India’s protocol on amendment to the India Brazil Tax Treaty and Proposals for Innovative Elephant Bonds November 15, 2019
Published in: Alerts
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Pursuant to India’s increased focus on boosting foreign investment and cross-border businesses along with countering harmful tax practices, following developments have taken place recently:
Indian’s Union Cabinet approves the signing of the Protocol amending the India Brazil Tax Treaty for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income
The existing Tax Treaty between India and Brazil is being amended to bring it in line with international developments and also to implement the recommendations contained in the G20 OECD Base Erosion and Profit Shifting Project (BEPS) in view of the fact that Brazil has opted not to sign the Multilateral Convention to implement tax treaty related measures to prevent BEPS (MLI).
The existing Tax Treaty between India and Brazil was signed on 26th April, 1988 and was amended through a Protocol signed on 15th October 2013 in respect of exchange of information. According to the press release by the Government of India, significant amendments made vide this protocol are as under:
The amending protocol would come into force upon official notification by the Central Government.
Recommendation made by Central Government’s High-Level Advisory Group for issuance of “Elephant Bonds” to bring back undisclosed foreign income and assets:
A High-Level Advisory Group (HLAG) was constituted by the Ministry of Commerce and Industry under the Central Government to make recommendations for boosting India’s global trade, bilateral trade relations and other economic activities. In its report issued in September 2019, HLAG has suggested, inter alia, the issuance of “Elephant Bonds” as an amnesty scheme to bring undisclosed foreign income and assets back to India and channelize such funds for investment in infrastructure. Salient features of the proposed “Elephant Bonds” scheme are as under:
Comments: The proposed amnesty scheme while being pragmatic would channelize the undisclosed income and assets staked abroad towards the pressing need of infrastructural development in India. While this is not the first time that an amnesty scheme has been proposed to bring the black money back in India, the proposed scheme on cracking down black money seems very attractive as it provides immunity from applicable laws.