International Relations - Current Affairs for October, 2016

India and South Korea on 26th Oct 2016 signed a revised Double Taxation Avoidance Agreement for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income.

• The provisions of the new DTAA will have an effect in India with respect to income derived in fiscal years beginning on or after April 1, 2017.
• Earlier DTAA Convention between India and Korea was inked on 19th July, 1985 and notified on Sept 26, 1986.
• It provides for source based taxation of capital gains arising from shares alienation comprising more than 5 percent of share capital.
• To promote cross border flow of investments and technology, the revised DTAA provided for reduction in withholding tax rates from 15 to 10 percent on fees for technical services and from 15 to 10 percent on interest income.
• It expands the scope of dependant agent Permanent Establishment provisions in concordance with Indian policy of source based taxation.
• It provides for exclusive residence based taxation of shipping income from global traffic under Article 8 of the revised DTAA.
• It provides recourse to taxpayers of both countries to apply for Mutual Agreement Procedure in transfer pricing disputes as well as apply for bilateral Advance Pricing Agreements.
• The Article on Exchange of Information is updated to the latest international standard to provide for the exchange of information to the maximum possible extent.
• As per the revised Article, the country from which information is requested cannot leave aside the information on grounds of domestic tax interest.
• It inserts the new Article for assistance inc collection of taxes between tax authorities.
• It inserts new Limitation of Benefits Article i.e. anti-abuse provisions to ensure the benefits are availed by genuine residents of the two nations only.
• It also seeks to avoid the burden of double taxation for taxpayers of two countries to promote and stimulate the flow of investment, technology and services between India and Korea.

Reducing travel time significantly, the Indian Railways will form a pact with Germany for running high-speed trains in the nation

• Pact will strengthen ties between the two countries for bilateral cooperation in the rail sector
• German Minister Alexander Dobrindt will visit the capital city from Oct 12-15 thereby sealing the deal
• Both rail ministers will hold talks at Rail Bhavan and the ministers will focus on deepening collaboration and strengthening ties in railways and high speed trains

Russia and India on 13th Oct 2016 signed a bilateral agreement for cooperation in the development of a network of integrated infrastructure irradiation centres.

• The agreement was signed between Indian Agricultural Association, Hindustan Agro Co-Op Limited and United Innovation Corporation, a subsidiary of ROSATOM State Atomic Energy Corporation of Russia
• It was signed by Bharat Dhokane Pandurang, Chairman of HACL and Denis Cherednichenko CEO of UIC
• This will be implemented through a Joint Venture and the aim is to set up 25 integrated irradiation centres
• In the 1st phase, 7 centres will be set up in Maharashtra commencing with the current centre in Rahuri in Ahmednagar district
• The 7 centres are likely to be established in Solapur, Sindhudurg, Satar, JNPT, Jalana, Nagpur and Pune in the first phase
• UIC will be a technology partner and set up irradiation centres in India
• In India, as per estimates post harvest losses in food and food grains is close to 40-50 percent on account of insect infestation, microbial contamination and lack of shelf life
• In irradiation, food products are subject to a low dosage of radiation to treatment them for germs and insects, raising longevity and shelf life.
• Use of irradiation will make it possible to reduce loss of food products in India
• Radiation treatment is carried out in a dosage recommended by International Atomic Energy Agency
• It neither reduces nutritional value of food nor spoils taste or presentation