EMBASSY OF THE
UNITED STATES OF AMERICA
New Delhi, September 12, 1989
Excellency:
I have the honor to refer to the Convention between the
Government of the United states of America and the Government
of the Republic of India for the Avoidance of Double Taxation
and the Prevention of Fiscal Evasion with Respect to Taxes on
Income which was signed today (hereinafter referred to as "the
Convention") and to confirm, on behalf of the Government of the
United States of America, the following understandings reached
between the two Governments:
Both sides agree that a tax sparing credit shall not be
provided in Article 25 (Relief from Double Taxation) of the
Convention at this time. However, the Convention shall be
promptly amended to incorporate a tax sparing credit provision
if the United states hereafter amends its laws concerning the
provision of tax sparing credits, or the United States reaches
agreement on the provision of a tax sparing credit with any
other country.
Both sides also agree that, for purposes of paragraph 4(c)
of Article 5 (Permanent Establishment) of the Convention, a
person shall be considered to habitually secure orders in a
Contracting State, wholly or almost wholly for an enterprise,
only if:
1. such person frequently accepts orders for goods or
merchandise on behalf of the enterprise;
2. substantially all of such person's sales-related
activities in the Contracting state consist of activities for
the enterprise;
3. such person habitually represents to persons
offering to buy goods or merchandise that acceptance of an
order by such person constitutes the agreement of the
enterprise to supply goods or merchandise under the terms and
conditions specified in the order; and
4. the enterprise takes actions that give purchasers
the basis for a reasonable belief that such person has
authority to bind the enterprise.
I have the honor to request Your Excellency to confirm the
foregoing understandings of Your Excellency's Government.
Accept, Excellency, the renewed assurances of my highest
consideration.
His Excellen
Exc cy
llenc JohnR.R.Hubb
John ard
Hubbard
Dr. N.K. Sengupta,
Sengupta, Amb
Ambass
assado
adorr
Secretary (Revenue),
Secretary (Revenue),
Mi
Mini
nist
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ry of Finance
Finance,
,
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New
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Delh
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i.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE, DEPARTMENT OF REVENUE
NEW DELHI-110001
September 12, 1989
Excellency:
I have the honour to acknowledge receipt of Your
Excellency's Note of today's date, which reads as follows:
"I have the honor to refer to the Convention between the
Government of the United States of America and the Government
of the Republic of India for the Avoidance of Double Taxation
and the Prevention of Fiscal Evasion with Respect to Taxes on
Income which was signed today (hereinafter referred to as "the
Convention") and to confirm, on behalf of the Government of the
United States of America, the following understandings reached
between the two Governments:
Both sides agree that a tax sparing credit shall not be
provided in Article 25 (Relief from Double Taxation) of the
Convention at this time. However, the Convention shall be
promptly amended to incorporate a tax sparing credit provision
if the United States hereafter amends its laws concerning the
provision of tax sparing credits, or the United States reaches
agreement on the provision of a tax sparing credit with any
other country.
Both sides also agree that, for purposes of paragraph 4(c)
of Article 5 (Permanent Establishment) of the Convention, a
person shall be considered to habitually secure orders in a
Contracting state, wholly or almost wholly for an enterprise,
only if:
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1. such person frequently accepts orders for goods or
merchandise on behalf of the enterprise;
2. substantially all of such person's sales-related
activities in the Contracting state consist of activities for
the enterprise;
3. such person habitually represents to persons
offering to buy goods or merchandise that acceptance of an
order by such person constitutes the agreement of the
enterprise to supply goods or merchandise under the terms and
conditions specified in the order; and
4. the enterprise takes actions that give purchasers
the basis for a reasonable belief that such person has
authority to bind the enterprise."
I have the honour to confirm the understandings contained
in Your Excellency's Note, on behalf of the Government of the
Republic of India.
Accept, Excellency, the renewed assurances of my highest
consideration.
His Excellency N. K. Sengupta
Dr. John R. Hubbard,
Ambassador of the
United States of America,
New Delhi.
EMBASSY OF THE
UNITED STATES OF AMERICA
New Delhi, September 12, 1989
Excellency:
I have the honor to refer to the Convention signed today
between the United States of America and the Republic of
India for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on Income
and to Inform you on behalf of the United States of America
of the following:
During the course of the negotiations leading to
conclusion of the Convention signed today, the negotiators
developed and agreed upon a memorandum of understanding
intended to give guidance both to the taxpayers and the tax
authorities of our two countries In Interpreting aspects of
Article 12 (Royalties and Fees for Included Services)
relating to the scope of included services. This memorandum
of understanding represents the current views of the United
States Government with respect to these aspects of Article
12, and it is my Government's understanding that it also
represents the current views of the Indian Government. It
Is also my Government's view that as our Governments gain
experience in administering the Convention, and particularly
Article 12, the competent authorities may develop and
publish amendments to the memorandum of understanding and
further understandings and interpretations of the Convention.
common view of the purpose of the memorandum of
understanding relating to Article 12 of the Convention.
Accept, Excellency, the renewed assurances of my highest
consideration .
His Excellency John R. Hubbard
Dr. N.K. Sengupta, Ambassador
Secretary (Revenue),
Ministry of Finance,
New Delhi.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE, DEPARTMENT OF REVENUE
NEW DELHI-110001
September 12, 1989
Excellency:
I have the honour to acknowledge receipt of Your
Excellency's Note of today's date, which reads as follows:
"I have the honor to refer to the Convention signed today
between the United States of America and the Republic of India
for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income and to inform
you on behalf of the United States of America of the following:
During the course of the negotiations leading to conclusion
of the Convention signed today, the negotiators developed and
agreed upon a memorandum of understanding intended to give
guidance both to the taxpayers and the tax authorities of our
two countries in interpreting aspects of Article 12 (Royalties
and Fees for Included Services) relating to the scope of
included services. This memorandum of understanding represents
the current views of the United states Government with respect
to these aspects of Article 12, and it is my Government's
understanding that it also represents the current views of the
Indian Government. It is also my Government's view that as our
Governments gain experience in administering the Convention,
and particularly Article 12, the competent authorities may
SECRETARY
develop and publish amendments to the memorandum of
understanding and further understandings and interpretations of
the Convention.
If this position meets with the approval of the Government
of the Republic of India, this letter and your reply thereto
will indicate that our Governments share a common view of the
purpose of the memorandum of understanding relating to Article
12 of the Convention."
I have the honour to confirm the understandings contained
in Your Excellency's Note, on behalf of the Government of the
Republic of India.
Accept, Excellency, the renewed assurances of my highest
consideration.
His Excellency N. K. Sengupta
Dr. John R. Hubbard,
Ambassador of the
United States of America,
New Delhi.