United Arab Emirates - Legal Draft

Double Taxation

Avoidance AgreementIncome-tax Act, 1961:

Notification under section 90 Agreement between the Government of the Republic

of India and the Government of the United Arab Emirates for avoidance of double

taxation and the prevention of fiscal evasion with respect to taxes on income

and on capitalNotification

G.S.R. No. 710(E), dtd. 18th November, 1993.Whereas

the annexed agreement between the Government of the United Arab Emirates and

the Government of the Republic of India for the avoidance of double taxation

and prevention of fiscal evasion with respect to taxes on income and on capital

has entered into force on the 22nd September, 1993, after the notification by

both the Contracting States to each other of the completion of the proceedings

required by laws for bringing into force of the said agreement in accordance

with paragraph 1 of Article 30 of the said Agreement:Now,

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

Act, 1961 (43 of 1961), section 24A of the Companies (Profits) Surtax Act, 1964

(7 of 1964), and section 44A of the Wealth-tax Act, 1957 (27 of 1957), the

Central Government hereby directs that all the provisions of the said agreement

shall be given effect to in the Union of India.ANNEXUREAN

AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF

THE UNITED ARAB EMIRATES FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE

PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL.The

Government of the Republic of India and the Government of the United Arab

EmiratesDesiring

to promote mutual economic relations by concluding an Agreement for the

avoidance of double taxation and the prevention of fiscal evasion with respect

to taxes on income and on capital,Have

agreed as follows:Article

1PERSONAL

SCOPEThis

Agreement shall apply to persons who are residents of one or both of the

Contracting States.Article

2TAXES

COVERED1. There shall be

regarded as taxes on income and on capital all taxes imposed on total income,

on total capital, or on elements of income or of capital including taxes on

gains from alienation of movable or immovable property as well as on capital

appreciation.2. The existing taxes to

which the Agreement shall apply are:a. In United Arab

Emirates;i.

income-tax;ii.

corporation

tax;iii.

wealth-tax;(hereinafter

referred to as "U.A.E. tax");a. In India:i.

the

income-tax including any surcharge thereon;ii.

the

surtax; andiii.

the

wealth-tax;(hereinafter

referred to as "Indian tax").1.2.3. This Agreement shall

also apply to any identical or substantially similar taxes on income or capital

which are imposed at Federal or State level by either Contracting State in

addition to, or in place of, the taxes referred to in paragraph 2 of this

Article. The competent authorities of the Contracting States shall notify each

other of any substantial changes which are made in their respective taxation

laws.Article

3GENERAL

DEFINITIONS1. In this Agreement,

unless the context otherwise requiresa. the term

"India" means the Territory of India and includes the territorial sea

and air space above it, as well as any other maritime zone in which India has

sovereign rights, other rights and jurisdictions, according to the Indian law

and in accordance with international law;b. the term

"U.A.E." means the United Arab Emirates and when used in a

geographical sense, means all the territory of the United Arab Emirates

including its territorial sea in which the U.A.E. laws relating to taxation

apply and any area beyond its territorial sea within which the United Arab

Emirates has sovereign rights of exploration for an exploitation of resources

of the seabed and its sub-soil and superjacent water resources in accordance

with international law;c. the terms "a

Contracting State" and "the other Contracting State" mean U.A.E.

or India as the context requires;d. the term

"tax" means "Indian tax" or "U.A.E. tax" as the

context requires, but shall not include any amount which is payable in respect

of any default or omission in relation to the taxes to which this Agreement

applies or which represents a penalty imposed relating to those taxes;e. the term

"person" includes an individual, a company, and any other entity

which is treated as a taxable unit under the taxation laws in force in the

respective Contracting States;f. the term

"company" means any body corporate or any entity which is treated as

a company or body corporate under the taxation laws in force in the respective

Contracting States;g. 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 carried on by a resident of

the other Contracting State;h. the term

"national" means:i.

in

the case of U.A.E. all individuals possessing the nationality of U.A.E. in

accordance with U.A.E. laws and any legal person, partnership and other body

corporate deriving its status as such from the U.A.E. laws;ii.

in

the case of India, any individual possessing the nationality of India and any

legal person, partnership, or association deriving its status as such from the

laws in force in India;a.b.c.d.e.f.g.h.i. the term

"international traffic" means any transport by a ship or aircraft

operated by an enterprise which has its place of effective management in a

Contracting State except when the ship or aircraft is operated solely between

places in the other Contracting State;j. the term

"competent authority" means:i.

in

the case of U.A.E., the Minister of Finance and Industry or his authorised

representative; andii.

in

the case of India, the Central Government in the Ministry of Finance

(Department of Revenue) or their authorised representative.1.2. As regards the

application of the Agreement by a Contracting State, any term not defined

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

has under the laws of that State concerning the taxes to which the Agreement

applies.Article

4RESIDENT1. For the purposes of

this Agreement, the term "resident of a Contracting State" means any

person who, under the laws of that State, is liable to tax therein by reason of

his domicile, residence, place of management, place of incorporation or any

other criterion of a similar nature.2. Where by reason of

the provisions of paragraph 1 an individual is a resident of both Contracting

States, then his status shall. be determined as follows:a. he shall be deemed to

be a resident of the State in which he has a permanent home available to him;

if he has a permanent home available to him in both States, he shall be deemed

to be a resident of the State with which his personal and economic relations

are closer (centre of vital interests);b. if the State in which

he has his centre of vital interests cannot be determined, or if he has not a

permanent home available to him in either State, he shall be deemed to be a

resident of the State in which he has an habitual abode;c. if he has an

habitual. abode in both States or in either of them, he shall be deemed to be a

resident of the State of which he is a national;d. if he is a national

of both States or of neither of them, the competent authorities of the

Contracting States shall settle the question by mutual agreement.1.2.3. Where by reason of

the provisions of paragraph 1, a person other than an individual is a resident

of both Contracting States, then it shall be deemed to be a resident of the

State in which its place of effective management is situated.Article

5PERMANENT

ESTABLISHMENT1. For the purposes of

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

place of business through which the business of an enterprise is wholly or

partly carried on.2. The term

"permanent establishment" includes especially:a. a place of

management;b. a branch;c. an office;d. a factory;e. a workshop;f. a mine, an oil or gas

well, a quarry or any other place of extraction of natural resources;g. a farm or plantation;h. a building site or

construction or assembly project or supervisory activities in connection

therewith, but only where such site, project or activity continues for a period

of more than 9 months;i. the furnishing of

services including consultancy services by an enterprise of a Contracting State

through employees or other personnel in the other Contracting State, provided

that such activities continue for the same project or connected project for a

period or periods aggregating to more than 9 months within any twelve-month

period.1.2.3. Notwithstanding the

preceding provisions of this Article, the term permanent establishment"

shall be deemed not to include:a. the use of facilities

solely for the purpose of storage, display or delivery 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, display or delivery;c. the maintenance of a

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

purpose of processing by another enterprise;d. the maintenance of a

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

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

fixed place of business solely for the purpose of carrying on, for the

enterprise, any other activity of a preparatory or auxiliary character.1.2.3.4. Notwithstanding the

provisions of paragraphs 1 and 2, where a person--other than an agent of

independent status to whom paragraph 5 applies--is acting on behalf of an

enterprise and has, and habitually exercises in a Contracting State an

authority to conclude contracts on behalf of the enterprise, that enterprise

shall be deemed to have a permanent establishment in that State in respect of

any activities which that person undertakes for the enterprise, unless the

activities of such persons are limited to the purchase of goods or merchandise

for the enterprise.5. 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, provided that such persons are acting in the ordinary

course of their business. However, when the activities of such an agent are

devoted wholly or almost wholly on behalf of that enterprise, he will not be

considered an agent of an independent status within the meaning of this

paragraph.Article

6INCOME

FROM IMMOVABLE PROPERTY1. Income derived by a

resident of a Contracting State from immovable property (including income from

agriculture or forestry) situated in the other Contracting State may be taxed

in that other State.2. The term

"immovable property" shall have the meaning which it has under the

law of the Contracting State in which the property in question is situated. The

term shall in any case include property accessory to immovable property,

livestock and equipment used in agriculture and forestry, rights to which the

provisions of general law respecting landed property apply, usufruct of

immovable property and rights to variable or fixed payments as consideration

for the working of, or the right to work, mineral deposits, sources and other

natural resources. Ships, boats and aircraft shall not be regarded as immovable

property.3. The provisions of

paragraph 1 shall also apply to income derived from the direct use, letting, or

use in any other form of immovable property.4. The provisions of

paragraphs, 1 and 3 shall also apply to the income from immovable property of

an enterprise and to income from immovable property used for the performance of

independent personal services.Article

7BUSINESS

PROFITS1. The profits of an

enterprise of a Contracting State shall be taxable only in that State unless

the enterprise carries on business in the other Contracting State through a

permanent establishment situated therein. If the enterprise carries on business

as aforesaid, the profits of the enterprise may be taxed in the other State but

only so much of them as is attributable to that permanent establishment.2. Subject to the

provisions of paragraph 3, 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 that

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 conditions and dealing wholly

independently with the enterprise of which it is a permanent establishment.3. In determining the

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

expenses which are incurred for the purposes of the business of the permanent

establishment, including executive and general administrative expenses so

incurred, whether in the State in which the permanent establishment is situated

or elsewhere.4. In so far 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 shall preclude

that Contracting State from determining the profits to be taxed by such an

apportionment as may be customary; the methods of apportionment adopted shall,

however, be such that, the result shall be in accordance with the principles

contained in this Article.5. No profits shall be

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

permanent establishment of goods or merchandise for the enterprise.6. For the purposes 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.7. Where profits include

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

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

provisions of this Article.Article

8SHIPPING1. Profits derived by an

enterprise of a Contracting State from the operation by that enterprise of

ships in international traffic shall be taxable only in that State.2. For the purposes of

this Article, profits from the operation of ships in international traffic

shall mean profits derived by an enterprise described in paragraph 1 from the

transportation by sea of passengers, mail, livestock or goods and shall

include:a. the charter or rental

of ships incidental to such transportation;b. the rental of

containers and related equipments used in connection with the operation of

ships in international traffic;c. the gains derived

from the alienation of ships, containers and related equipments owned and

operated by the enterprise in international traffic.1.2.3. For the purposes of

this Article, interest on funds connected with the operation of ships in

international traffic shall be regarded as profits derived from the operation

of such ships and the provisions of Article 11 shall not apply in relation to

such interest.4. The provisions of

paragraphs 1, 2 and 3 shall apply to profits from the participation in a pool,

a joint business or an international operating agency.Article

9ASSOCIATED

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 an

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 enterprises, 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.Article

10DIVIDENDS1. Dividends paid by a

company which is a resident of a Contracting State to a resident of the other

Contracting State may be taxed in that other State.2. However, such

dividends may also be taxed in the Contracting State of which the company

paying the dividends is a resident and according to the laws of that State, but

if the recipient is the beneficial owner of the dividends, the tax so charged

shall not exceed:a. 5 per cent. of the

gross amount of the dividends if the beneficial owner is a company which owns

at least ten per cent. of the shares of the company paying the dividend;b. 15 per cent. of the

gross amount of the dividends in all other cases.1.2.3. The term

"dividends" as used in this Article means income from shares or other

rights, not being debt-claims, participating in profits, as well as income from

other corporate rights which is subjected to the same taxation treatment as

income from shares by the laws of the State of which the company making the distribution

is a resident.4. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends,

being a resident of a Contracting State, carries on business in the other

Contracting State of which the company paying the dividends is a resident,

through a permanent establishment situated therein or performs in that other

State independent personal services from a fixed base situated therein, and the

holding in respect of which the dividends are paid is effectively connected

with such permanent establishment or fixed base. In such a case, the provisions

of Article 7 or Article 14, as the case may be, shall apply.5. Where a company which

is a resident of a Contracting State derives profits or income from the other

Contracting State, that other State may not impose any tax on the dividends

paid by the company except in so far as such dividends are paid to a resident

of that other State or in so far as the holding in respect of which the

dividends are paid is effectively connected with a permanent establishment or a

fixed base situated in that other State, nor subject the company's

undistributed profits to a tax on the company's undistributed profits, even if

the dividends paid or the undistributed profits consist wholly or partly of

profits or income arising in such other State.Article

11INTEREST1. Interest arising in a

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

taxed in that other State.2. However, such

interest may be taxed in the Contracting State in which it arises and according

to the laws of that State, but if the recipient is the beneficial owner of the

interest, the tax so charged shall not exceed:a. 5 per cent. of the

gross amount of the interest if such interest is paid on a loan granted by a

bank carrying on a bona fide banking business or by a similar financial

institution; andb. 12.5 per cent. of the

gross amount of the interest in all other cases.1.2.3. Notwithstanding the

provisions of paragraph 2 interest arising in a Contracting State shall be

exempt from tax in that State provided it is derived and beneficially owned by:i.

the

Government, a political sub-division or a local authority of the other

Contracting State; orii.

the

Central Bank of the other Contracting State.1.2.3.4. The term

"interest" as used in this Article means income from debt-claims of

every kind, whether or not secured by mortgage and whether or not carrying a

right to participate in the debtor's profits, and in particular, income from

Government securities and income from bonds or debentures including premiums

and prizes attaching to such securities, bonds or debentures. Penalty charges

for late payment shall not be regarded as interest for the purpose of this

Article.5. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,

being a resident of a Contracting State, carries on business in the other

Contracting State in which the interest arises, through a permanent

establishment situated therein or performs in that other State independent

personal services from a fixed base situated therein, and the debt-claim in

respect of which the interest is paid is effectively connected with such

permanent establishment or fixed base. In such case, the provisions of Article

7 or Article 14, as the case may be, shall apply.6. Interest shall be

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

itself, a political sub-division, a local authority or a resident of that

State. Where, however, the person paying the interest, whether he is a resident

of a Contracting State or not, has in a Contracting State a permanent

establishment or a fixed base in connection with which the indebtedness on

which the interest is paid was incurred, and such interest is borne by such

permanent establishment or fixed base, then such interest shall be deemed to

arise in the Contracting State in which the permanent establishment or fixed

base is situated.7. Where, by reason of a

special relationship between the payer and the beneficial owner or between both

of them and some other person, the amount of the interest, having regard to the

debt-claim for which it is paid, exceeds the amount which would have been

agreed upon by the payer and the beneficial owner in the absence of such

relationship, the provisions of this Article shall apply only to the

last-mentioned amount. In such case, the excess part of the payments shall

remain taxable according to the laws of each Contracting State, due regard

being had to the other provisions of this Agreement.Article

12ROYALTIES1. Royalties arising in

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

be taxed in that other State.2. However, such

royalties may also be taxed in the Contracting State in which they arise and

according to the laws of that State, but if the recipient is the beneficial

owner of the royalties the tax so charged shall not exceed 10 per cent. of the

gross amount of such royalties.3. The term

"royalties" as used in this Article means payment of any kind

received as a consideration for the use of, or the right to use, any copyright

of literary, artistic or scientific work, including cinematography films, or

films or tapes used for radio or television broadcasting, any patent, trade

mark, design or model, plan, secret formula or process, or for the use of, or

the right to use, industrial, commercial or scientific equipment, or for

information concerning industrial, commercial or scientific experience but do

not include royalties or other payments in respect of the operation of mines or

quarries or exploitation of petroleum or other natural resources.4. The provisions of

paragraphs I and 2 shall not apply if the beneficial owner of the royalties,

being a resident of a Contracting State, carries on business in the other

Contracting State in which the royalties arise, through a permanent

establishment situated therein or performs in that other State independent

personal services from a fixed base situated therein and the right or property

in respect of which the royalties are paid is effectively connected with such

permanent establishment or fixed base. In such a case, the provisions of

Article 7 or Article 14, as the case may be, shall apply.5. Royalties 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. Where,

however, the person paying the royalties, whether he is a resident of a

Contracting State or not, has in a Contracting State a permanent establishment

or a fixed base in connection with which the liability to pay the royalties was

incurred, and such royalties are borne by such permanent establishment or fixed

base, then such royalties shall be deemed to arise in the Contracting State in

which the permanent establishment or fixed base is situated.6. Where, by reason of a

special relationship between the payer and the beneficial owner or between both

of them and some other person, the amount of the royalties, having regard to

the use, right or information for which they are paid, exceeds the amount which

would have been agreed upon by the payer and the beneficial owner in the

absence of such relationship, the provisions of this Article shall apply only

to the lastmentioned amount. In such case, the excess part of the payments

shall remain taxable according to the laws of each Contracting State, due

regard being had to the other provisions of this Agreement.Article

13CAPITAL

GAINS1. Gains derived by a

resident of a Contracting State from the alienation of immovable property

referred to in paragraph 2 of Article 6 and situated in the other Contracting

State may be taxed in that other State.2. Gains from the

alienation of movable property forming part of the business property of a

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

Contracting State or of movable property pertaining to a fixed base available

to a resident of a Contracting State in the other Contracting State for the

purpose of performing independent personal services, including such gains from

the alienation of such a permanent establishment (alone or together with the

whole enterprise) or of such fixed base may be taxed in that other State.3. Gains from the

alienation of any property other than that mentioned in paragraphs 1 and 2

shall be taxable only in the Contracting State of which the alienator is a

resident.Article

14INDEPENDENT

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, except in the following circumstances when such income may also be taxed

in the other Contracting State:a. if he has a fixed

base regularly available to him in the other Contracting State for the purpose

of performing his activities; in that case, only so much of the income as is

attributable to that fixed base may be taxed in that other Contracting State;

orb. if his stay in the

other Contracting State is for a period or periods amounting to or exceeding in

the aggregate 183 days in the relevant "previous year" or "year

of income", as the case may be; in that case only so much of the income as

is derived from his activities performed in that other State may be taxed in

that other State.1.2. The term

"professional services" includes independent scientific, literary,

artistic, educational or teaching activities as well as the independent

activities of physicians, surgeons, lawyers, engineers, architects, dentists

and accountants.Article

15DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Articles 16, 17, 18, 19, 20 and 21, salaries, wages and other

similar remuneration derived by a resident of a Contracting State in respect of

an employment shall be taxable only in that State unless the employment is

exercised in the other Contracting State. If the employment is so exercised,

such remuneration as is derived therefrom may be taxed in that other State.2. Notwithstanding the

provisions of paragraph 1, remuneration derived by a resident of a Contracting

State in respect of an employment exercised in the other Contracting State

shall be taxable only in the first-mentioned State, ifa. the recipient is

present in the other State for a period or periods not exceeding in the

aggregate 183 days in the relevant "previous year" or "year of

income", as the case may be; andb. the remuneration is

paid by, or on behalf of, an employer who is not a resident of the other State;

andc. the remuneration is

not borne by a permanent establishment or a fixed base which the employer has

in the other State.1.2.3. Notwithstanding the

preceding provisions of this Article, remuneration derived in respect of an

employment exercised aboard a ship or aircraft operated in international

traffic by an enterprise of a Contracting State shall be taxable only in that

State.Article

16DIRECTORS'

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

17INCOME

EARNED BY ENTERTAINERS AND ATHLETES1. Notwithstanding the

provisions of Articles 14 and 15, income derived by a resident of a Contracting

State as an entertainer such as a theatre, motion picture, radio or television

artiste or a musician or as an athlete, from his personal activities as such

exercised in the other Contracting State may be taxed in that other State.2. Where income in

respect of personal activities exercised by an entertainer or an athlete in his

capacity as such accrues not to the entertainer or an athlete himself but to

another person, that income may, notwithstanding the provisions of Articles 7,

14 and 15, be taxed in the Contracting State in which the activities of the

entertainer or athlete are exercised.3. Notwithstanding the

provisions of paragraph 1, income derived by an entertainer or an athlete who

is a resident of a Contracting State from his personal activities as such

exercised in the other Contracting State, shall be taxable only in the

first-mentioned Contracting State, if the activities in the other Contracting

State are supported wholly or substantially from the public funds of the

first-mentioned Contracting State, including any of its political sub-divisions

or local authorities.4. Notwithstanding the

provisions of paragraph 2 and Articles 7, 14 and 15, where income in respect of

personal activities exercised by an entertainer or an athlete in his capacity

as such in a Contracting State accrues not to the entertainer or athlete

himself but to another person, that income shall be taxable only in the other

Contracting State, if that other person is supported wholly or substantially

from the public funds of that other State, including any of its political

sub-divisions or local authorities.Article

18REMUNERATION

AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE1.a. Remuneration, other

than a pension, paid by a Contracting State or a political sub-division or a

local authority thereof to an individual in respect of services rendered to

that State or sub-division or authority shall be taxable only in that State.b. However, such

remuneration shall be taxable only in the other Contracting State if the

services are rendered in that other State and the individual is a, resident of

that State who:i.

is

a national of that State; orii.

did

not become a resident of that State solely for the purpose of rendering the

services.1.2.a. Any pension paid by,

or out of funds created by a Contracting State or a political sub-division or a

local authority thereof to an individual in respect of services rendered to

that State or sub-division or authority shall be taxable only in that State.b. However, such pension

shall be taxable only in the other Contracting State, if the individual is a

resident of, and a national of that other State.1.2.3. The provisions of

Articles 15, 16 and 17 shall apply to remuneration and pensions in respect of

services rendered in connection with a business carried on by a Contracting

State or a political sub-division or a local authority thereof.Article

19NON-GOVERNMENT

PENSIONS AND ANNUITIES1. Any pension, other

than a pension referred to in Article 18, or any annuity derived by a resident

of a Contracting State from sources within the other Contracting State may be

taxed only in the first-mentioned Contracting State.2. The term

"pension" means a periodic payment made in consideration of past

services or by way of compensation for injuries received in the course of

performance of services.3. The term

"annuity" means a stated sum payable periodically at stated times

during life or during a specified or ascertainable period of time, under an

obligation to make the payments in return for adequate and full consideration

in money or money's worth.Article

20STUDENTS,

TRAINEES AND APPRENTICES1. An individual who is

a resident of a Contracting State and who is temporarily present in the other

Contracting State solely as a student at a recognised university, college,

school or other educational institution in that other Contracting State or as a

business or technical apprentice therein, for a period not exceeding six years

from the date of his first arrival in that other Contracting State in

connection with that visit, shall be exempt from tax in that other Contracting

State on--a. all remittances from

the first-mentioned Contracting State for the purposes of his maintenance,

education or training; andb. any remuneration (not

exceeding 20,000 Indian rupees or its equivalent sum in U.A.E. currency per

annum) for personal services rendered in that other Contracting State with a

view to supplementing the resources available to him for such purposes.1.2. An individual who is

a resident of a Contracting State and who is temporarily present in the other

Contracting State for the purpose of study, research or training solely as a

recipient of a grant, allowance or award from the Government of either of the

Contracting States or from a scientific, educational, religious or charitable

organisation or under a technical assistance programme entered into by the

Government of either of the Contracting States for a period not exceeding three

years from the date of his first arrival in that other Contracting State in

connection with that visit shall be exempt from tax in that other Contracting

State on--a. the amount of such

grant, allowance or award;b. all remittances from

the first-mentioned Contracting State for the purposes of his maintenance,

education or training; andc. any remuneration (not

exceeding 20,000 Indian rupees or its equivalent sum in U.A.E. currency per

annum) in respect of services in that other Contracting State if the services

are performed in connection with his study, research, training or are

incidental thereto.1.2.3. An individual who is

a resident of a Contracting State and who is temporarily present in the other

Contracting State solely as an employee of, or under contract with, an

enterprise of the first-mentioned Contracting State solely for the purpose of

acquiring technical, professional or business experience from a person other

than such enterprise, for a period not exceeding twelve months from the date of

his first arrival in that other Contracting State in connection with that visit

shall be exempt from tax in that other Contracting State on-a. all remittances from

the first-mentioned Contracting State for the purposes of his maintenance,

education or training; andb. any remuneration, so

far as it is not in excess of 20,000 Indian rupees or its equivalent sum in

U.A.E. currency per annum, for personal services rendered in that other

Contracting State, provided such services are in connection with the

acquisition of such experience.1.2.3.4. An individual who is

a resident of a Contracting State and who is temporarily present in the other

Contracting State under arrangements with the Government of that other

Contracting State solely for the purpose of training or study shall be exempt

from tax in that other Contracting State in respect of remuneration received by

him on account of such training or study.5. For the purposes of

this Article and Article 21,a.i.

an

individual shall be deemed to be a resident of India if he is resident in India

in the "previous year" in which he visits U.A.E. or in the

immediately preceding "previous year";ii.

an

individual shall be deemed to be a resident of U.A.E. if, immediately before

visiting India, he is a resident of U.A.E.;a.b. the term

"recognised" in relation to a university, college, school or other

educational institution in a Contracting State shall, in the case of doubt, be

determined by the competent authority of that State.Article

21PROFESSORS,

TEACHERS AND RESEARCHERS1. An individual who is

a resident of a Contracting State immediately before making a visit to the

other Contracting State, and who, at the invitation of any university, college,

school or other similar educational institution, which is recognised by the Government

a political sub-division or a local or statutory authority of that State,

visits that other Contracting State for a period not exceeding two years solely

for the purpose of teaching or research or both at such educational

institution, shall be exempt from tax in that other Contracting State on his

remuneration for such teaching or research2. This Article shall

not apply to income from research if such research is undertaken primarily for

the private benefit of a specific person or persons.Article

22OTHER

INCOME1. Subject to the

provisions of paragraph 2, items of income of a resident of a Contracting

State, wherever arising, which are not expressly dealt with in the foregoing

articles of this Agreement, shall be taxable only in that Contracting State.2. The provisions of

paragraph 1 shall not apply to income, other than income from immovable

property as defined in paragraph 2 of Article 6, if the recipient of such

income, being a resident of a Contracting State, carries on business in the

other Contracting State through a permanent establishment situated therein, or

performs in that other State independent personal services from a fixed base

situated therein, and the right or property in respect of which the income is

paid is effectively connected with such permanent establishment or fixed base.

In such case, the provisions of Article 7 or Article 14, as the case may be,

shall apply.Article

23CAPITAL1. Capital represented

by immovable property referred to in Article 6, owned by a resident of a

Contracting State and situated in the other Contracting State, may be taxed in

that State.2. Capital represented

by movable property forming part of the business property of a permanent

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

Contracting State, or by movable property pertaining to a fixed base available

to a resident of a Contracting State in the other Contracting State for the

purpose of performing independent personal services, may be taxed in that other

State.3. Capital represented

by ships operated in international traffic and by movable property pertaining

to the operation of such ships, shall be taxable only in the Contracting State

in which the place of effective management of the enterprise is situated.Article

24INCOME

OF GOVERNMENT AND INSTITUTIONS1. The Government of one

of the Contracting States shall be exempt from tax in the other Contracting

State in respect of any income derived by such Government from that other

Contracting State.2. For the purposes of

paragraph 1 of this Article, the term "Government"--a. In the case of India,

means the Government of India, and shall include:i.

the

political sub-divisions, the local authorities, the local administrations,and

the local Governments;ii.

the

Reserve Bank of India;iii.

any

such institution or body as may be agreed from time to time between the two

Contracting States;a.b. In the case of

U.A.E., means the Government of the United Arab Emirates, and shall include;i.

the

political sub-divisions, the local authorities, the local administrations and

the local Governments;ii.

the

Central Bank of the United Arab Emirates, Abu Dhabi Investment Authority and

Abu Dhabi Fund for Economic Development;iii.

any

such institution or body as may be agreed from time to time between the two

Contracting States.Article

25ELIMINATION

OF DOUBLE TAXATION1. The laws in force in

either of the Contracting States shall continue to govern the taxation of

income and capital in the respective Contracting States except where express

provisions to the contrary are made in this Agreement.2. Where a resident of

India derives income or owns capital which, in accordance with the provisions

of this Agreement, may be taxed in U.A.E., India shall allow as a deduction

from the tax on the income of that resident an amount equal to the income-tax

paid in U.A.E. whether directly or by deduction; and as a deduction from the

tax on the capital of that resident an amount equal to the capital tax paid in

U.A.E. Such deduction in either case shall not, however, exceed that part of

the income-tax or capital tax (as computed before the deduction is given) which

is attributable, as the case may be, to the income or the capital which may be

taxed in U.A.E. Further, when such resident is a company by which surtax is

payable in India, the deduction in respect of income-tax paid in U.A.E. shall

be allowed in the first instance from income-tax payable by the company in

India and as to the balance, if any, from the surtax payable by it in India.3. Subject to the laws

of the U.A.E. where a resident of the U.A.E. derives income which in accordance

with the provisions of this Agreement may be taxed in India, the U.A.E. shall

allow as a deduction from the tax on income of that person an amount equal to

the tax on income paid in India. Such deduction shall not, however, exceed that

part of income-tax as computed before the deduction is given, which is

attributable to the income which may be taxed in the U.A.E.4. For the purpose of

paragraph 3, the term "tax paid in India" shall be deemed to include

the amount of Indian tax which would have been paid if the Indian tax had not

been exempted or reduced in accordance with the special incentive measures

under the provisions of the Income-tax Act, 1961, which are designed to promote

economic development in India, effective on the date of signature of this

Agreement, or which may be introduced in the future in modification of, or in

addition to, the existing provisions for promoting economic development in

India, and such other incentive measures which may be agreed upon from time to

time by the Contracting States.5. Where, in accordance

with any provision of the Agreement, income derived or capital owned by a

resident of a Contracting State is exempt from tax in that State, such State

may, nevertheless, in calculating the amount of tax on the remaining income or

capital of such resident, take into account the exempted income or capital.Article

26NON-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 and under the same conditions are or

may be subjected.2. The taxation on 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

Contracting State than the taxation levied on enterprises of that Contracting

State carrying on the same activities in the same circumstances or under the

same conditions.3. The provisions of

this Article 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 requirement 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 in the same

circumstances and under the same conditions.5. In this Article, the

term "taxation" means taxes which are the subject of this Agreement.Article

27MUTUAL

AGREEMENT PROCEDURE1. Where a resident of a

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

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

Agreement, 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. This case must be presented within two years

of the date of receipt of notice of the action which gives rise to taxation not

in accordance with the Agreement.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 avoidance of taxation not in accordance with the

Agreement. Any Agreement reached shall be implemented notwithstanding any time

limits in the national laws of the Contracting States.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 Agreement. When it seems advisable in order to reach

agreement to have an oral exchange of opinion, such exchange may take place

through a commission consisting of representatives of the competent authorities

of the Contracting States. They may also consult together for the elimination

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

authorities of the Contracting States may communicate with each other directly

for the purpose of applying this Agreement.Article

28EXCHANGE

OF INFORMATION1. The competent

authorities of the Contracting States shall exchange such information as is

necessary for carrying out the provisions of the Agreement or for the

prevention or detection of evasion of taxes which are the subject of this

Agreement. Any information so exchanged shall be treated as secret but may be

disclosed only to persons (including a court or administrative body) concerned

with the assessment, collection, enforcement, investigation or prosecution in

respect of the taxes which are the subject of this Agreement, or to persons

with respect to whom the information relates.2. The exchange of

information may also be on request with reference to particular cases.3. In no case shall the

provisions of paragraph 1 be construed so as to impose on a Contracting State

the obligation:a. to carry out

administrative measures at variance with the laws or administrative practice of

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

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

the administration of that or of the other Contracting Statec. to supply information

of documents 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 (ordre public).Article

29DIPLOMATIC

AND CONSULAR ACTIVITIESNothing

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

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

of special agreements.Article

30ENTRY

INTO FORCE1. Each of the

Contracting States shall notify to the other the completion of the proceedings

required by its law for the bringing into force of this Agreement. The

Agreement shall enter into force on the date of the later of these

notifications and shall thereupon have effect-a. In the United Arab

Emirates:In

respect of income derived on or after the 1st January next following the

calendar year in which the Agreement enters into force and in respect of

capital which is held at the expiry of the calendar year next following that in

which the Agreement enters into force or subsequent years;a.b. In India:In

respect of income arising in any "previous year" beginning on or

after 1st April next following the calendar year in which the Agreement enters

into force and in respect of capital which is held at the expiry of any

"previous year" beginning on or after 1st April next following the

calendar year in which the Agreement enters into force.Article

31TERMINATIONThis

Agreement shall remain in force indefinitely, but either of the Contracting

States may, on or before 30th June in any calendar year beginning after the

expiration of a period of five years from the date of its entry into force,

give to the other Contracting State, through diplomatic channels, written

notice of termination. In such event, the Agreement shall cease to have

effect--a.

In

the United Arab Emirates:in

respect of income derived on or after 1st January next following the calendar

year in which the notice of termination is given and in respect of capital

which is held at the expiry of the calendar year next following that in which

the notice of termination is given or subsequent years;a.b. In India:in

respect of income arising in any "previous year" beginning on or

after 1st April next following the calendar year in which the notice of

termination is given and in respect of capital which is held at the expiry of

any "previous year" beginning on or after 1st April next following

the calendar year in which the notice of termination is given.IN

WITNESS WHEREOF,

the undersigned, being duly authorised thereto, have signed this Agreement.Done

in two originals at New Delhi on this Wednesday, 29th day of April, One

Thousand Nine Hundred and Ninety-Two corresponding to the 27th day of Shawwal

1412H in the Hindi, Arabic and English languages, all texts being equally

authentic. In case of divergence amongst the texts, the English text shall be

the operative one.For

the Government of the Republic of IndiaFor

the Government of the United Arab Emirates(Sd.)

Dr. Manmohan Singh, (Sd.) Hamdan Bin Rashid Al Maktoum,Minister

of Finance. Minister of Finance and Industry.PROTOCOLAt

the signing today of the Agreement between the Government of the Republic of

India and the Government of the United Arab Emirates for the Avoidance of

Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on

income and on capital, the undersigned have agreed upon the following

provisions which shall form an integral part of this Agreementi.

Subject

to the provisions of Article 5, nothing in this Agreement shall affect the

right of the Government of the United Arab Emirates, its political

sub-divisions, local authorities or local Governments to apply its own laws

related to the taxation of income derived from the petroleum and natural

resources; such activities will be taxed according to the laws of the United

Arab Emirates;ii.

Notwithstanding

the provisions of Article 6 and Article 23, the residential property owned by a

national of a Contracting