India and South Korea has ink MoU on taxation treaty [ Current Affairs ]
New memorandums of understanding (MoU) on suspension of collection of taxes during pendency of mutual agreement procedure have been inked by India and South Korea. During the pendency of Mutual Agreement Procedure (MAP) proceedings burden of double assessment for taxpayers in both the countries can be released by MoU.
- In addition, Between India and Korea also have agreed that transfer pricing dispute cases will be taken up for MAP under the revised Double Tax Avoidance Agreement (DTAA).
What is Mutual Agreement Procedure?
- MAP is an alternate dispute resolution mechanism
- An experienced authority of particular nation and its contract partner to negotiate a mutually acceptable settlement is certified by MAP.
- According to this settlement two signatory sides can negotiate settlement on a case that can subsequently be taken off from the formal legal process.
- MAP pulls up parameters for taxation in a country for which credit would be available in another as part of resolution process.
Benefits of MAP:
- To settle cross-border tax cases globally MAP is ideal approach.
- It eliminates double taxation retiring out of transfer pricing tax arguments and also a characterization of income and attribution of profits and existence of Permanent Establishment.
- Published on: December 11, 2015