New Delhi, Dec 16 (IANS) India and Australia Friday signed an agreement to amend their bilateral tax treaty to ensure more effective exchange of financial information between the two countries.
India's Minister of State for Finance S. S. Palanimanickam and Australia's Minister for Financial Services Bill Shorten signed the agreement here to amend the 20-year old Double Taxation Avoidance Agreement (DTAA) signed in 1991.
The two countries have now decided to update the agreement to 'internationally accepted standards for effective exchange of information on tax matters including bank information and also for exchange of information without domestic tax interest'.
'It is further provided that the information received from Australia in respect of a resident of India can be shared with other law enforcement agencies with authorisation of the competent authority of Australia and vice-versa,' the Indian finance ministry said in a statement.
'This facilitates higher degree of mutual co-operation between two countries,' it said.
The amended protocol provides that India and Australia shall assist each other in the collection of revenue claims. The assets or moneys kept in one country can be recovered by the other country for the purposes of recovery of taxes by following certain conditions and procedure.
Concept of non-discrimination provision was not in the existing treaty. Now it is provided that nationals of one country shall not be discriminated against the nationals of the other country in the same circumstances in line with international practices.
In the original treaty, no threshold limit for determining permanent establishment was provided - a provision not in line with other treaties and international practice.
Now the 'threshold limit to avail the exemption for service, exploration and equipment permanent establishments and taxation thereof have been rationalised to encourage cross border movement of capital and services between the two countries', the finance ministry statement said.