India amends tax treaty with France, cuts dividend tax

NEW DELHI: India and France have amended the double taxation avoidance agreement which will provide for taxation of capital gains on the basis of residency of the company and deleted the Most Favoured Nation (MFN) clause bringing in certainty in taxation.

The amending protocol modifies the taxation of income from dividends by replacing a single rate of 10% of tax with a split rate of 5% for those holding at least 10% of capital and 15% of tax for all other cases.




It also modifies the definition of 'fees for technical services' by aligning it with the definition in India US Double Taxation Avoidance Agreement, and expands the scope of 'permanent establishment' by adding Service PE. The protocol amending the India-France Double Taxation Avoidance Convention (DTAC) was signed during the recent visit of French President Emmanuel Macron to India. It was signed by Ravi Agrawal, chairperson, Central Board of Direct Taxes (CBDT), and Thierry Mathou, Ambassador of France to India, on behalf of their respective governments. Amending protocol updates the provisions on exchange of information and introduces a new Article on assistance in collection of taxes, as per international standards.