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Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

PROTOCOL

PROTOCOL TO THE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE RUSSIAN FEDERATION FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME

The Government of the Republic of India and the Government of the Russian Federation,

Having regard to the Agreement between the Government of the Republic of India and the Government of the Russian Federation for the avoidance of double taxation with   respect to taxes on income signed today (in this Protocol called "the Agreement"),

Have agreed as follows:

  • (1) With reference to paragraph (4) of Article 8 of the Agreement, the Contracting States agree that at the end of three years from the date of entry into force of this Agreement, the provisions of paragraph (4) will cease to have effect.
  • (2) With respect to clause (j) of paragraph (2) of Article 5 of the Agreement, the competent authorities of the Contracting States may invoke mutual agreement procedure referred to in the aforesaid clause in particular cases of supervisory activities relating to a project which satisfies the following conditions :
    • (a) the project has been approved by the Government of the concerned Contracting State ;
    • (b) it is a turnkey project;
    • (c) the fees for supervisory activities do not exceed 10 per cent of the total cost of the project, including the cost of the machinery and the equipment mentioned in the contract;
    • (d) the total cost of the project is not less than US $ 10 million;
    • (e) the duration of the project is for a period extending from 12 months to five years or such longer period as has been specified in the contract by the authority granting approval to the contract. The said time will include the further period which may be extended by the project approving authority in consultation with the competent authority of the concerned Contracting State ; and
    • (f) the enterprise is not involved in avoidance or evasion of tax in the Contracting State in which supervisory activities are being rendered.
  • Where aforementioned conditions of sub-paragraphs (a) to (/) of this paragraph are fulfilled, the enterprise shall be liable to pay in that Contracting State where the project is situated, tax on its income by way of fees for supervisory activities at the rate not exceeding 10 per cent of the gross amount of such fees as is applicable under Article 12 in respect of royalties and fees for technical services.
  • (3) Notwithstanding the provisions of paragraph (2) of Article 24 of this Agreement, either Contracting State may tax the profits of a permanent establishment of an enterprise of the other Contracting State at a rate which is higher than that applied to the profits of a similar enterprise of the first-mentioned Contracting State. It is also provided that in no case the differences in the two rates, referred to above will exceed 12 percentage points.

The taxation of a permanent establishment of an enterprise of one Contracting State in the other Contracting State shall not, after the coming into force of this Agreement, be less favourable than the tax treatment given by that other Contracting State to a permanent establishment of an enterprise of any third country.

This Protocol shall form an integral part of the Agreement.

DONE at Moscow, this 25th day of March, 1997, in duplicate in the Russian, Hindi and English languages, all three texts being equally authentic. In case of divergence between the texts, the English text shall be the operative one.

FOR GOVERNMENT OF THE REPUBLIC OF INDIA:

FOR THE GOVERNMENT OF THE RUSSIAN FEDERATION: