OBJECTIVE In the present era of cross-border transactions across the globe, the effect of taxation is one of the important considerations for any trade and investment decisions in other countries. Where a taxpayer is resident in one country but has a source of income situated in another country it gives rise to possible double taxation, to address the same Double Taxation Avoidance Agreements (DTAAs) are entered between countries. In this webinar, we shall understand and analyse the DTAA entered by India-UAE.

1. Analysis of DTAA between India
and UAE
Dr. CA. Nabeel Ahmed B.com, ACA, CMA, AICWA, AIA, MBA, Ph.D.

2. Research
Credits
Harish Kumar

3. Legends used in the Presentation
BO Beneficial Owner
DTAA Double Taxation Avoidance Agreements
PE Permanent Establishment
POEM Place of Effective Management
UAE United Arab Emirates

4. Presentation Schema
Introduction Overview
Permanent
Establishment
Income from
Immovable
property
Business
Profits
Shipping
Associated
Enterprises
Dividends Interest Royalties
Fees for
Technical
Services
Capital Gains
Independent
Personal
Services
Dependent
Personal
Services
Directors’
Fees
Artistes and
Athletes
Government
Functions
Non-
Government
Pensions and
Annuities
Students and
Apprentices
Professors,
Teachers And
Research
Scholars
Other Income Miscellaneous

5. Introduction and Overview

6. Introduction
In the present era of cross-border transactions across the globe, the effect of taxation is one of the
important considerations for any trade and investment decisions in another countries
Where a taxpayer is resident in one country but has a source of income situated in another country
it gives rise to possible double taxation
Double Taxation Avoidance Agreements (DTAAs) lay down rules for taxation of the income by the
source country and the residence country
Such rules are laid for various categories of income such as interest, dividends, royalties, capital
gains, business income etc.
Each category is dealt with by a separate article in the relevant DTAA
The provisions of DTAA are then compared with domestic law; whichever are beneficial can be opted by
the assessee
In this webinar, we shall focus on analysing the provisions of DTAA between India and UAE whereby a non-
resident Indian (resident of UAE) has income connected with sources in India. Thus, in this context,
Contracting State shall be UAE and other Contracting State shall be India

7. Overview of United Arab Emirates
(UAE)
The economy of the UAE is the second largest in the Middle East
The UAE enjoys a strategic location between Asia, Europe and Africa
The UAE has several multi-specialty free zones which offer several economic incentives such as exemption
from corporate taxes and import/export duties and full foreign ownership with 100 % profit repatriation

8. List of Articles
Personal Scope Shipping
Dependent Personal
Services Other Income Limitation Of Benefits
Taxes Covered Associated Enterprises Directors' Fees Capital
Diplomatic And
Consular Activities
General Definitions Dividends
Income Earned By
Entertainers And
Athletes
Income Of Government
And Institutions Entry Into Force
Resident Interest
Remuneration And
Pensions In Respect Of
Government Service
Elimination Of Double
Taxation Termination
Permanent
Establishment Royalties
Non-Government
Pensions And Annuities Non-Discrimination
Income From
Immovable Property Capital Gains
Students, Trainees And
Apprentices
Mutual Agreement
Procedure
Business Profits
Independent Personal
Services
Professors, Teachers
And Researchers
Exchange Of
Information
The list of Articles entered between India-UAE are as follows
We shall discuss the major components of income while doing the said analysis

9. Analysis of DTAA

10. Article 5 – Permanent Establishment
Permanent Establishment (PE) means a fixed place of business through which the business of the
enterprise is wholly or partly carried on
The term shall include
a place of
management ;
a branch ; an office ; a factory ; a workshop ;
a warehouse, in
relation to a person
providing storage
facilities for others
a mine, an oil or gas
well, a quarry or any
other place of
extraction of natural
resources
a firm, plantation or
other place where
agricultural, forestry,
plantation or related
activities are carried on
a building site or construction
where such site, project or
supervisory activity continues
for a period of more than 9
months
The term shall not include
he use of facilities solely for the purpose of storage or display of merchandise belonging to the enterprise ;
the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of
storage or display ;
the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of
processing by another enterprise

11. Income from Immovable property and
Business Profits
Income from immovable property may be taxed in India in which such property is situated
Immovable property shall be construed as defined by Indian laws in which the property is situated
Income tax rate for Income from Immovable property (being rental income) in India would be based on
slab rates
The profits of an enterprise of UAE shall be taxable only in UAE unless the enterprise carries on business in India
through a PE
The profits of the enterprise may be taxed in India to the extent attributable to that PE
Deduction of expenses including executive and general administrative expenses are allowed
The profits to be attributed to the PE shall be determined by the same method every year unless there is sufficient
reason to change
Income tax rate for Business Profits in India would range from 22% to 30%
Article 7 – Business Profits
Article 6 - Income from Immovable property

12. Article 8 - Shipping
Profits derived by an enterprise of UAE from the operation by that enterprise of ships in international
traffic shall be taxable only in UAE
Profits from the operation of ships in international traffic shall mean profits derived from the
transportation by sea of passengers, mail, livestock or goods and shall include
• the charter or rental of ships
• the rental of containers and related equipments used in connection with the operation of ships in
international traffic
• the gains derived from the alienation of ships, containers and related equipments owned and
operated by the enterprise in international traffic
The provisions are also applicable to profits from the participation in a pool, a joint business or an
international operating agency
Article 11 (Interest) shall not apply for interest on funds connected with the operation of ships or
aircraft in international traffic is received
Income tax rate in India for such activity is 7.5%
Operation of ships or aircraft shall mean business of transportation of persons, mail, livestock or goods, carried on by the owners or
lessees or charterers of the ships or aircraft, including the sale of tickets for transportation on behalf of others, the incidental lease of
ships or aircraft and any other activity directly connected with transportation

13. Article 9 – Associated Enterprises
Where an enterprise of UAE participates, directly or indirectly, in the management, control or capital of an
enterprise of India, or the same persons participate, directly or indirectly, in the management, control or
capital of an enterprise of UAE and an enterprise of India, profit of first mentioned enterprise may be
included in the profits of the second mentioned enterprise and taxed accordingly

14. Article 10 - Dividends
Dividends paid by a company which is a resident of UAE to a resident of India may be taxed in India
However, such dividends may also be taxed in UAE where the company paying the dividends is a resident
if the recipient is the Beneficial Owner (BO) of the dividends; such dividend shall be charged at rate not
exceeding 10 %
The provisions shall not apply if the BO, being a resident of UAE, carries on business in India where the
company paying the dividends is a resident, through a PE (as dealt specifically in Article 5 and 7)

15. Article 11 - Interest
Interest arising in UAE and paid to a resident of India may be taxed in India
However, such interest may be taxed in UAE in which it arises, but if the recipient is the BO of the interest,
the tax so charged shall not exceed
• 5 % of the gross amount of the interest if such interest is paid on a loan granted by a bank or by a
similar financial institution ; and
• Other cases - 12.5 %
Interest arising in UAE shall be exempt from tax in India provided it is derived and beneficially owned by :
• the Government, a political sub-division or a local authority of India ; or
• the Central Bank of the India
The provisions shall not apply if the BO of the interest, being a resident of UAE, carries on business in India
in which the interest arises, through a PE (as dealt specifically in Article 5 and 7)

16. Article 12 - Royalties
Royalties arising in UAE and paid to a resident of India may be taxed in India
Such royalties may also be taxed in UAE in which they arise, and according to the law of UAE, but the
tax so charged shall not exceed 10 % of the gross amount of the royalties
The provisions shall not apply if the recipient of the royalties, being a resident of UAE carries on
business in India in which the royalties arise, through a PE (as dealt specifically in Article 5 and 7)
Royalties are taxed at the rate of 10% in India
Fees for technical services is not specifically covered in DTAA between India and UAE

17. Article 13 – Capital Gains
Gains from the alienation of immovable property, may be taxed in UAE in which such property is
situated
Gains from the alienation of movable property forming part of the business property of a PE
which an enterprise of UAE has in India may be taxed in India
Gains from the alienation of shares of the capital stock of a company the property of which
consists directly or indirectly principally of immovable property situated in UAE may be taxed
in UAE. However, in other cases where gains arising from alienation of shares in UAE/ India
where the company is a resident
In all other cases gains from the alienation of any property shall be taxable only in UAE of which
the alienator is a resident
In India Capital Gains are taxable at the rate of 10%, 20% or slab rates depending on the type of
capital assets
Alienation means the sale, exchange, transfer, or relinquishment of the property or the extinguishment of any rights therein or the
compulsory acquisition thereof under any law in force in the respective Contracting States.

18. Article 14 – Independent Personal
Services
Income derived by a resident of UAE in respect of professional services or other independent activities
of a similar character shall be taxable only in UAE
However, in the following circumstances such income may also be taxed in India:
• if he has a fixed base regularly available to him in India for the purpose of performing his activities
• if his stay in India is for a period or periods amounting to or exceeding in the aggregate 183 days in
the relevant previous year
Here, the income shall be taxable to the extent attributable to the fixed base or based on his stay
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.

19. Article 15 – Dependent Personal
Services
Salaries, wages and other similar remuneration derived by a resident of UAE in respect of an
employment shall be taxable in UAE unless the employment is exercised in India
Remuneration derived by a resident of UAE in respect of an employment exercised in India shall be
taxable only in the first mentioned State, if
• the recipient is present in India for a period or periods not exceeding in the aggregate 183 days in
the relevant previous year and
• the remuneration is paid by, or on behalf of, an employer who is not a resident of India, and
• the remuneration is not borne by a PE or a fixed base which the employer has in India
Remuneration in respect of an employment exercised aboard a ship or aircraft in international traffic,
may be taxed only in UAE in which the POEM of the enterprise is situated

20. Directors’ Fees, Artistes and Athletes
Directors' fees and other similar payments derived by a resident of UAE in his capacity as a
member of the board of directors of a company which is a resident of India may be taxed in India
Article 16 – Directors’ Fees
• 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 UAE in which these
activities are exercised
• Where income is derived from personal activities exercised by an entertainer or an athlete in his capacity
as such, and accrues not to the entertainer or athlete himself but to another person, that income may,
be taxed in UAE/ India in which the activities of the entertainer or athlete are exercised
Article 17 - Artistes and Athletes

21. Government Functions, Non-Government
Pensions and Annuities
Remuneration, other than a pension, paid by UAE or a political sub-division or a local authority thereof to an
individual in respect of services rendered to UAE or sub-division or authority shall be taxable only in UAE
However, such remuneration shall be taxable only in India if the services are rendered in India and the individual is
a resident of India who
• is a national of India or
• did not become a resident of India solely for the purpose of rendering the services
Any pension paid by, or out of funds created by UAE or a political sub-division or a local authority thereof to an
individual in respect of services rendered to UAE or sub-division or authority shall be taxable only in UAE
However, such pension shall be taxable only in India if the individual is a resident of, and a national of India
Any pension, other than a pension referred to in article 18, or any annuity derived by a resident of UAE from
sources within India shall be taxed only in UAE
Article 18 – Government Functions
Article 19 – Non-Government Pensions and Annuities

22. Article 20 - Students and Apprentices
An individual who is resident of UAE and is temporarily present in India solely as a student at a recognised university,
college, school or other educational institution in India or as a business or technical apprentice therein, for a period not
exceeding 6 years from the date of his first arrival in India in connection with that visit, shall be exempt from tax in India
on
all remittances from UAE for the purposes of his maintenance, education or training ; and
any remuneration (not exceeding INR 20,000 or its equivalent sum in UAE currency p.a)
for personal services rendered in India with a view to supplementing the resources
available to him for such purposes
An individual who is resident of UAE and is temporarily present in India for the purpose of study, research or training
solely as a recipient of a grant, allowance or award for a period not exceeding 3 years from the date of his first arrival to
India in connection with that visit shall be exempt from tax in India on
the amount of such grant, allowance or award ;
all remittances from the UAE for the purposes of his maintenance, education or training ; and
any remuneration (not exceeding INR 20,000 or its equivalent sum in UAE currency per annum) in respect of
services in India if the services are performed in connection with his study, research, training or are incidental
thereto

23. Contd.
An individual who is resident of UAE and is temporarily present India solely as an employee of or under contract
for a period not exceeding 12 months from the date of his first arrival in India in connection with that visit shall
be exempt from tax in India on
all remittances from UAE for the purposes of his maintenance, education or training and
any remuneration, so far as it is not in excess of INR 20,000 or its equivalent sum in UAE currency
p.a, for personal services rendered in India, provided such services are in connection with the
acquisition of such experience

24. Article 21 - Professors, Teachers And
Research Scholars
• A professor, teacher and research scholar who is or was a resident of UAE immediately
before visiting India at the invitation of India or of a university, college, school or other
approved institution in India for the purpose of teaching or engaging in research, or both,
shall be exempt from tax in India on any remuneration for such teaching or research for a
period not exceeding 2 years from the date of his arrival in India
• However, it will not apply to income from research if the research is undertaken
primarily for the private benefit of a specific person or persons

25. Article 22 – Other Income
Items of income of a resident of UAE, wherever arising, which are not expressly dealt with in the
foregoing articles of this Convention, shall be taxable only in that Contracting State
The provisions shall not apply to income, other than income from immovable property if the
recipient of such income, being a resident of UAE, carries on business in India through a PE
Fees for technical services may get covered within the ambit of this Article

26. Miscellaneous

27. Article 23 - Capital
Capital represented by immovable property, owned by a resident of UAE and situated in India, may be
taxed in India
Capital represented by movable property forming part of the business property of a PE which an
enterprise of UAE has in India, or by movable property pertaining to a fixed base available to a resident of
UAE in India for the purpose of performing independent personal services, may be taxed in India
Capital represented by ships operated in international traffic and by movable property pertaining to the
operation of such ships, shall be taxable only in UAE in which the POEM of the enterprise is situated

28. Article 24 and 25
The Government of UAE shall be exempt from tax, including capital gains tax, in India in respect of any income
derived by UAE Government from India
Article 25 – Elimination of Double Taxation
Where a resident of India derives income or owns capital which, in accordance with the provisions of this
Agreement, may be taxed in UAE, India shall allow as a deduction from the tax on the income of that
resident an amount equal to the income-tax paid in UAE 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 UAE
Where a resident of the UAE derives income which in accordance with the provisions of this Agreement
may be taxed in India, the UAE shall allow as a deduction from the tax on income of that person an
amount equal to the tax on income paid in India
However, the credit shall not be allowed in one country for excess tax paid in another country. For e.g. If
for an income, tax levied in India is Rs. 100 and the tax levied on the same income in UAE is Rs. 80. The
UAE resident can take credit only to an extent of Rs. 80. He cannot ask refund of Rs. 20 paid in India from
the UAE government
Article 24 – Income of Government and Institutions

29. Article 27, 29 and 30
When a resident of UAE feels that action of one or both of UAE/ India will result in taxation not in accordance
with DTAA, he may present his case to the competent authorities in UAE within 2 years from the date of such
action
Article 29 – Limitation of Benefits
An entity which is a resident of UAE shall not be entitled to the benefits of this Agreement if the main
purpose or one of the main purposes of the creation of such entity was to obtain the benefits of this
Agreement that would not be otherwise available
Article 30 – Diplomatic and Consular Activities
Nothing 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 27 – Mutual Agreement Procedure

30. Thank You!
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