This much anticipated legislation is welcome news for Australian universities looking to establish a location for teaching, research and industry engagement in India.  This provides an opportunity to enter the Indian market in a more tax effective and less heavily regulated environment.

Register SW’s webinar to hear more about the opportunities for foreign universities in the IFSC.

About IFSC Regulations 2022

The regulations came into effect on 11th October 2022 and are applicable to an IBC or OEC operating in the IFSC zone.

Key objectives of the regulations:

• to enable Foreign Universities to establish an IBC either on standalone basis or any other form as may be permitted
• to enable Foreign educational institutions to establish OEC
• to put in place an objective and transparent process for registration of a Foreign University/ Foreign Educational Institution offering courses including research program.

Permissible activities in IFSC

• An IBC or OEC shall not act as representative office of the Foreign University or Foreign Educational Institution for the purposes of undertaking promotional activities for their program in their home jurisdiction or outside the IFSC
• The course or program conducted shall be identical in all respects with the course or program conducted by the Foreign University or Foreign Educational Institution in its home jurisdiction and identical degree, diploma or certificate shall be conferred upon the students of the IBC or OEC directly by the Foreign University or Foreign Educational Institution
• A degree, diploma or certificate issued shall enjoy the same recognition and status as if they were conducted by the Foreign University or Foreign Educational Institution in its home jurisdiction
• Modification in the course curriculum or content shall be carried out with prior approval of academic council, syndicate or any other competent body of the Foreign University or Foreign Educational Institution and the IBC or OEC shall undergo the necessitated changes after intimation to IFSC Authority and shall be effected only after such intimation.

Permissible subject areas are courses, including research programmes, in:

• Financial Management
• FinTech
• Science
• Technology
• Engineering
• Mathematics

Eligibility criteria

• Foreign University within Top 500 in global overall ranking and / or subject ranking in the latest QS World Universities ranking
• A reputed Foreign Educational Institution in its home jurisdiction
• Financial capability to establish and ensure continuity
• Suitable infrastructure and facilities.

Key features of IFSC

About IFSC

• Set up in 2014, the Gujarat International Finance Tec-City (GIFT) is India’s first operational Greenfield Smart City followed by an announcement in 2015, to set up a Financial center in Gift City
• IFSC has been designed to cater to outside the domestic economy and intended to deal with finance, financial products and services across borders
• IFSC Unit is treated as a ‘non-resident’ under Indian exchange control regulations, thus no exchange control regulations shall apply.

Tax incentives

• Tax exemption of 100% for 10 consecutive years out of 15 years with a flexibility to select any 10 years with no need to set up ‘Not for Profit entity’
• MAT rate of 9% for units/companies set up in IFSC (regular MAT is 18%), however MAT paid is available as a credit for carry forward & adjustment upto 15 years and can accordingly be adjusted against future year income tax liability, as will apply after 10 years of tax holiday
• No GST on services received by unit in IFSC or provided to unit in IFSC or Offshore clients
• State subsidies also available on lease rental, electricity charges etc.

Other incentives

• Profit/Surplus repatriation permissible with no restriction from exchange control perspective
• All transactions undertaken by the IBC or OEC shall be in freely convertible foreign currency

How we can help

SW India can help you every step of the way from strategy formulation through to implementation.

If you require further advice regarding the new IFSCA regulations, please reach out to our SW Team – Rahul Sanghani, Stephen O’Flynn, Steve Allan and Sabrina Camilleri.

Webinar │ Concessions provided to foreign universities to operate in India  

Join us to hear from Dipesh Shah –  Executive Director, IFSCA, Sandip Shah – Head- IFSC Dept and Saurrav Sood – SW India who will discuss the IFSC regulations and highlight the advantages of GIFT City and what it can offer in terms of its world class infrastructure to Australian universities.

Date: Thursday, 24 November 2022

Time: 3.30pm – 4.30pm AEDT (11am – 12pm IST)

The post Concessions provided to foreign universities to operate in India appeared first on SW Accountants & Advisors.

2022年4月，《澳大利亚-印度经济合作与贸易协定》（AIECTA）签署，旨在加强两国关系，促进双边贸易，并为从业人员和企业创造机会。其中包括一项协议，即澳大利亚将修改其国内税法，让印度实体在向澳大利亚提供技术服务产生境外收入时，避免被双重征税。

澳大利亚政府现已发布立法草案，用于实施两国之间达成的关于远程提供服务而非通过澳大利亚常设机构提供服务时的双重征税协议。

澳大利亚-印度双重征税的背景

澳大利亚-印度双重征税协定（DTA）于1991年首次实施，这次草案解决了印度政府提出的关于两国间避免双重征税协议的问题，

澳大利亚一直对通过远程技术服务的支付或信贷的非居民印度企业征税，即便这些服务不是通过澳大利亚常设机构提供的；究其原因，就是DTA项下的特许权使用费定义（第12(3)(g)条）和来源条款（第23条）的实施。

对特许权使用费定义的解释

第12(3)(g)条对特许权使用费的定义比《1936年所得税评定法》(ITAA 1936)规定得更广泛，涵盖了任何提供的服务：

• 技术知识
• 经验
• 技能
• 专有技术；或者
• 数据处理。

其中还包括技术计划或设计的开发与转让。

解释性备忘录中的例子解释了第12(3)(g)条中关于特许权使用费的更广泛定义是如何适用于服务付费的。

一名澳大利亚税务居民拥有库存控制软件，用于其自身在澳大利亚各地的连锁零售店。该税务居民扩大了销售业务，雇用了一直巡回销售团队，在乡村各地推销公司的产品。其希望修改软件，允许销售人员使用其中央计算机，以了解哪些产品有库存以及何时能交货的信息。其雇用了一家印度税务居民计算机编程企业，为此目的修改其软件。

澳大利亚居民支付的费用是第12(3)(g)条所定义的特许权使用费。该印度企业远程为该澳大利亚企业提供技术服务，并将其为该企业开发的技术计划（即计算机程序）转让给该澳大利亚企业。

有哪些新变化？

立法草案征求意见稿修订了《1953年国际税收协定法》，将该等支付或信贷排除在澳大利亚税收之外。《1953年国际税收协定法》新的第11J条规定，如果满足以下三项标准，澳大利亚将停止对该等支付或信贷征税：

• 支付必须是第12(3)(g)条所涵盖的服务的对价–即提供技术知识、经验、技能、专有技术或数据处理的服务，或包括开发和转让技术计划或设计。
• 服务支付或信贷不是《1936年所得税评定法》所定义的特许权使用费–因为该法项下的支付或信贷也被认为属于特许权使用费，那么该修正案就不适用，支付或信贷将继续缴纳澳大利亚税。
• 由于第12(3)(g)条和第23条的实施，支付或信贷必须只缴纳澳大利亚税。如果DTA有另一条款涵盖或适用于支付，则该支付将继续缴纳澳大利亚税。例如，通过澳大利亚常设机构提供技术服务的将继续作为商业利润被征税（第7条）。

此外，如果有一家从事该种服务的常设机构（PE），除外规定将不适用。通过该PE提供这些服务有好处，因为这样可以避免预扣税的毛额税基，而不是净额税基，就可申请以费用抵扣支付或信贷。

本表所做的修订将从下列日期之较晚者开始：

• 本法获得御准之日；以及
• 在AI-ECTA对澳大利亚生效之日。

继Tech Mahindra于2018年在联邦法院输掉对税务专员的上诉案后，这对印度信息技术公司来说是一项重大的舒缓。这些修正案是两国合作的重要一环。

信永中和澳大利亚能如何帮助您

信永中和澳大利亚和信永中和印度与我们的共同客户紧密合作，认真处理各国复杂的税收制度问题，确保您达到国际税收义务的要求。

如果您有任何疑问或想进一步了解澳大利亚和印度之间的双重征税议题，请联系我们在澳大利亚或印度的税务专家。

联系方式

欧斯迪
信永中和澳大利亚董事

宋格理
信永中和澳大利亚税务高级经理

Saurrav Sood
信永中和印度国际税务与转让定价业务负责人

The post 澳大利亚-印度：取消对离岸技术服务的双重征税 appeared first on SW Accountants & Advisors.

In April 2022, the Australia-India Economic Cooperation and Trade Agreement (AIECTA) was signed to strengthen the relationship between the two countries, facilitate bilateral trade and create opportunities for workers and businesses. This included an agreement that Australia will amend its domestic tax laws to prevent the double taxation offshore income arising to Indian entities from the provision of technical services to Australia.

The Australian Government has now released draft legislation to implement this agreement reached between the two countries regarding double taxation for services provided remotely and not through a permanent establishment in Australia.

Background on Australia-India double taxation

This resolves the issue raised by the Indian government about the Double Taxation Avoidance Agreement between the two countries, with the Australia-India Double Tax Agreement (DTA) first implemented in 1991.

Australia has been taxing payments or credits for technical services that are provided remotely by non-resident Indian firms even if they are not provided through a permanent establishment in Australia, due to the operation of both the Royalty definition (Article 12(3)(g)) and the Source Article (Article 23) under DTA.

Explanation of the royalty definition

The definition of royalty in Article 12(3)(g) is broader than the definition as provided in Income Tax Assessment Act 1936 (ITAA 1936) and captures any services which make available:

• technical knowledge
• experience
• skill
• know-how; or
• processes.

It also includes the development and transfer of a technical plan or design.

The example in the explanatory memorandum explains how payment for services is caught by the broader definition of royalty in Article 12(3)(g).

An Australian resident for tax purposes owns inventory control software for use in its own chain of retail outlets throughout Australia. It expands its sales operation by employing a team of travelling salespeople to travel around the countryside selling the company’s wares. It wants to modify its software to permit salesperson to access its central computers for information on what products are available in inventory and when they can be delivered. It hires a computer programming firm that is a resident of India for tax purposes to modify its software for this purpose.

The payments which the Australian resident pays are royalties within the meaning of Article 12(3)(g). The Indian firm performs a technical service for the Australian company remotely, and it transfers to the Australian company the technical plan (i.e. the computer program) which it has developed for that company.

What are the new changes?

The exposure draft legislation amends the International Tax Agreements Act 1953 to exclude such payments or credits from Australian tax. New section 11J of the International Tax Agreements Act 1953 will stop Australian taxation on such payments or credits if three criteria are satisfied:

• Payment must be a consideration for service covered by Article 12(3)(g) – services that make available technical knowledge, experience, skill, know-how or processes or consists of the development and transfer of a technical plan or design.
• Payments or credits for services are not royalties within the meaning of the ITAA 1936 – where payment or credit is also considered a royalty under the ITAA 1936, then the amendment will not apply, and the payment or credit will continue to be subject to Australian tax.
• Payments or credits must only be subject to Australian tax because of the operation of Article 12(3)(g) and Article 23. If the payment is covered or dealt with by another article of the DTA, it will continue to be subject to Australian tax. For example, technical services provided through a permanent establishment in Australia will continue to be taxed as business profits (Article 7).

Further, where there is a permanent establishment (PE) that is engaged in providing such services, then the exclusion shall not apply. It will be beneficial to render these services from such PE so as to avoid the gross basis of withholding tax instead of a net basis where expenses can be claimed against the payment or credit.

The amendments made by this schedule will commence on the later of:

• the day this Act receives Royal Assent; and
• the day the AI-ECTA enters into force for Australia.

This is a significant relief for Indian Information Technology firms after Tech Mahindra lost an appeal against the Commissioner in the Federal Court in 2018. These amendments are an important step in the cooperation between the two countries.

How can SW help

SW Australia and SW India work closely with our mutual clients to navigate the complex tax regimes in each country to ensure that your international tax obligations are complied with.

If you have any questions or would like further information about the double taxation between Australian India, please contact one of our tax experts based in Australia or India.

Contacts

Stephen O’Flynn
Director
SW Australia

Rahul Sanghani
Senior Manager, Tax
SW Australia

Saurrav Sood
Practice Leader, International Tax & Transfer Pricing
SW India

The post Australia-India: removal of double taxation of offshore technical services appeared first on SW Accountants & Advisors.