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INTERNATIONAL TAXATION
Presented By:
Aakanksha Gupta
Eesha Gupta
CONTENTS
• Meaning & Scope of International Taxation
• Types of International Taxation
• Taxability of Transaction
• Foreign Remittances
• Double Taxation & Relief Measures
• Tax Avoidance Methods
• Tax Treaty
• Budget 2015 Changes
MEANING OF INTERNATIONAL
TAXATION
The study or determination of tax on a person or
business subject to the tax laws of different
countries or the international aspects of an
individual country's tax laws.
SCOPE OF INTERNATIONAL
TAXATION
• Taxation of Residents on foreign income
• Taxation of Non Residents
• Cross border taxation of MNCs
TYPES OF INTERNATIONAL
TAXATION
• Residence based taxation :Residents of the
country are taxed on their worldwide (local and
foreign) income.
• Source Based Taxation :Only local income from
a source inside the country is taxed. Usually
nonresidents are taxed only on their local income
TAXABILITY OF TRANSACTION
• Scope of Total income is defined in Section 5 of
Income Tax Act, 1961
• Two step process:
• Identify whether it is Indian Income or Foreign
Income
• Determine taxability of both the incomes by
identifying the control of business
IDENTIFICATION OF INDIAN
INCOME AND FOREIGN INCOME
IDENTIFICATION OF TAXABILITY
FOREIGN REMITTANCES
• Section 195 of Income Tax Act, 1961
• TDS on Non Resident Payments
• Withholding Taxes
• Royalty and Fees for Technical Services
DOUBLE TAXATION
Double taxation occurs when tax is paid more than once
on the same taxable income or asset.
Types of double taxation:
• Juridical
when the same person is taxed twice on the same income
by more than one state
• Economic
when more than one person is taxed on the same item
RELIEF FROM DOUBLE
TAXATION
• Exemption
• Deduction
• Credit
Bilateral relief Unilateral relief
TAX AVOIDANCE METHODS
• Profit shifting via transfer pricing
 Arm’s length pricing
 Limitation On Benefits: LOB
• Thin capitalization
TAX TREATY
A tax treaty is an agreement between two countries
that outlines a series of articles which clarifies the tax
rules between the countries on specific subjects.
Types:
• OECD model tax treaty
• UN model tax treaty
DIFFERENCE BETWEEN THE
MODELS
OECD MODEL TAX TREATY
• Residence based taxation
• Capital export neutrality
• Signed between countries
with comparable tax
systems
• Credit Method
UN MODEL TAX TREATY
• Source based taxation
• Capital import neutrality
• Signed between countries
with unequal economic
status
• Exemption method
BUDGET 2015: CHANGES IN
INTERNATIONAL TAXATION
• GAAR is deferred by two years and will apply with
effect from 1st April 2018, i.e. AY 2018-19 and FY
2017-18
• Residence status of company is re-defined
• Place of Effective Management(POEM) test for
determination of residence
• Reduced Tax on Royalty and Fees for Technical Services
(FTS) paid to Non Residents from 25% to 10%
• CBDT is now empowered to frame rules to notify the
manner of granting foreign tax credit
• Reporting by Persons paying any sums to Non Residents
• Measures to curb Black Money stashed abroad
REFERENCES
• http://www.incometaxindia.gov.in/pages/internation
al-taxation.aspx
• http://indialiaison.com/residential_status.htm
• http://www.expatarrivals.com/india/taxes-in-india
• http://taxguru.in/income-tax/faq-tds-residents-
us195-income-tax-act.html
THANKS

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Assignment international taxation

  • 2. CONTENTS • Meaning & Scope of International Taxation • Types of International Taxation • Taxability of Transaction • Foreign Remittances • Double Taxation & Relief Measures • Tax Avoidance Methods • Tax Treaty • Budget 2015 Changes
  • 3. MEANING OF INTERNATIONAL TAXATION The study or determination of tax on a person or business subject to the tax laws of different countries or the international aspects of an individual country's tax laws.
  • 4. SCOPE OF INTERNATIONAL TAXATION • Taxation of Residents on foreign income • Taxation of Non Residents • Cross border taxation of MNCs
  • 5. TYPES OF INTERNATIONAL TAXATION • Residence based taxation :Residents of the country are taxed on their worldwide (local and foreign) income. • Source Based Taxation :Only local income from a source inside the country is taxed. Usually nonresidents are taxed only on their local income
  • 6. TAXABILITY OF TRANSACTION • Scope of Total income is defined in Section 5 of Income Tax Act, 1961 • Two step process: • Identify whether it is Indian Income or Foreign Income • Determine taxability of both the incomes by identifying the control of business
  • 7. IDENTIFICATION OF INDIAN INCOME AND FOREIGN INCOME
  • 9. FOREIGN REMITTANCES • Section 195 of Income Tax Act, 1961 • TDS on Non Resident Payments • Withholding Taxes • Royalty and Fees for Technical Services
  • 10. DOUBLE TAXATION Double taxation occurs when tax is paid more than once on the same taxable income or asset. Types of double taxation: • Juridical when the same person is taxed twice on the same income by more than one state • Economic when more than one person is taxed on the same item
  • 11. RELIEF FROM DOUBLE TAXATION • Exemption • Deduction • Credit
  • 13. TAX AVOIDANCE METHODS • Profit shifting via transfer pricing  Arm’s length pricing  Limitation On Benefits: LOB • Thin capitalization
  • 14. TAX TREATY A tax treaty is an agreement between two countries that outlines a series of articles which clarifies the tax rules between the countries on specific subjects. Types: • OECD model tax treaty • UN model tax treaty
  • 15. DIFFERENCE BETWEEN THE MODELS OECD MODEL TAX TREATY • Residence based taxation • Capital export neutrality • Signed between countries with comparable tax systems • Credit Method UN MODEL TAX TREATY • Source based taxation • Capital import neutrality • Signed between countries with unequal economic status • Exemption method
  • 16. BUDGET 2015: CHANGES IN INTERNATIONAL TAXATION • GAAR is deferred by two years and will apply with effect from 1st April 2018, i.e. AY 2018-19 and FY 2017-18 • Residence status of company is re-defined • Place of Effective Management(POEM) test for determination of residence
  • 17. • Reduced Tax on Royalty and Fees for Technical Services (FTS) paid to Non Residents from 25% to 10% • CBDT is now empowered to frame rules to notify the manner of granting foreign tax credit • Reporting by Persons paying any sums to Non Residents • Measures to curb Black Money stashed abroad
  • 18. REFERENCES • http://www.incometaxindia.gov.in/pages/internation al-taxation.aspx • http://indialiaison.com/residential_status.htm • http://www.expatarrivals.com/india/taxes-in-india • http://taxguru.in/income-tax/faq-tds-residents- us195-income-tax-act.html