each other of important changes which have been made in their respective
taxation laws.
Article 3 : GENERAL
DEFINITIONS - 1. In this Agreement, unless the context otherwise requires :
(a) the term “Malaysia” means the territories of the Federation of
Malaysia, the territorial waters of Malaysia and the sea-bed and subsoil of the
territorial waters, and includes any area extending beyond the limits of the
territorial waters of Malaysia, and the sea-bed and subsoil of any such area,
which has been or may hereafter be designated under the laws of Malaysia and in
accordance with international law as an area over which Malaysia has sovereign
rights for the purposes of exploring and exploiting the natural resources,
whether living or non-living;
(b) the term “India” means the territory of India and includes the
territorial sea and airspace above it, as well as any other maritime zone in
which India has sovereign rights, other rights and jurisdictions, according to
the Indian law and in accordance with international law and the U.N. Convention
on the Law of the Sea;
(c) the terms “a
(d) the term “company” means any body corporate or any entity which is
treated as a company or body corporate under the taxation laws in force in the
respective Contracting States;
(e) the term “competent authority” means—
(i) in the case of
(ii) in the case of
(f) the terms “enterprise of a
(g) the term “international traffic” means any transport by a ship or
aircraft operated by an enterprise of a
(h) the term “national” means—
(i) any individual possessing the nationality or
citizenship of a
(ii) any legal person, partnership, association and
any other entity deriving its status as such from the laws in force in a
Contracting State;
(i) the term “person” includes an individual, a
company, and any other body of persons;
(j) the term “tax” means Malaysian tax or Indian tax, as the context
requires, but shall not include any amount which is payable in respect of a
default or omission in relation to the taxes to which this Agreement applies or
which represents a penalty or fine imposed relating to those taxes.
2. In the application of this Agreement by a
Article 4 : RESIDENT -
1. For the purposes of this Agreement, the term “resident of a
Contracting State” means any person who, under the tax laws of that State, is liable
to tax therein by reason of his domicile, residence, place of management or any
other criterion of a similar nature.
2. Where by reason of the provisions of
paragraph 1, an individual is a resident of both Contracting States, then his
status shall be determined in accordance with the following rules :
(a) he shall be deemed to be a resident of the State in which he has a
permanent home available to him. If he has a permanent home available to him in
both States, he shall be deemed to be a resident of the State with which his
personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests cannot
be determined, or if he has not a permanent home available to him in either
State, he shall be deemed to be a resident of the State in which he has an
habitual abode;
(c) if he has an habitual abode in both States or in neither of them,
he shall be deemed to be a resident of the State of which he is a national;
(d) if he is a national of both States or of neither of them, the
competent authorities of the Contracting States shall settle the question by
mutual agreement.
3. Where, by reason of the provisions of
paragraph 1, a person other than an individual is a resident of both
Contracting States, then it shall be deemed to be a resident of the State in
which its place of effective management is situated. If the State in which its
place of effective management is situated cannot be determined, then the
competent authorities of the Contracting States shall settle the question by
mutual agreement.
Article 5 : PERMANENT
ESTABLISHMENT - 1. For the
purposes of this Agreement, the term “permanent establishment” means a fixed
place of business through which the business of an enterprise is wholly or
partly carried on.
2. The term “permanent establishment” shall
include especially :
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources including timber or other forest produce;
(g) a farm or plantation;
(h) a sales outlet;
(i) a warehouse;
(j) a building site or construction, installation or assembly project
which exists for more than nine months;
3. Notwithstanding the preceding provisions of
this Article, the term “permanent establishment” shall be deemed not to include
:
(a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose
of purchasing goods or merchandise, or of collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose
of carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character;
(f) the maintenance of a fixed place of business solely for any
combination of activities mentioned in sub-paragraphs (a) to (e),
provided that the overall activity of the fixed place of business resulting
from this combination is of a preparatory or auxiliary character.
4. An enterprise of a Contracting State shall be
deemed to have a permanent establishment in the other Contracting State if it
carries on supervisory activities in that other State for more than nine months
in connection with a construction, installation or assembly project which is
being undertaken in that other State.
5. Notwithstanding the provisions of paragraphs 1
and 2, a person other than a broker, general commission agent or any other
agent of an independent status to whom paragraph 7 applies - acting in a
Contracting State on behalf of an enterprise of the other Contracting State
shall be deemed to be a permanent establishment in the first-mentioned State,
if such a person :
(a) has, and habitually exercises in the first-mentioned State, an
authority to conclude contracts in the name of the enterprise, unless his
activities are limited to the purchase of goods or merchandise for the
enterprise; or
(b) has no such authority, but habitually maintains in the
first-mentioned State a stock of goods or merchandise belonging to the
enterprise from which he regularly fills orders on behalf of the enterprise; or
(c) manufactures or processes in the first-mentioned State for the
enterprise goods or merchandise belonging to the enterprise.
6. Notwithstanding the preceding provisions of
this Article, an insurance enterprise of a Contracting State shall, except in
regard to re-insurance, be deemed to have a permanent establishment in the
other Contracting State if it collects premiums in the territory of that other
State or insures risks situated therein through a person other than an agent of
an independent status to whom paragraph 7 applies.
7. An enterprise of a
However, when
the activities of such an agent are devoted wholly or almost wholly on behalf
of that enterprise, such a person shall not be considered an agent of an
independent status if the transactions between the agent and the enterprise
were not made under arm’s length conditions.
8. The fact that a company which is a resident
of a Contracting State controls or is controlled by a company which is a
resident of the other Contracting State, or which carries on business in that
other State (whether through a permanent establishment or otherwise), shall not
of itself constitute either company a permanent establishment of the other.
Article 6 : INCOME FROM
IMMOVABLE PROPERTY - 1. Income derived by a resident of a
2. The term “immovable property” shall be
defined in accordance with the laws of the
3. The provisions of paragraph 1 shall also
apply to income derived from the direct use, letting, or use in any other form
of immovable property.
4. The provisions of paragraphs 1 and 3 shall
also apply to the income from immovable property of an enterprise and to income
from immovable property used for the performance of independent personal services.
Article 7 : BUSINESS
PROFITS - 1. The profits of an enterprise of a
2. Subject to the provisions of paragraph 3,
where an enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated therein, there
shall in each Contracting State be attributed to that permanent establishment
the profits which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment.
3. In determining the profits of a permanent
establishment, there shall be allowed as deductions expenses which are incurred
for the purposes of the permanent establishment including executive and general
administrative expenses so incurred, whether, in the State in which the
permanent establishment is situated or elsewhere in accordance with the
provisions of and subject to the limitations of the tax laws of that State.
4. No profits shall be attributed to a permanent
establishment by reason of the mere purchase by that permanent establishment of
goods or merchandise for the enterprise.
5. For the purposes of the preceding paragraphs,
the profits to be attributed to the permanent establishment shall be determined
by the same method year by year unless there is good and sufficient reason to
the contrary.
6. Where profits include items of income which
are dealt with separately in other Articles of this Agreement, then the
provisions of those Articles shall not be affected by the provisions of this
Article.
Article 8 : SHIPPING
AND AIR TRANSPORT - 1. Profits derived by an enterprise
of a
2. For the purposes of this Article, profits
from the operation of ships or aircraft in international traffic shall mean
profits derived by an enterprise described in paragraph 1 from the
transportation by sea or air respectively of passengers, mail, livestock or
goods carried on by the owners or lessees or charterers
of ships or aircraft including :
(a) the sale of tickets for such transportation on behalf of other
enterprises; and
(b) the rental of ships or aircraft incidental to any activity directly
connected with such transportation.
3. Profits of an enterprise of a Contracting
State described in paragraph 1 from the use, maintenance, or rental of
containers (including trailers, barges and related equipment for the transport
of containers) used in connection with the operation of ships or aircraft in
international traffic shall be taxable only in that State.
4. The provisions of paragraphs 1 and 3 shall
also apply to profits from participation in a pool, a joint business, or an
international operating agency.
5. For the purposes of this Article, interest on
funds connected with the operation of ships or aircraft in international
traffic shall be regarded as profits derived from the operation of ships or
aircraft, and the provisions of Article 11 shall not apply in relation to such
interest.
6. Gains derived by an enterprise of a
Contracting State described in paragraph 1 from the alienation of ships,
aircraft or containers owned and operated by the enterprise, the income from
which is taxable only in that State, shall be taxed only in that State.
Article 9 : ASSOCIATED
ENTERPRISES - Where :
(a) an enterprise of a
(b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a
and in either
case conditions are made or imposed between the two enterprises in their
commercial or financial relations which differ from those which would be made
between independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
Article 10 : DIVIDENDS -
1. Dividends paid by a company which is a resident of a
2. However, such dividends may also be taxed in
the
This paragraph
shall not affect the taxation of the company in respect of the profits out of
which the dividends are paid.
3. The term “dividends” as used in this Article
means income from shares or other rights, not being debt-claims, participating
in profits, as well as income from other corporate rights which is subjected to
the same taxation treatment as income from shares by the laws of the State of
which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State, of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such
permanent establishment or fixed base. In such a case, the provisions of
Article 7 or Article 14, as the case may be, shall apply.
5. Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company
except insofar as such dividends are paid to a resident of that other State or
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment in that other State, or
fixed base situated in that other State, nor subject the company’s
undistributed profits to a tax on the company’s undistributed profits, even if
the dividends paid or the undistributed profits consist wholly or partly of profits
or income arising in such other State.
Article 11 : INTEREST
- 1. Interest arising
in a
2. However, such interest may also be taxed in
the
3. Notwithstanding the provisions of paragraph
2, interest arising in a
(a) in the case of
(i) the Government of
(ii) the Government of the State;
(iii) the Bank Negara
(iv) the local authorities;
(v) the statutory bodies; and
(vi) the Export-Import Bank of
(b) in the case of
(i) the Government;
(ii) the political sub-divisions;
(iii) the statutory bodies;
(iv) the local authorities;
(v) the Export-Import Bank of
(vi) the Reserve Bank of
(vii) the Industrial Finance Corporation of
(viii) the Industrial Development Bank of
(ix) the National Housing Bank;
(x) the Small Industries Development Bank of
(xi) the Industrial Credit and Investment Corporation of India (ICICI);
(c) any other institutions as may be agreed from time to time between
the competent authorities of the Contracting States.
4. The term “interest” as used in this Article
means income from debt-claims of every kind, whether or not secured by
mortgage, and whether or not carrying a right to participate in the debtor’s
profits, and in particular, income from Government securities and income from
bonds or debentures, including premiums and prizes attaching to such
securities, bonds or debentures. Penalty charges for late payment shall not be
regarded as interest for the purposes of this Article.
5. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the interest, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the interest arises, through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the debt-claim in respect of which the interest is paid
is effectively connected with such permanent establishment or fixed base. In
such a case, the provisions of Article 7 or Article 14, as the case may be,
shall apply.
6. Interest shall be deemed to arise in a
7. Where, by reason of a special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of the interest paid, having regard to the debt-claim
for which it is paid, exceeds the amount which would have been agreed upon by
the payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In
such a case, the excess part of the payments shall remain taxable according to
the laws of each
Article 12 : ROYALTIES -
1. Royalties arising in a
2. However, such royalties may also be taxed in
the
3. The term “royalties” as used in this Article
means payments of any kind received as a consideration for the use of, or the
right to use, any copyright of a literary, artistic or scientific work
including cinematograph films or recordings on any means of reproduction for
use in connection with television or radio broadcasting, any patent, trade
mark, design or model, plan, know-how, computer software programme,
secret formula or process, or any industrial, commercial or scientific
equipment or for information concerning industrial, commercial or scientific
experience.
4. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the royalties arise through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the royalties
are paid is effectively connected with such permanent establishment or fixed
base. In such a case the provisions of Article 7 or Article 14, as the case may
be, shall apply.
5. Royalties shall be deemed to arise in a
6. Where, by reason of a special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of the royalties paid, having regard to the use, right
or information for which they are paid, exceeds the amount which would have
been agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such a case, the excess part of the payments shall
remain taxable according to the laws of each
Article 13 : FEES
FOR TECHNICAL SERVICES - 1. Fees for technical services
arising in a
2. However, fees for technical services may also
be taxed in the
3. The term “fees for technical services” means
payment of any kind in consideration for the rendering of any managerial,
technical or consultancy services including the provision of services by
technical or other personnel but does not include payments for services
mentioned in Article 14 and Article 15 of this Agreement.
4. The provisions of paragraph 1 of this Article
shall not apply if the beneficial owner of the fees for technical services,
being a resident of a Contracting State, carries on business in the other
Contracting State in which the fees for technical services arise through a
permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the fees
for technical services are effectively connected with such permanent
establishment or fixed base. In such case, the provisions of Article 7 or
Article 14, as the case may be, shall apply.
5. Fees for technical services shall be deemed
to arise in a
6. Where, by reason of a special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of the fees for technical services paid exceeds, for
whatever reason, the amount which would have been agreed upon by the payer and
the beneficial owner in the absence of such relationship, the provisions of
this Article shall only apply to the last-mentioned amount. In such case, the
excess part of the payments shall remain taxable according to the law of each
Article 14 : INDEPENDENT
PERSONAL SERVICES - 1. Income derived by a resident of a
Contracting State in respect of professional services or other independent
activities of a similar character shall be taxable only in that State. However,
in the following circumstances such income may also be taxed in the other
(a) if he has a fixed base regularly available to him in the other
Contracting State for the purpose of performing his activities; in that case,
only so much of the income as is attributable to that fixed base may be taxed
in that other Contracting State; or
(b) if his stay in the other State is for a period or periods amounting
to or exceeding in the aggregate 183 days in any twelve month period commencing
or ending in the fiscal year concerned; in that case, only so much of the
income as is derived from his activities performed in that other State may be
taxed in that other State; or
(c) if the remuneration for his services in the other Contracting State
is either derived from a resident of that State or borne by a permanent
establishment or fixed base which a person not resident in that State has in
that State and which, in either case exceeds in value an amount equivalent to
two thousand U.S. dollars in the fiscal year concerned.
2. The term “professional services” includes
especially independent scientific, literary, artistic, educational or teaching
activities as well as the independent activities of physicians, surgeons,
lawyers, engineers, architects, dentists and accountants.
Article 15 : DEPENDENT
PERSONAL SERVICES - 1. Subject to the provisions of
Articles 16, 17, 19 and 20, salaries, wages and other similar remuneration
derived by a resident of a
2. Notwithstanding the provisions of paragraph
1, remuneration derived by a resident of a
(a) the recipient is present in the other Contracting State for a
period or periods not exceeding in the aggregate 183 days in any twelve month
period commencing or ending in the fiscal year concerned; and
(b) the remuneration is paid by, or on behalf of, an employer who is
not a resident of the other
(c) the remuneration is not borne by a resident or permanent establishment
or fixed base which the employer has in the other State or by a person carrying
on independent personal services in the other
3. Notwithstanding the preceding provisions of
this Article, remuneration in respect of an employment exercised aboard a ship
or aircraft operated in international traffic by an enterprise of a
Article 16 : DIRECTORS’
FEES - Director’s fees and similar payments derived
by a resident of a Contracting State in his capacity as a member of the board
of directors of a company which is a resident of the other Contracting State,
may be taxed in that other State.
Article 17 : ARTISTES
AND SPORTSMEN - 1. Notwithstanding the provisions of
Articles 14 and 15, income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or television artiste, or
a musician, or as a sportsman, from his personal activities as such exercised
in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal
activities exercised by an entertainer or a sportsman in his capacity as such
accrues not to the entertainer or sportsman himself but to another person, that
income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed
in the contracting State in which the activities of the entertainer or
sportsman are exercised.
3. The provisions of paragraphs 1 and 2 shall
not apply to remuneration or profits derived from activities exercised in a Contracting
State if the visit to that State is directly or indirectly supported wholly or
substantially from the public funds of the other Contracting State, a political
sub-division, a local authority or a statutory body thereof.
Article 18 : NON-GOVERNMENT
PENSIONS AND ANNUITIES - 1. Subject to the provisions of
paragraph 2 of Article 19, any pension and other similar remuneration for past
employment or any annuity arising in a Contracting State and paid to a resident
of the other Contracting State shall be taxable only in that other State.
2. The term “annuity” includes a stated sum
payable periodically at stated times during life or during a specified or
ascertainable period of time, under an obligation to make the payments in
return for adequate and full consideration in money or money’s worth.
Article 19 : GOVERNMENT
SERVICE - 1. (a) Remuneration, other
than a pension, paid by a Contracting State or a political sub-division or a
local authority or a statutory body thereof to an individual in respect of services
rendered to that State or political sub-division or a local authority or
statutory body thereof shall be taxable only in that State.
(b)
However, such remuneration shall be taxable only in the other Contracting State
if the services are rendered in that other State and the recipient is a
resident of that other State who :
(i) is a national of that other State; or
(ii) did not become a resident of that other State
solely for the purpose of performing the services.
2. Any pension paid by, or out of funds created
by, a Contracting State, a political sub-division or a local authority or a
statutory body thereof to an individual in respect of services rendered to that
State, political sub-division, local authority or statutory body thereof shall
be taxable only in that State.
3. The provisions of Articles 15, 16 and 18
shall apply to remuneration and pension in respect of services rendered in
connection with any trade or business carried on by a
Article 20 : STUDENTS
AND TRAINEES - 1. An individual who is or was a
resident of a Contracting State immediately before making a visit to the other
Contracting State and is temporarily present in the other State solely :
(a) as a student at a recognised university,
college, school or other similar recognised
educational institution in that other State;
(b) as a business or technical apprentice; or
(c) as a recipient of a grant, allowance or award for the primary purpose
of study, research or training from the Government of either State or from a
scientific, educational, religious or charitable organisation
or under a technical assistance programme entered
into by the Government of either State,
shall be
exempt from tax in that other State on—
(i) all remittances from abroad for the purposes
of his maintenance, education, study, research or training;
(ii) the amount of such grant, allowance or award;
and
(iii) any remuneration not exceeding an amount
equivalent to two thousand U.S. Dollars per annum in respect of services in
that other State provided the services are performed in connection with his
study, research or training or are necessary for the purposes of his
maintenance.
2. The benefits in respect of this Article shall
extend only for such period of time as may be reasonable or customarily
required to complete the education or training undertaken. However, in no event
shall any individual have the benefits or paragraph (iii) of this
Article for more than seven consecutive years from the date he first arrived
for such purpose in that other
Article 21 : TEACHERS
AND RESEARCH SCHOLARS - 1. An individual who is or was a
resident of a Contracting State immediately before making a visit to the other
Contracting State, and who, at the invitation of any university, college or
other similar educational institution, visits that other State for a period not
exceeding two years solely for the purpose of teaching or research or both at
such educational institution shall be exempt from tax in that other State on
any remuneration for such teaching or research which is subject to tax in the
first-mentioned Contracting State.
2. This Article shall not apply to income from
research if such research is undertaken primarily for the private benefit of a
specific person or persons.
3. For the purposes of this Article and Article
20, an individual shall be deemed to be a resident of a
Article 22 : OTHER
INCOME - Items of income of a resident of a
Article 23 : ELIMINATION
OF DOUBLE TAXATION - 1. The laws in force in either of the
Contracting States will continue to govern the taxation of income in the
respective Contracting States except where provisions to the contrary are made
in this Agreement.
2. In the case of
Subject to the
laws of Malaysia regarding the allowance as a credit against Malaysian tax of
tax payable in any country other than Malaysia, tax paid in India under the
taxation laws of India by a resident of Malaysia in respect of income derived
from India shall be allowed as a credit against tax payable in Malaysia in
respect of that income. Where such income is a dividend paid by a company which
is a resident of India to a company which is a resident of Malaysia and which
owns not less than 10 per cent of the voting shares of the company paying the
dividend, the credit shall take into account tax paid in India by that company
in respect of its income out of which the dividend is paid. The credit shall
not, however, exceed that part of the Malaysian tax, as computed before the
credit is given, which is attributable to such item of income.
3. For the purposes of paragraph 2, the term
“tax paid in India” shall be deemed to include the tax which would, under the
laws of India and in accordance with this Agreement, have been payable on any
income derived from sources in India had the income not been taxed at a reduced
rate or exempted from Indian tax in accordance with the provisions of this
Agreement and the special incentives under the Indian laws for the promotion of
economic development of India which were in force at the date of signature of
this Agreement or any other provisions which may subsequently be introduced in
India in modification of, or in addition to, those laws so far as they are
agreed by the competent authorities of the Contracting States to be of a
substantially similar character.
4. In the case of
Where a
resident of
5. For the purposes of paragraph 4, the term
“tax paid in Malaysia” shall be deemed to include the tax which would, under
the laws of Malaysia and in accordance with this Agreement, have been payable
on any income derived from sources in Malaysia had the income not been taxed at
a reduced rate or exempted from Malaysian tax in accordance with the provisions
of this Agreement and the special incentives under the Malaysian laws for the
promotion of economic development of Malaysia which were in force at the date
of signature of this Agreement or any other provisions which may subsequently
be introduced in Malaysia in modification of, or in addition to, those laws so
far as they are agreed by the competent authorities of the Contracting States
to be of a substantially similar character.
Article 24 : NON-DISCRIMINATION
- 1. The nationals of
a
2. The taxation on a permanent establishment
which an enterprise of a
3. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and
connected requirements to which other similar enterprises of the
first-mentioned State are or may be subjected.
4. Nothing in this Article shall be construed so
as to prevent either
5. In this Article, the term “taxation” means
taxes to which this Agreement applies.
Article 25 : MUTUAL
AGREEMENT PROCEDURE - 1. Where a resident of a Contracting
State considers that the actions of one or both of the Contracting States
result or will result for him in taxation not in accordance with this
Agreement, he may, notwithstanding the remedies provided by the taxation laws
of those States, present his case to the competent authority of the State of
which he is a resident or, if his case comes under paragraph 1 of article 24,
to that of the State of which he is a national. The case must be presented
within three years from the first notification of the action resulting in
taxation not in accordance with the provisions of this Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified
and if it is not itself able to arrive at an appropriate solution, to resolve
the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation which is not in
accordance with the Agreement notwithstanding any time limits in the domestic
laws of the Contracting States.
3. The competent authorities of the Contracting
States shall endeavour to resolve by mutual agreement
any difficulties or doubts arising as to the interpretation or application of
this Agreement. They may also consult together for the elimination of double
taxation in cases not provided for in this Agreement.
4. The competent authorities of the Contracting
States may communicate with each other directly for the purposes of reaching an
agreement in the preceding paragraphs.
Article 26 : EXCHANGE
OF INFORMATION - 1. The competent authorities of the
Contracting States shall exchange such information including documents as is
necessary for carrying out the provisions of this Agreement or of the domestic
laws of the Contracting States concerning taxes covered by this Agreement, or
for the prevention or detection of evasion or avoidance of taxes covered by
this Agreement. Any information so exchanged shall be treated as secret and
shall be disclosed only to persons or authorities (including a court, an
administrative body or reviewing authority) involved in the assessment,
collection, enforcement or prosecution in respect of, or the determination of
appeals in relation to, the taxes which are the subject of this Agreement. Such
persons or authorities shall use the information only for such purposes, but
may disclose the information in public court proceedings or in judicial
decisions.
2. In no case shall the provisions of paragraph
1 be construed so as to impose on a
(a) to carry out administrative measures at variance with the laws or
the administrative practice of that or of the other
(b) to supply particulars which are not obtainable under the laws or in
the normal course of the administration of that or of the other
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or information,
the disclosure of which would be contrary to public policy.
Article 27 : DIPLOMATIC
AND CONSULAR OFFICERS - Nothing in this Agreement shall affect the
fiscal privileges of diplomatic or consular officers under the general rules of
international law or under the provisions of special agreements.
Article 28 : ENTRY
INTO FORCE - 1. The Contracting States shall
notify each other in writing, through diplomatic channels, of the completion of
the procedures required by the respective laws for the entry into force of this
Agreement.
2. This Agreement shall enter into force thirty
days after the receipt of the latter of the notifications referred to in
paragraph 1 of this Article.
3. The provisions of this Agreement shall have
effect :
(a) in
(i) in respect of Malaysian tax, other than
petroleum income-tax, to tax chargeable for any year of assessment beginning on
or after the first day of January in the calendar year following the year in
which this Agreement enters into force;
(ii) in respect of petroleum income-tax, to tax
chargeable for any year of assessment beginning on or after the first day of
January of the second calendar year following the year in which this Agreement
enters into force; and
(b) in
in respect of
income in any fiscal year beginning on or after the first day of April next
following the calendar year in which the Agreement enters into force.
4. The Agreement between the Government of
Malaysia and the Government of India for the Avoidance of Double Taxation and
Prevention of Fiscal Evasion with respect to Taxes on Income signed at New
Delhi, India on the 25th day of October, 1976 shall cease to have effect when
the provisions of this Agreement become effective in accordance with the
provisions of paragraph 3.
Article 29 : TERMINATION -
This Agreement shall remain in force indefinitely but either Contracting States
may, on or before the thirtieth day of June in any calendar year beginning
after the expiration of a period of five years from the date of its entry into
force, give the other Contracting State through diplomatic channels, written
notice of termination and, in such event, this Agreement shall ceases to have
effect :
(a) in
(i) in respect of Malaysian tax, other than
petroleum income-tax, to tax chargeable for any year of assessment beginning on
or after the first day of January in the calendar year following the year in
which the notice is given;
(ii) in respect of petroleum income-tax, to tax
chargeable for any year of assessment beginning on or after the first day of
January of the second calendar year following the year in which the notice is
given; and
(b) in
in respect of
income arising in any fiscal year on or after the 1st day of April next
following the date on which the notice is given.
In witness
whereof the undersigned, duly authorised thereto, by
their respective Governments, have signed this Agreement.
Done in
duplicate at Putrajaya this 14th day of May, 2001,
each in the Malay, Hindi and English language, all texts being equally
authentic. In the event of there being a dispute in the interpretation and the
application of this Agreement, the English text shall prevail.
PROTOCOL
At the time of
signing the Agreement between the Government of Malaysia and the Government of
the
It is
understood that :
1. For the purposes of the Agreement, the term
“fiscal year” wherever it appears means :
(i) in the case of
(ii) in the case of
2. With reference to paragraph 1(j) of
article 3, the tax shall not include any amount which is payable by way of a
penalty or fine for any default or omission in relation to taxes to which this
Agreement applies or which represents any other penalty or fine imposed
relating to those taxes.
3. With reference to paragraph 7 of article 5,
the term “arm’s length conditions” means the conditions which would have been
made or imposed between two enterprises in their commercial or financial
relations which would not have differed from those which would have been made
or imposed between independent enterprises.
4. With reference to paragraph 1 of article 6,
this paragraph should not be construed as preventing the country of residence
to also tax the income under this article.
5. With reference to sub-paragraphs 3(a)(i) and (ii) of article 28 and sub-paragraphs
(a)(i) and (ii) of article 29,
the term “year of assessment” has the meaning assigned to under section 2 of
the Income-tax Act, 1967.
Done in
duplicate at Putrajaya this 14th day of May, 2001,
each in the Malay, Hindi and English language, all texts being equally
authentic. In the event of there being a dispute in the interpretation and the
application of this Agreement, the English text shall prevail.
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