notification no.20/2018 f.no.501/06/94 ftd ii / so 1589 e

8 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)] MINISTRY OF FINANCE (Department of Revenue) NOTIFICATION New Delhi, the 12th April, 2018 (INCOME TAX) S.O. 1589(E).—Whereas the Protocol, amending the Convention between the Government of the Republic of India and the Government of the Republic of Kazakhstan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital with Protocol signed at New Delhi, India on the 9th December 1996, was signed at New Delhi, India on the 6th January, 2017, as set out in the annexure appended to this notification and hereinafter referred to as the said amending Protocol; And whereas, the date of entry into force of the said amending Protocol is the 12th day of March, 2018, being the date of receipt, through diplomatic channels, of later of written notifications informing in regard to the completion of internal procedures required for the entry into force of the said amending Protocol, in accordance with paragraph 1 of Article XV of the said amending Protocol; And whereas, clause (a) of paragraph 2 of Article XV of the said amending Protocol provides that the provisions of the said amending Protocol shall have effect in India in respect of income derived or capital held in any fiscal year beginning on or after the first day of April next following the date on which this Protocol enters into force; Now, therefore, in exercise of the powers conferred by sub-section (1) of section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that all the provisions of the said amending Protocol, as annexed hereto, shall be given effect to in the Union of India. ANNEXURE PROTOCOL AMENDING THE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF KAZAKHSTAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL WITH PROTOCOL SIGNED AT NEW DELHI ON 9TH DECEMBER, 1996 The Government of the Republic of India and the Government of the Republic of Kazakhstan, Desiring to amend the Convention between the Government of the Republic of India and the Government of the Republic of Kazakhstan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital with Protocol signed at New Delhi on 9th December 1996 (hereinafter referred to as “the Convention”), Have agreed as follows: ¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 9 Article I Sub-paragraph (a) of paragraph 3 of Article 2 (Taxes covered) of the Convention shall be replaced by the following sub-paragraph: “(a) in the Republic of Kazakhstan: (i) the corporate income tax; (ii) the individual income tax; (iii) the tax on property of legal persons and individuals; (hereinafter referred to as "Kazakhstan tax");”. Article II 1. Clause (i) of sub-paragraph (а) of paragraph 1 of Article 3 (General definitions) of the Convention shall be replaced by the following clause: “(i) "Kazakhstan" means the Republic of Kazakhstan and, when used in a geographical sense, the term "Kazakhstan" includes the state territory of the Republic of Kazakhstan and areas where Kazakhstan exercises its sovereign rights and jurisdiction according to its legislation and international law;”. 2. The following sentence shall be added at the end of paragraph 2 of Article 3 of the Convention: “Аny meaning under the applicable tax laws of that Contracting State prevailing over a meaning given to the term under other laws of that Contracting State.”. Article III 1. Paragraph 1 of Article 4 (Resident) of the Convention shall be replaced by the following paragraph: “1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes that Contracting State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that Contracting State in respect only of income from sources in that Contracting State or capital situated therein.”. 2. With reference to paragraph 1 of Article 4 of the Convention, it is understood that the phrase “place of incorporation” includes “place of registration”. Article IV 1. In sub-paragraph (b) of paragraph 3 of Article 5 (Permanent establishment) of the Convention, the number and words “more than 12 months” shall be replaced by the number and words “more than 6 months”. 2. After sub-paragraph (b) of paragraph 3 of Article 5 of the Convention, the following paragraph (c) shall be added: “(с) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods aggregating more than 90 days within any twelve-month period.”. 3. With reference sub-paragraph (c) of paragraph 3 of Article 5 of the Convention, it is understood that where an enterprise of a Contracting State that is performing services in the other Contracting State is, during a period of time, associated with another enterprise that performs substantially similar services in that other Contracting State for the same project or for connected projects through one or more individuals who are present and performing such services in that other Contracting State, the first-mentioned enterprise shall be deemed, during that period of time, to be performing services in the other Contracting State for that same project or for connected projects through these individuals. For the purpose of the preceding sentence, an enterprise shall be associated with another enterprise if one is controlled directly or indirectly by the other, or both are controlled directly or indirectly by the same persons, regardless of whether or not these persons are 10 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)] residents of one of the Contracting States. Article V After paragraph 6 in Article 7(Business profits) of the Convention, the following paragraph 7 shall be added: “7. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 of this article shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this article.”. Article VI In Article 9 (Associated enterprises) of the Convention, the existing text shall be numbered as paragraph 1 and after such numbering, the following paragraph shall be added: “2. Where a Contracting State includes in the profits of an enterprise of that Contracting State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other Contracting State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned Contracting State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Contracting State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.”. Article VII In paragraph 6 of Article 11 (Interest) of the Convention, the words “that State itself, a political sub- division, a local authority or” shall be deleted. Article VIII The first sentence of paragraph 5 of Article 12 (Royalties and fees for technical services) of the Convention shall be replaced by the following sentence: “Royalties or fees for technical services shall be deemed to arise in a Contracting State when the payer is a resident of that Contracting State.” Article IX In paragraph 1 of Article 21 (Professors, teachers and research scholars) of the Convention, the words “two years from the date of his arrival” shall be replaced by “two years from the date of his first arrival”. Article X