Section 90 of the Income-tax Act, 1961 – Double Taxation Agreement – Agreement for Exchange of Information with respect to taxes with Bermuda
NOTIFICATION NO. 5/2011 [F. NO. 503/2/2009-FTD-I], DATED 24-1-2011
WHEREAS, an Agreement between the Government of the Republic of India and Bermuda as authorised by the Government of the United Kingdom of Great Britain and Northern Ireland for the Exchange of Information with respect to taxes was signed at New Delhi on the 7th day of October, 2010;
AND WHEREAS, the date of entry into force of the said Agreement is the 3rd day of November, 2010, being the date of later of the notifications of completion of the procedures as required by the respective laws for entry into force of the said Agreement, in accordance with paragraph 2 of Article 12 of the said Agreement;
AND WHEREAS, sub-paragraph (a ) of paragraph 2 of Article 12 of the said Agreement provides that the provisions of the said Agreement shall have effect with respect to criminal tax matters on that date and sub-paragraph (b) of paragraph 2 of Article 12 of the said Agreement provides that the provisions of the said Agreement shall have effect with respect to all other matters covered in Article 1, for taxable periods beginning on or after that date, or where there is no taxable period, for all charges to tax arising on or after that date;
NOW, THEREFORE, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Agreement, as set out in the Annexure hereto, shall be given effect to in the Union of India with respect to criminal tax matters immediately and with respect to all other matters covered in Article 1, for taxable periods beginning on or after the 3rd day of November, 2010, or where there is no taxable period, for all charges to tax arising on or after the 3rd day of November, 2010.
AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA
AND BERMUDA AS AUTHORISED BY THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND FOR THE EXCHANGE OF INFORMATION WITH RESPECT TO TAXES
The Government of the Republic of India and the Government of Bermuda, desiring to enhance co-operation and facilitate the exchange of information with respect to taxes, have agreed as follows :
Article 1 : OBJECT AND SCOPE OF THE AGREEMENT – The competent authorities of the Contracting Parties shall provide assistance through exchange of information that is relevant to the administration and enforcement of the domestic laws of the Contracting Parties concerning taxes covered by this Agreement. Such information shall include information that is relevant to the determination, assessment and collection of such taxes, the recovery and enforcement of tax claims, or the investigation or prosecution of tax matters. Information shall be exchanged in accordance with the provisions of this Agreement. The rights and safeguards secured to persons by the laws or administrative practice of the requested Party remain applicable to the extent that they do not unduly prevent or delay effective exchange of information.
Article 2 : JURISDICTION – Information shall be exchanged in accordance with this Agreement without regard to whether the person to whom the information relates is, or whether the information is held by, a resident of a Contracting Party. However, a Requested Party is not obliged to provide information which is neither held by its authorities nor is in the possession or control of persons who are within its territorial jurisdiction.
Article 3 : TAXES COVERED – 1. The taxes which are the subject of this Agreement are :
(a) in India, taxes of every kind and description, imposed by the Central Government or the Governments of political sub-divisions or local authorities, irrespective of the manner in which they are levied;
(b) in Bermuda, direct taxes of every kind and description imposed by the Central Government or the Governments of political sub-divisions or local authorities, irrespective of the manner in which they are levied.
2. This Agreement shall also apply to any identical or substantially similar taxes imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting Parties shall notify each other of any substantial changes to the taxation and related information gathering measures which may affect the obligations of that Party pursuant to this Agreement.
Article 4 : DEFINITIONS – 1. For the purposes of this Agreement, unless otherwise defined :
(a) the term “India” means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea;
(b) the term “Bermuda” means the Islands of Bermuda;
(c) the term “Contracting Party” means India or Bermuda as the context requires;
(d) the term “competent authority” means
(i) in the case of India, the Finance Minister, Government of India, or his authorized representative;
(ii) in the case of Bermuda, the Minister of Finance or an authorised representative of the Minister;
(e) the term “person” includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting Parties;
(f) the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;
(g) the term “publicly traded company” means any company whose principal class of shares is listed on a recognised stock exchange provided its listed shares can be readily purchased or sold by the public. Shares can be purchased or sold “by the public” if the purchase or sale of shares is not implicitly or explicitly restricted to a limited group of investors;
(h) the term “principal class of shares” means the class or classes of shares representing a majority of the voting power and value of the company;
(i) the term “recognised stock exchange” means
(i) in India, the National Stock Exchange, the Bombay Stock Exchange, and any other stock exchange recognised by the Securities and Exchange Board of India;
(ii) in Bermuda, the Bermuda Stock Exchange; and
(iii) any other stock exchange which the competent authorities agree to recognise for the purposes of this Agreement;
(j) the term “collective investment fund or scheme” means any pooled investment vehicle, irrespective of legal form;
(k) the term “public collective investment fund or scheme” means any collective investment fund or scheme provided the units, shares or other interests in the fund or scheme can be readily purchased, sold or redeemed by the public. Units, shares or other interests in the fund or scheme can be readily purchased, sold or redeemed “by the public” if the purchase, sale or redemption is not implicitly or explicitly restricted to a limited group of investors;
(l) the term “tax” means any tax to which this Agreement applies;
(m) the term “requesting Party” means the Contracting Party submitting a request for information to, or having received information from, the requested Party;
(n) the term “requested Party” means the Contracting Party which is requested to provide information or which has provided information;
(o) the term “information gathering measures” means laws and administrative or judicial procedures that enable a Contracting Party to obtain and provide the requested information;
(p) the term “information” means any fact, statement, document or record in whatever form.
2. The term “relevant” wherever used in the Agreement with respect to information, shall be interpreted in a manner that ensures that information will be considered relevant notwithstanding that a definite assessment of the pertinence of the information to an on-going investigation could only be made following the receipt of the information.
3. As regards the application of this Agreement at any time by a Contracting Party, any term not defined therein shall, unless the context otherwise requires or the competent authorities agree to a common meaning pursuant to the provisions of Article 11 of this Agreement, have the meaning that it has at that time under the law of that Party, any meaning under the applicable tax laws of that Party prevailing over a meaning given to the term under other laws of that Party.
Article 5 : EXCHANGE OF INFORMATION UPON REQUEST – 1. The competent authority of the requested Party shall provide upon request information for the purposes referred to in Article 1. Such information shall be exchanged without regard to whether the requested Party needs such information for its own tax purposes or whether the conduct being investigated would constitute a crime under the laws of the requested Party if such conduct occurred in the requested Party.
2. If the information in the possession of the competent authority of the requested Party is not sufficient to enable it to comply with the request for information, that Party shall use all relevant information gathering measures to provide the requesting Party with the information requested, notwithstanding that the requested Party may not need such information for its own tax purposes.
3. If specifically requested by the competent authority of the requesting Party, the competent authority of the requested Party shall provide information under this Article, to the extent allowable under its domestic laws, in the form of depositions of witnesses and authenticated copies of original records.
4. Each Contracting Party shall ensure that its competent authority, for the purposes of this Agreement, has the authority to obtain and provide upon request :
(a) information held by banks, other financial institutions, and any person, including nominees and trustees, acting in an agency or fiduciary capacity;
(b) information regarding the legal and beneficial ownership of companies, partnerships, collective investment funds or schemes, trusts, foundations, “Anstalten” and other persons, including, within the constraints of Article 2, ownership information on all such persons in an ownership chain; in the case of collective investment funds or schemes, information on shares, units and other interests; in the case of trusts, information on settlors, trustees and beneficiaries; in the case of foundations, information on founders, members of the foundation council and beneficiaries; and equivalent information in case of entities that are neither trusts nor foundations.
5. This Agreement does not create an obligation on the Contracting Parties to obtain or provide ownership information with respect to publicly traded companies or public collective investment funds or schemes unless such information can be obtained without giving rise to disproportionate difficulties.
6. The competent authority of the requesting Party shall provide the following information to the competent authority of the requested Party when making a request for information under the Agreement to demonstrate the relevance of the information to the request :
(a) the identity of the person under examination or investigation;
(b) the period for which information is requested;
(c) the nature of the information requested and the form in which the requesting Party would prefer to receive it;
(d) the tax purpose for which the information is sought;
(e) grounds for believing that the information requested is present in the requested Party or is in the possession or control of a person within the jurisdiction of the requested Party;
(f) to the extent known, the name and address of any person believed to be in possession or control of the requested information;
(g) a statement that the request is in conformity with the laws and administrative practices of the requesting Party, that if the requested information was within the jurisdiction of the requesting Party then the competent authority of the requesting Party would be able to obtain the information under the laws of the requesting Party or in the normal course of administrative practice and that it is in conformity with this Agreement;
(h) a statement that the requesting Party has pursued all means available in its own territory to obtain the information, except those that would give rise to disproportionate difficulties.
7. The competent authority of the requested Party shall forward the requested information as promptly as possible to the requesting Party. To ensure a prompt response, the competent authority of the requested Party shall :
(a) Confirm receipt of a request in writing to the competent authority of the requesting Party and shall notify the competent authority of the requesting Party of deficiencies in the request, if any, within 60 days of the receipt of the request.
(b) If the competent authority of the requested Party has been unable to obtain and provide the information within 90 days of receipt of the request, including if it encounters obstacles in furnishing the information or it refuses to furnish the information, it shall immediately inform the requesting Party, explaining the reason for its inability, the nature of the obstacles or the reasons for its refusal.
Article 6 : TAX EXAMINATIONS ABROAD – 1. At the request of the competent authority of the requesting Party, the requested Party may allow representatives of the competent authority of the requesting Party to enter the territory of the requested Party, to the extent permitted under its domestic laws, to interview individuals and examine records with the prior written consent of the individuals or other persons concerned. The competent authority of the requesting Party shall notify the competent authority of the requested Party of the time and place of the intended meeting with the individuals concerned.
2. At the request of the competent authority of the requesting Party, the requested Party may allow representatives of the competent authority of the requesting Party to be present at the appropriate part of a tax examination in the requested Party, in which case the competent authority of the requested Party conducting the examination shall, as soon as possible, notify the competent authority of the requesting Party about the time and place of the examination, the authority or official designated to carry out the examination and the procedures and conditions required by the requested Party for the conduct of the examination. All decisions with respect to the conduct of the tax examination shall be made by the Party conducting the examination.
Article 7 : POSSIBILITY OF DECLINING A REQUEST FOR INFORMATION – 1. The competent authority of the requested Party may decline to assist :
(a) where the request is not made in conformity with this Agreement; or
(b) where the requesting Party has not pursued all means available in its own territory to obtain the information, except where recourse to such means would give rise to disproportionate difficulty; or
(c) where disclosure of the information would be contrary to public policy (ordre public) of the requested Party.
2. This Agreement shall not impose on a Contracting Party the obligation :
(i) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, provided that information described in paragraph 4 of Article 5 shall not be treated as such a secret or trade process merely because it meets the criteria in that paragraph; or
(ii) to obtain or provide information, which would reveal confidential communications between a client and an attorney, solicitor or other admitted legal representative where such communications are :
(a) produced for the purposes of seeking or providing legal advice; or
(b) produced for the purposes of use in existing or contemplated legal proceedings; or
(iii) to carry out administrative measures at variance with its laws and administrative practices, provided nothing in this sub-paragraph shall affect the obligations of a Contracting Party under paragraph 4 of Article 5.
3. A request for information shall not be refused on the ground that the tax claim giving rise to the request is disputed.
4. The requested Party shall not be required to obtain and provide information which the requesting Party would be unable to obtain in similar circumstances under its own laws for the purpose of the administration or enforcement of its own tax laws or in response to a valid request from the requested Party under this Agreement.
5. The requested Party shall not decline to provide information solely because the request does not include all the information required under Article 5 if the information can otherwise be provided according to the law of the requested Party.
Article 8 : IMPLEMENTATION LEGISLATION – The Contracting Parties shall enact any legislation necessary to comply with, and give effect to, the terms of the Agreement.
Article 9 : CONFIDENTIALITY – Any information received by a Contracting Party under this Agreement shall be treated as confidential and may be disclosed only to persons or authorities (including courts and administrative bodies) in the jurisdiction of the Contracting Party concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by this Agreement. Such persons or authorities shall use such information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. The information may not be disclosed to any other person or entity or authority or any other jurisdiction (including a foreign Government) without the express written consent of the competent authority of the Requested Party.
Article 10 : ADMINISTRATIVE COSTS – 1. Unless the competent authorities of the Parties otherwise agree, ordinary costs incurred in providing assistance shall be borne by the requested Party, and, subject to the provisions of this Article, extraordinary costs incurred in providing assistance (including costs of engaging external advisors in connection with litigation or otherwise necessary to comply with the request) shall, if they exceed US $ 500, be borne by the requesting Party.
2. The competent authorities will consult each other, in advance, in any particular case where extraordinary costs are likely to exceed US $ 500 to determine whether the requesting party will continue to pursue the request and bear the cost.
3. The competent authorities shall consult from time to time with regard to this Article.
Article 11 : MUTUAL AGREEMENT PROCEDURE – 1. Where difficulties or doubts arise between the Contracting Parties regarding the implementation or interpretation of the Agreement, the competent authorities shall endeavour to resolve the matter by mutual agreement. In addition, the competent authorities of the Contracting Parties may mutually agree on the procedures to be used under Articles 5 and 6 of this Agreement.
2. The competent authorities of the Contracting Parties may communicate with each other directly for purposes of reaching agreement under this Article.
Article 12 : ENTRY INTO FORCE – 1. The Contracting Parties shall notify each other in writing of the completion of the procedures required by the respective laws for the entry into force of this Agreement.
2. This Agreement shall enter into force on the date of the later of the notifications referred to in paragraph 1 of this Article and shall thereupon have effect —
(a) with respect to criminal tax matters on that date; and
(b) with respect to all other matters covered in Article 1, for taxable periods beginning on or after that date, or where there is no taxable period, for all charges to tax arising on or after that date.
Article 13 : TERMINATION – 1. This Agreement shall remain in force until terminated by either Contracting Party.
2. Either Contracting Party may, after the expiry of five years from the date of its entry into force, terminate the Agreement by serving a written notice of termination to the other Contracting Party through diplomatic channels.
3. Such termination shall become effective on the first day of the month following the expiration of a period of six months after the date of receipt of notice of termination by the other Contracting Party. All requests received up to the effective date of termination shall be dealt with in accordance with the provisions of the Agreement.
In witness whereof, the undersigned, being duly authorised thereto, have signed this Agreement.
DONE in duplicate at New Delhi on this Seventh day of October, 2010, each in the Hindi, and English languages, all texts being equally authentic. In case of divergence of interpretation, the English text shall prevail.