India, Singapore amend tax treaty

India and Singapore have amended a decade-old double tax avoidance agreement (DTAA) that will allow the tax department to impose capital gains (tax) on investments routed through the island nation and plug a possible misuse of benefits.
Earlier this year, the government managed to get Mauritius and Cyprus to amend tax treaties that allowed it to impose capital gains tax and check alleged round tripping of funds into the country some of which was said to be black money .
In recent years, Singapore had emerged as a key source for foreign investors from across the globe to route funds into the country and in some cases it was the top originator of investments. Between April 2000 and September 2016, Singapore accounted for 16% of inflows with Mauritius topping the list with 33% of flows.
The latest move by the government seeks to bring parity although there are agreements with countries such as the Netherlands, France and South Korea where some additional benefits are available.Tax experts, however, said with the general anti-avoidance treaty in place, misusing these treaties would be tough.
Under the amended treaty with Singapore, capital gains tax will be imposed at 50% for two years starting April 2017.
Switzerland will begin sharing with India from 2019 information on all investment or accounts maintained in its banks post-2018. 

No comments: