India, Myanmar sign pact for DTAA

New Delhi: India and Myanmar have signed a double taxation avoidance agreement (DTAA) to stimulate the flow of investment, technology and services between the two countries besides providing tax stability to their residents.

The agreement provides that business profit would be taxable in the source State if the activities of an enterprise constitute Permanent Establishment (PE) in the State. Examples of PE include branch, factory, place of management, sales outlet etc.

Moreover, profits of a construction, assembly or installation projects will be taxed in the source State if the project continues in that State for 270 days or more. Profits made by an enterprise from operation of ships or aircraft in international traffic would be taxable in the country of residence of the enterprise.

The DTAA was signed by Mr P.K. Misra, Chairman of the Central Board of Direct Taxes (CBDT), on behalf of the Indian Government and Mr Kyi Thein, Myanmar’s Ambassador to India.

An official release said that capital gains from sale of shares would be taxable in the source country. Dividends, interest and royalty would be taxed both in the country of residence and in the country of source. However, the maximum rate of tax to be charged in the country of source will not exceed 5 per cent in the case of dividends and 10 per cent in the case of interest and royalties.

Strengthen relations:

Meanwhile, both Federation of Indian Chambers of Commerce and Industry (FICCI) and the Confederation of Indian Industry on Thursday signed separate memorandum of understanding with the Union of Myanmar Federation of Chambers of Commerce and Industry to strengthen trade and business relations.

Speaking at a FICCI meeting, Mr Jairam Ramesh, Minister of State for Commerce, said that the agreement between the two countries on the Kaladan Multi-Modal Transport project in Myanmar, for which India has committed Rs 540-crore investment, will open a new access route to India’s north eastern region and connect the region to Asian and Southeast Asian nations through Myanmar.

Mr Ramesh said that the Kaladan projects, slated to be completed in five years, seeks to upgrade the Sittwe Port, make river Kaladan navigable and build the link road to Mizoram. The Sitwee project will open up India’s landlocked north-eastern States — Assam, Manipur, Meghalya, Mizoram, Tripura, Sikkim, Nagaland and Arunachal Pradesh — to international trade routes through the Bay of Bengal and give a fillip to the country’s ‘Look East’ policy.

Oil and gas:

Also, Myanmar’s Energy Minister, Brig Gen Lun Thi called on the Petroleum Minister, Mr Murli Deora. Both Ministers discussed matters of mutual interest in the oil and gas sector. Mr Deora had visited Myanmar in September 2007.