Online Courses (English)
This just in:

State PCS

Daily Updates

International Relations

India and Brazil Signed Amended DTAC

  • 07 Nov 2019
  • 4 min read

Why in News

Recently, the Union Cabinet has approved the signing of the Protocol amending the Convention between India and Brazil for the Double Taxation Avoidance Convention (DTAC).

  • The amendments aim to implement the recommendations contained in the G20 OECD Base Erosion and Profit Shifting Project (BEPS).
  • It will also help to streamline the existing DTAC with international standards which will help to provide tax certainty to investors and businesses of both countries.
  • The amending protocol will augment the flow of investment through the lowering of tax rates and fees for technical services.

Double Tax Avoidance Agreements (DTAAs)

  • A DTAA is a tax treaty signed between two or more countries.
  • Its key objective is that tax-payers in these countries can avoid being taxed twice for the same income.
  • It applies in cases where a taxpayer resides in one country and earns income in another.
    • The relief is provided by exempting income earned abroad from tax in the resident country or providing credit to the extent taxes have already been paid abroad.
  • It can either be comprehensive to cover all sources of income or be limited to certain areas such as taxing of income from shipping, air transport, inheritance, etc.
  • DTAAs are intended to make a country an attractive investment destination by providing relief on dual taxation.

Base Erosion and Profit Shifting (BEPS)

  • BEPS is a term used to describe tax planning strategies that exploit mismatches and gaps that exist between the tax rules of different jurisdictions.
  • It minimizes the corporation tax that is payable overall, by either making tax profits ‘disappear’ or shift profits to low tax jurisdictions where it is little or no genuine activity.
  • BEPS takes advantage of different tax rules operating in different jurisdictions.
  • BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises (MNEs).
  • The BEPS initiative is an OECD initiative, approved by the G20, to identify ways of providing more standardized tax rules globally.

OECD/G20 Base Erosion and Profit Shifting (BEPS)Project

  • In 2013, OECD and G20 countries adopted a 15-point Action Plan to address BEPS.
  • The OECD/G20 BEPS Project aims to create a single set of consensus-based international tax rules to address BEPS, and hence to protect tax bases.
  • In 2016, the OECD and G20 established an Inclusive Framework on BEPS. Over 100 countries and jurisdictions have joined the Inclusive Framework.

Difference Between Convention, Agreement, and Protocol

  • Agreement: It is a negotiated and usually legally enforceable understanding between two or more legally competent parties.
    • A binding contract can (and often does) result from an agreement.
  • Convention: It is a formal agreement between States. These are normally open for participation of a large number of States.
    • The generic term ‘convention’ is thus synonymous with the generic term ‘treaty’.
  • Protocol: A protocol is an agreement that negotiators formulate and sign as the basis for a final convention or treaty.


SMS Alerts

Please login or register to view note list


Please login or register to list article as bookmarked


Please login or register to make your note


Please login or register to list article as progressed


Please login or register to list article as bookmarked