India and Iceland conclude tax agreement

Representatives of the governments of India and Iceland signed a Double Taxation Avoidance Agreement last week, in a move designed to strengthen the ties of economic cooperation existing between the two countries.

The Indian Minister of Finance, P. Chidambaram met with his Icelandic counterpart, Arni Mathiesen, to make the final arrangements in an agreement which will prevent fiscal evasion on income tax and avoid double taxation.

According to Mr. Chidambaram, the agreement will result in an increased level of comfort for investors in both countries. Arni Mathiesen expressed similar sentiments at the signing, declaring that the pact would encourage more mutual investment and enhanced economic cooperation between India and Iceland.

The treaty covers the taxes of income, dividends, interest, royalties and fees for technical services and stipulates that the rate of tax in the country where the income was made must not be higher than ten per cent.

In order to avoid double taxation, Iceland and India have agreed to give credit for taxes that their residents pay in the other country. In addition, the treaty allows both countries to assist with collecting information on revenue claims of their own citizens in the other country.

Both ministers of finance are hoping that the agreement will help stimulate the exchange of capital, personnel and technology between India and Iceland.