One of the new features of the deal is that it provides for a corresponding transfer pricing adjustment in the other country, said Amit Maheshwari, partner, Ashok Maheshwary &Associates, an audit firm. This is provided for in the new double taxation agreement between India and Malaysia (DBAA), which entered into force on 26 December. Previously, this facility did not exist, which led to double taxation. The new agreement, signed in May, will enter into force in India from 1 April. In the case of Malaysia, it entered into force on 1 January. With regard to the elimination of double taxation, India applies a deduction, while Malaysia would use a credit method. Both countries also offer a tax-saving credit. The new agreement also introduced, in line with international practice, a new article on the taxation of capital gains on the sale of property. In addition to a mechanism for the exchange of banking information for the tax administration, the new agreement also contains a limitation clause on benefits, a provision to combat abuse.
The concept of service establishment was also introduced with a threshold of 90 days over a twelve-month period. AGREEMENT FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF TAX EVASION WITH ALBANIA, THE GOVERNMENT OF THE REPUBLIC OF INDIA WITH REGARD TO TAXES ON INCOME AND CAPITAL, THE TEXT OF THE MULTILATERAL AGREEMENT ON THE IMPLEMENTATION OF FISCAL MEASURES TO PREVENT PROFIT REDUCTION AND PROFIT SHIFTING (MLI) AND THE AGREEMENT BETWEEN THE GOVERNMENT. Details of the India-Malaysia Income Tax Agreement and Protocol, signed on 9 May 2012, are available. The contract was concluded in Hindi, Malay and English, all texts being equally authentic. However, in the event of a discrepancy, the English text shall prevail. The treaty generally follows the OECD model. . AGREEMENT ON THE PREVENTION OF DOUBLE TAXATION AND THE PREVENTION OF TAX EVASION WITH AFGHANISTAN While the Government of India and the Government of Afghanistan a. . .
On April 1, dividends paid by Indian companies to Malaysian investors or companies will attract a 5 percent lower withholding tax compared to 10 percent earlier. Simply put, when an Indian transfer pricing officer makes a transfer pricing adjustment to an Indian subsidiary of a Malaysian company, an adjustment may be made by the Malaysian authorities in the books of the Malaysian company. . . .