As a part of its ongoing effort to ease relations with foreign countries with regards to the prevalent taxation system, India had recently signed a Double Taxation Avoidance Agreement (hereinafter referred to as “DTAA”) on February 17, 2018 with Iran, for the purpose of avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
DTAA is basically an agreement entered into by two countries to avoid the jeopardy of double taxation of a person or entity in his resident country while having business in a foreign country. India at present has signed this agreement with 85 other countries.
The object of a DTAA is to provide for the tax claims of the government of two countries wherein those countries have similar interest and are legitimately qualified to charge taxes on a particular income of a person or entity. The countries who have such interest may assign the whole claim to one of the countries or provide a platform wherein such claims is to be shared between the two.
Object of the Act
- Stimulate flow of investment, technology and personnel from India to Iran & vice versa, and prevent double taxation.
- Provide for exchange of information between the two Contracting Parties as per latest international standards.
- Improve transparency in tax matters and will help curb tax evasion and tax avoidance.