New Delhi: Ahead of Prime Minister Narendra Modi's visit to South Korea this month, the Cabinet Wednesday approved revising the double tax avoidance pact with Seoul to provide tax stability and facilitate flow of investment and technology between the countries.
The Cabinet headed by the Prime Minister gave its approval for revising the Double Taxation Avoidance Convention between India and South Korea, an official release said.
The agreement was signed in 1985.
"The revised DTAA will provide tax stability to the residents of India and Korea and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between the two countries," it said.
The revised pact provides for source-based taxation of capital gains and provisions for making adjustments to profits of associated enterprises on arm's length principle.
It also provides for residence-based taxation of shipping income, provisions for service of permanent establishment, rationalises tax rates in the Articles on Dividends, Interest and Royalties and Fees for Technical Services.
"The Agreement further incorporates provisions for effective exchange of information and assistance in collection of taxes between tax authorities and also incorporates limitation of benefits provisions, to ensure that the benefits of the Agreement are availed of by genuine residents of both countries," the release said.
On a three-nation tour beginning May 14, Modi will visit China, Mongolia and South Korea. He will visit South Korea on May 18-19.
"We look forward to harnessing Korean capabilities and investments in infrastructure, manufacturing, ship building, energy, defence production," the PMO said in a release.
