Libya - Legal Draft

SOCIALIST PEOPLES

LIBYAN ARAB JAMAHIRIYACONVENTION BETWEEN

THE SOCIALIST PEOPLES LIBYAN ARAB JAMAHIRIYA AND THE GOVERNMENT OF REPUBLIC OF

INDIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME.Notification

F. No. 501/17/73-FTD, dated 1-7-1982.G.S.R.

484(E).--Whereas the annexed Convention between the Socialist Peoples Libyan

Arab Jamahiriya and the Government of the Republic of India for the avoidance

of double taxation and the prevention of fiscal evasion with respect to taxes

on income has been ratified and the instruments of ratification exchanged as

required by Article 25 of the said Convention;Now,

therefore, in exercise of the powers conferred by section 90 of the Income-tax

Act, 1961 (43 of 1961) and section 24A of the Companies (Profits) Surtax Act,

1964 (7 of 1964), the Central Government hereby directs that all the provisions

of the said Convention shall be given effect to in the Union of India.CONVENTION

BETWEEN THE SOCIALIST PEOPLES LIBYAN ARAB JAMAHIRIYA. AND THE GOVERNMENT OF

REPUBLIC OF INDIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF

FISCAL EVASION WITH RESPECT TO TAXES ON INCOMECHAPTER

I SCOPE OF THE CONVENTIONARTICLE

ITaxes

Covered1. This Convention shall

apply to taxes on income imposed on behalf of each Contracting State or local

authorities, irrespective of the manner in which they are levied.2. They shall be

regarded as taxes on income all taxes imposed on total income, or on elements

of income.3. The existing taxes to

which this Convention shall apply are:A

With regard to the Socialist Peoples Libyan Arab Jamahiriyai.

Real

Estate Revenue Tax.ii.

Agricultural

Revenue Tax.iii.

Taxes

on Commercial, Industrial and Professional profits, which comprise---a. taxes on profits

realised from commercial, industrial and professional activities;b. taxes on Companies.i.ii.iii.iv.

Taxes

on profits realised by practising Fee Professions.v.

Taxes

on wages, salaries and the like.vi.

Taxes

on Income realised abroad.vii.

General

Tax on Income.viii.

Al-Jihad

Tax (Defence Tax).ix.

Income

arising from depositing money in banks and savings accounts.a.b.c. With regard to the

Republic of India.i.

The

Income-tax including any surcharge thereon imposed under the Income-tax Act,

1961 (43 of 1961);ii.

The

surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964).1.2. The Convention shall

also apply to any identical or substantially similar taxes which are

subsequently imposed in addition to, or in place of, the existing taxes. At the

end of each year, the competent authorities of the Contracting States shall

notify to each other any changes which have been made in their respective

taxation laws.CHAPTER

II DEFINITIONSARTICLE

IIGeneral

Definitions1. In this Convention,

unless the context otherwise requires:a. the term " a

contracting State " and " the other Contracting State " mean '

India ' or ' Libya ', as the context requires;b. the term "

person " comprises an individual, a company and any other body of persons;c. the term "

Company " means any body corporate or any entity which is treated as a

body corporate for tax purposes;d. the terms "

enterprise of a Contracting State " and " enterprise of the other

Contracting State " mean respectively an enterprise carried on by a

resident of a Contracting State and an enterprise by a resident of the other

contracting state;e. the term "

competent authority " with respect to the Socialist Peoples Libyan Arab

Jamahiriya means the Ministry of Treasury, and with respect to India means the

Ministry of Finance (Department of Revenue).1.2. For the purposes of

this Convention, the term " resident of a Contracting State " means

any person who, under the law of that State, is liable to taxation therein by

reason of his domicile, resident, place of management or any other criterion of

a similar nature;3. As regards the

application of the Convention by a Contracting State any term not otherwise

defined shall, unless the context otherwise requires, have the meaning which it

has under the laws of that Contracting State relating to the taxes which are the

subject of the Convention.ARTICLE

IIIThe

Tax HomeWithout

prejudice to the provisions of this Convention, the Tax Home of any income

shall be deemed to be the Contracting State in which the income arises.ARTICLE

IVPermanent

Establishment1. For the purposes of

this Convention, the term " permanent establishment " means a fixed

place of business in which the business of the enterprise is wholly or partly

carried on.2. The term "

permanent establishment " shall include especially:a. a place of

management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a

mine, quarry or other place of extraction of natural resource. (g) a building

or building site which continues for a period of more than three months;The

term " permanent establishment " shall not be deemed to include:a. the use of facilities

solely for the purpose of storage and display of goods or merchandise belonging

to the enterprise;b. the maintenance of a

stock of goods or merchandise belonging to the enterprise solely for the

purpose of storage and display;c. the maintenance of

stock of goods or merchandise belonging to the enterprise solely for the

purpose, of processing by any other enterprise;d. the maintenance, of a

fixed place of business solely for the purpose of purchasing goods or merchandise,

of for collecting information, for the enterprise;e. the maintenance of a

fixed place of business solely for the purpose of advertising, for the supply

of information, for scientific research or for similar activities which have a

preparatory or auxiliary character, for the enterprise.1.2.3. A person acting in a

Contracting State on behalf of an enterprise of the other Contracting State

other than an agent of an independent status to whom paragraph 5 applies--shall

be deemed to be a permanent establishment in the first-men tioned State if he has

and habitually exercises in that State, an authority to conclude contracts in

the name of the enterprise, unless his activities are limited to the purchase

of goods or merchandise for the enterprise.4. An enterprise of a

Contracting State shall not be deemed to have a permanent establishment in the

other Contracting State merely because it carries on business in that other

State through a broker, general commission agent or any other agent of an

independent status, where such persons are acting independently in the ordinary

course of their business.5. The fact that company

which is a resident of a contracting State controls or is controlled by a

company which is a resident of the other Contracting State, or which carries on

business in that other State (whether through a permanent establishment or

otherwise) shall not itself constitute for either company a permanent

establishment of the other.CHAPTER

IIITAXATION

OF INCOMEARTICLE

VIncome

from Immovable Property1. Income from immovable

property may be taxed in the Contracting State in which such property is

situated.2. The term "

immovable property " shall be defined in accordance with the law of the

Contracting State in which the property in question is situated.ARTICLE

VIBusiness

Profits1. The profits of an enterprise

of a Contracting State shall be taxable in the State where the enterprise is

situated and also in the State where it has a permanent establishment, in which

case, the tax shall be limited to the profits attributable to the permanent

establishment.2. Where an enterprise

of a Contracting State carries on business in the other Contracting State

through a permanent establishment situated therein, there shall in each

Contracting State be attributed to the permanent establishment the profits

which it might be expected to make if it were a distinct and separate

enterprise engaged in the same or similar activities under the same or similar

condition and dealing wholly independently with the enterprise of which it is a

permanent establishment.3. In the determination

of the profits of a permanent establishment, there shall be allowed as

deduction expenses which are incurred for the purpose of the permanent

establishment whether such expenses have been incurred in the State in which

the permanent establishment is situated or elsewhere in accordance with

regulations of the State in which the income is taxable.4. No profits shall be

attributed to a permanent establishment by reason of the mere purchase by that

permanent establishment of goods or merchandise for the enterprise.5. For the purpose of

the preceding paragraphs, the profits to be attributed to the permanent

establishment shall be determined by the same method year by year unless there

is good and sufficient reason to the contrary.6. Where profits include

items of income which are dealt with separately in other Articles of this

Convention, then the provisions of those Articles shall not be affected by the

provisions of this Article.ARTICLE

VIIShipping

and Air TransportProfits

from the operation of ships or aircraft in international traffic shall be

taxable only in the Contracting State in which the place of effective

management of the enterpriser is situated.ARTICLE

VIIIAssociated

EnterprisesWhere:a. an enterprise of a

Contracting State participates directly or indirectly in the management,

control or capital of an enterprise of the other Contracting State, orb. the same persons

participate directly or indirectly in the management, control or capital of

enterprise of a Contracting State and an enterprise of the other Contracting

State, and in either case conditions are made or imposed between the two

enterprises in their commercial or financial relations which differ from those

which would be made between independent enterprise, then any profits which would

but for those conditions, have accrued to one of the enterprises, but, by

reason of those conditions, have not so accrued, may be included in the profits

of that enterprise and taxed accordingly.It

is to be understood that the procedures available in the respective laws of

each Contracting State in this regard shall be applied.ARTICLE

IXDividends1. Dividends paid by a

Company which is registered in one of the Contracting States may be taxed in

that State.2. The term "

dividends " shall be defined in accordance with the law of the Contracting

State in which the company in question is registered.ARTICLE

XInterest1. Interest arising in a

Contracting State and paid to a resident of the other Contracting State may be

taxed in the Contracting State where it arises.2. The provisions of

paragraph 1 shall not apply if the recipient of the interest, being a resident

of a Contracting State, has in the other Contracting State in which the

interest arises a permanent establishment with which the debt-claim from which

the interest arises is effectively connected. In such a case, the provisions of

Article 6 shall apply.3. Interest shall be

deemed to arise in a Contracting State when the payer is that State itself, a

political sub-division, a local authority or a resident of that State.ARTICLE

XIRoyalties1. Royalties arising in

a Contracting State may be taxable in that State.2. The term "

royalties " as used in this Article means payments of any kind as a

consideration for the use of, or the right to use, any copyright of literary,

artistic or scientific work, any patent, trade mark, design or model, plan

secret formula or process of for the use of the right to use, industrial,

commercial, or scientific equipment, or for information concern inindustrial,

commercial or scientific experience.3. The term "

royalties " as used in this Article shall exclude rentals and other income

in respect of cinematographic films. Such rentals, and income shall, for the

purpose of this Convention, be considered the profits from business.ARTICLE

XIIIndependent

Personal Services1. Income derived by a

resident of a Contracting State in respect of professional services or other

independent activities of a similar character shall be taxable only in that

State unless he has a fixed base regularly available to him in the other

Contracting State for the purpose of performing his activities. If he has such

a fixed base, the income may be taxed in the other Contracting State brat only

so much of it as is attributable to that fixed base.2. The term " professional

services " means independent activities according to the laws and

regulations in force in each Contracting State.ARTICLE

XIIIDependent

Personal ServicesSalaries,

wages and similar emoluments arising in one of the Contracting States may be taxable

in the State where the services giving rise to that income are performed but if

such income is realised from work carried out on a ship or aircraft operating

in the field of international transport, it shall only be taxable in the State

where the place of effective management of the enterprise is situated.ARTICLE

XIVDirectors'

FeesDirectors'

fees and similar payments derived by a resident of a Contracting State in his

capacity as a member of the Board of Directors of a company which is a resident

of the other Contracting State may be taxed in that other State.ARTICLE

XVArtistes

and AthletesNotwithstanding

the provisions of Articles 12 and 13, income derived by public entertainers,

such as theatre, motion picture, radio or television artistes and musicians,

and by athletes, from their personal activities as such may be taxed in the

Contracting State in which these activities are exercised.ARTICLE

XVIPensionsPensions

and other similar income paid to a resident of Contracting State in cosideration

of past employment shall be taxable only in that State.ARTICLE

XVIIGovernment

Functions/Civil Service1. Remuneration paid by

the Government of one of the Contracting States to any individual for services

rendered to that Government in the discharge of governmental functions shall be

exempt from tax in other State if the individual is not resident in that other

State or is resident in other State solely for the purpose of rendering those

services, so provided however, that such an individual has the nationality of

that Contracting State.2. The provision of this

Article shall not apply to payments in respect of services rendered in

connection with any trade or business carried on by either of the Government

for purposes of profit.3. In this Article,

" Government " shall be deemed to include public corporation and any

other similar parastatal bodies.ARTICLE

XVIIIStudents1. Payments which a

student or business apprentice who is or was formerly a resident of a

Contracting State and who is present in the other Contracting State solely for

the purpose of his education or training receives for the purpose of his

maintenance, education or training shall not be taxed in that other State,

provided that such payments are made to him from sources outside that other State.2. The provision of this

Article shall also apply to the income which the student or business apprentice

may derive from an employment in the other Contracting State; provided that

such employment is related to his study or training and/ or that the income

deriving therefrom is required by the student or trainee to meet his living

expenses.ARTICLE

XIXProfessors,

Teachers and ResearchersA

professor, teacher or research worker from one of the Contracting States who

receives remuneration for teaching or carrying out research work during a

period of temporary residence not exceeding three months at a university,

college or/other institute of higher education or scientific research in the

other Contracting State shall be exempt from tax in that other State, in

respect of that remuneration, provided that the period of three months may be

extended by similar periods.CHAPTER

IVELIMINATION

OF DOUBLE TAXATIONARTICLE

XXTax

Credits1. When a resident of a

Contracting State derives income which has also suffered tax in the other

Contracting State, the first-mentioned State shall allow a deduction from its

tax on the income of that person equal to the tax in the other Contracting

State; provided that the deduction shall not exceed that part of the tax, as

computed before the deduction is given which is applicable to the income taxed

in the other Contracting State.2. Nothing in this

Article contained shall prevent the granting of such further relief as may be

appropriate under the provisions of the law of either Contracting State in

respect of any amount by which the tax in case of the States exceeds the credit

allowed on its account in the other State in accordance with the provisions of

this Article.CHAPTER

VSPECIAL

PROVISIONSARTICLE

XXINon-Discrimination1. The nationals of a

Contracting State shall not be subjected in the other Contracting State to any

taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which nationals of

that other State in the same circumstances are or may be subjected.2. The term "

national " means:a. all individuals

possessing the nationality of a Contracting State;b. all legal persons,

partnerships and associations deriving their status as such from the law in

force in a Contracting State.1.2.3. The taxation of a

permanent establishment which an enterprise of a Contracting State has in the

other Contracting State shall not be less favourably levied in that other State

than the taxation levied on enterprises of that other State carrying on the

same activities. The provision shall not be construed as obliging a Contracting

State to grant to residents of the other Contracting State any personal

allowances, reliefs and reductions for taxation purposes on account of civil

status or family responsibilities which it grants to its own residents.4. Enterprises of a

Contracting State, the capital of which is wholly or partly owned or controlled

directly or indirectly, by one or more residents of the other Contracting

State, shall not be subjected in the first-mentioned Contracting State to any

taxation or any requirements connected therewith which is other or more

burdensome than the taxation and connected requirements to which other similar

enterprises of that first mentioned State are or may be subjected.ARTICLE

XXIIMutual

Agreement Procedure1. Were a resident of a

Contracting State considers that the actions of one or both of the Contracting

State result or will result for him in taxation not in accordance with this

Convention he may, notwithstanding the remedies provided by the national laws

of those States, present his case to the competent authority of the Contracting

State of which he is a resident.2. The competent

authority shall endeavour, if the objection appears to it to be justified and

if it is not itself able to arrive at an appropriate solution, to resolve the

case by mutual agreement with the competent authority of the other Contracting

State, with a view to the avoidance of taxation not in accordance with the

Convention.3. The competent

authorities of the Contracting States shall endeavour to resolve by mutual

agreement any difficulties or doubts arising as to the interpretation or

application of the Convention. They may also consult together for the

elimination of double taxation in cases not provided for in the Convention.4. The competent

authorities of the Contracting States may communicate with each other directly

for the purpose of reaching an agreement in the sense of the preceding

paragraphs. When it seems advisable in order to reach agreement to have an oral

exchange of opinions, such exchange may take place through a Commission

consisting of representatives of the competent authorities of the Contracting

States.ARTICLE

XXIIIExchange

of Information1. The competent

authorities of the Contracting States shall exchange such information as is

necessary for the carrying out of this Convention and of the domestic laws of

the Contracting States concerning taxes covered by this Convention in so far as

the taxation thereunder is in accordance with this Convention. Information

shall also be exchanged as is necessary for the prevention of fiscal evasion of

taxes which are the subject of this Convention. Any information so exchanged

shall be treated as secret and shall not be disclosed to any persons or

authorities other than these concerned with the assessment of collection of the

taxes which are the subject of the Convention.2. In no case shall the

provisions of paragraph I be constituted so as to impose on one of the

Contracting States the obligation:a. to carry out

administrative measures at variance with the laws or the administrative

practice of that or of the other Contracting State;b. to supply particulars

which are not obtainable under the laws or in the normal course of the

administration of that or of the other Contracting State;c. to supply information

which would disclose any trade, business, industrial commercial or professional

secret or trade process, or information, the disclosure of which would be

contrary to public policy.ARTICLE

XXIVDiplomatic

and Consular OfficialsNothing

in this Convention shall affect the fiscal privileges of diplomatic or consular

officials under the general rules of international law or under the provisions

of special agreements.CHAPTER

VIFINAL

PROVISIONSARTICLE

XXVEntry

into ForceThe

Convention shall enter into force upon the exchange of instruments of

ratification and its provisions shall have effect from the tax year commencing

after the said ratification.Any

agreement reached shall be implemented notwithstanding any time limits in the

national laws of the Contracting State.ARTICLE

XXVITerminationThis

Convention remains in force until denounced by one, of the Contracting States.

Either Contracting State may denounce the Convention through diplomatic

channels by giving notice of termination at least 6 months before the end of

any calendar year beginning 5 years after the agreement enters into force. In

such event the Convention shall cease to have effect after the end of the

calendar year during which notice of the denouncing of the Convention is given

by one Contracting State to the other.In

witness of the agreement reached as above, the signatories have today signed

this Convention in virtue of the authority delegated to them for this purpose

by their respective Governments.Done

in duplicate at THIPOLI, on 2nd March 1981 corresponding to 25 Rabiul Akhar

1390 P.D. in the English, Hindi and Arabic languages, all texts being equally

authoritative except in the case of doubt, the English text shall prevail.Sd/NARENDRA

SINGH,Ambassador

of India.Sd/AMMAR

SASI ATIYA.Director

General TaxationSocialist

People Libyan ArabJamahiriya