India, Singapore rework tax treaty |
The government of India has convinced Singapore to rework the tax treaty, helping plug another source of possible misuse of the double tax avoidance treaty for round tripping of funds and generation of black money.The move comes after similar deals with Mauritius and Cyprus. Between April 200 and September 2016, Mauritius and Singapore accounted for 49% of all FDI inflows into India as companies from across the globe routed funds into the country through the two island nations in order to virtually avoid paying taxes.The Singapore DTAA provided for similar amendments as Mauritius, finance minister said. Although, there are gaps that the government authorities would like to fill in tax treaties with the Netherlands, France and South Korea, tax experts said that the inflows from these countries is not significantly large.In any case with the general anti-avoidance rules (GAAR) coming into places, the requirement for showing substance to route funds from another country will be so high that investors may not be able to leverage the treaties to avoid paying taxes.
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