According to a press release by the Ministry of Finance, India and China have signed a Protocol that amends the Double Taxation Avoidance Agreement (DTAA) between the two countries on 26th November 2018.
The express objective this DTAA is avoidance of double taxation and the prevention of fiscal evasion.
The provisions regarding the exchange of information under the DTAA stand updated in accordance with the latest international standards as a result of the Protocol.
Further, specific changes as per the Action reports of Base Erosion & Profit Shifting (BEPS) Project incorporated through the Protocol including the implementation of treaty-related minimum standards as agreed upon by both the countries.
Base Erosion & Profit Shifting (BEPS) are arrangements or strategies crafted in such a way that profits are separated from profit creating activities and shifted to countries with no tax or lesser tax burden, leading to double non-taxation.
The Organisation for Economic Co-operation and Development (OECD) has come up with the BEPS Action plans consisting of 15 actions aimed at tackling the BEPS problem.
Minimum Standards would be the actions that have been agreed upon and implemented by both the countries per BEPS Action plans.
Section 90 of the Income-tax Act, 1961 empowers India to enter into DTAAs with other countries to avoid double taxation, exchange information relevant for prevention of tax evasion/avoidance and recover income tax due.
