With holding tax applicability

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Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2012 We are the importers of anti virus products, importing through email. the principals of the anti virus is USSR. But the agrement made us between india and UK, in this case what is the with holding tax on royality ?

Can you help in this regard

CA. Subhash Dangi

CA. Subhash Dangi (Expert)
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22 October 2012 Withholding tax in Russia:
The tax withholding rates for payments to nonresidents:
Royalties = 20%
Interest = 20%
Dividend = 15%

Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2012 IF the DTAA is Aplicible, what is the rate of withholding tax on royality

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CA. Subhash Dangi

CA. Subhash Dangi (Expert)
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22 October 2012 Russian Federation = 10%

Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2012 Any Difference is there between Russia & Russian Federation, One more thing in my query the Dealership agreement between india and UK, at the time of payment what i consider the DTAA Rule of USSR or UK

CA. Subhash Dangi

CA. Subhash Dangi (Expert)
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22 October 2012 As per DTAA Country list only Russin Federation is listed. U can assume that it is applicable to Russia or USSR.

Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2012 Please clarify the DTAA Rule of which country, to consider the payment against royality.

CA. Subhash Dangi

CA. Subhash Dangi (Expert)
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22 October 2012 As the DTAA is between India and UK in case of importing the antivirus products.
Withholding tax is applicable at the prescribed rate to whom you are making payments as per the DTAA rules.
It is immaterial whether the principal of antivirus USSR.

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Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2012 what is the With holding tax in uk against Payment of Roaylity

CA. Subhash Dangi

CA. Subhash Dangi (Expert)
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22 October 2012
Royalties and fees for technical services -

1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the law of that State; but if the beneficial owner of the royalties or fees for technical services is a resident of the other Contracting State, the tax so charged shall not exceed :

(a) in the case of royalties within paragraph 3(a) of this Articles, and fees for technical services within paragraphs 4(a) and (c) of this Article,—

(i) during the first five years for which this Convention has effect ;

(aa) 15 per cent of the gross amount of such royalties or fees for technical services when the payer of the royalties or fees for technical services is the Government of the first-mentioned Contracting State or a political sub-division of that State, and

(bb) 20 per cent of the gross amount of such royalties or fees for technical services in all other cases; and

(ii) during subsequent years, 15 per cent of the gross amount of such royalties or fees for technical services; and

(b) in the case of royalties within paragraph 3(b) of this Article and fees for technical services defined in paragraph 4(b) of this Article, 10 per cent of the gross amount of such royalties and fees for technical services.

3. For the purposes of this Article, the term “royalties” means :

(a) 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 cinematography films or work on films, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience; and

(b) payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial or scientific equipment, other than income derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic.

4. For the purposes of paragraph 2 of this Article, and subject to paragraph 5, of this Article, the term “fees for technical services” means payments of any kind of any person in consideration for the rendering of any technical or consultancy services (including the provision of services of a technical or other personnel) which :

(a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3(a) of this article is received ; or

(b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) of this Article is received ; or

(c) make available technical knowledge, experience, skill know-how or processes, or consist of the development and transfer of a technical plan or technical design.

swasti

swasti (Expert)
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22 October 2012 Subhash ji, your explanation is quite elaborative and understandable. Please guide that if a company of UAE not having PE in India but rendering supervision services by sending their technical experts to India, would there be withholding tax liability on the Indian company and at what rate?