India - Malaysia Tax Treaty

EFFECTIVE DATE: 1 JANUARY 2013 6691 P.U. (A) 338.

INCOME TAX ACT 1967 AND PETROLEUM (INCOME TAX) ACT 1967

DOUBLE TAXATION RELIEF (THE GOVERNMENT OF THE REPUBLIC OF INDIA) ORDER 2012

IN exercise of the powers conferred by subsection 132(1) of the Income Tax Act 1967 [Act 53] and subsection 65A(1) of the Petroleum (Income Tax) Act 1967 [Act 543], the Minister makes the following order:

Citation

This order may be cited as the Doubie Taxation Relief (The Government at the Republic of India) Order 2012.

Double taxation relief

It is declared that the arrangements specified in the Schedule have been made by the Government of Malaysia with the Government of the Republic of India with a view to affording relief from double taxation in relation to Malaysian tax and Indian tax (as defined in each case in the arrangements) and that it is expedient that those arrangements shall have effect.

SCHEDULE (Paragraph 2)

AGREEMENT BETWEEN THE GOVERNMENT OF MALAYSIA AND THE GOVERNMENT OF THE REPUBLIC OF INDIA FOR THE AVOIDANCE iUF DOUBLE TAXATION AND THE PREVENTION 0F FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

The Govcﬂnnent of Malaysia and tbs chcmment of the, Republic of India, desiring to conciuda an Agreamﬁnt for the avoidance 0f éoublc taxation and the prwcntion of fiscal evasion with respect to taxes on income and with a view to promoting economic coepcration batween the two countries, have agmcd as follows:

Arﬁcie 1 PERSONS COVERED

This Agtecment shail apply to persens Who am rasidems of one or bath of the Camtacting Slams.

P.U. (A) 333. 6692

Article 2

TAXES COVERED

i. This Agreement shall apply to taxes on inceme imposed on behaif of a Contractiag State or of its political subdivisions 01' leeai authorities, itiespective of the manner in which they are levied.

2, There shall be regarded as taxes on income 33.1 taxes imposed on total income, or on elements of income, ieeluding- taxes on gains from the alienation of movabie or immovable property and taxes on the total amounts of wages or salaries paid by enterprises.

The existing taxes which are the subject of this Agreement are:

{a} i}: Imiia, the income tax, including any surcharge therecn; (hereinafter referred to as “Indian tax”);

{1;} in Malaysia:

(i) the income tax; and

(ii) the Petroleum immune8 (hereinafter referred to‘

demical or substantiaily similar

The Agreement shall apply 21130 ’[O‘ ‘ signature of the Agreement in

taxes that are impcsed after th addition to, or in place of, the e

that have been made in their re

GENERAL EEFINITIONS

For the purpuses of this Agreement, unless the centext otherwise requires:

(a) the term “indie.” means the {miter}; ef India and includes the territorial sea and airspace above it, as welt as any other maritime zone in Which India has sovereigi rights, other rights and jutisdiction, aceoréing to the Indian law and in accordance with international law, including the Uniteti Natiens Convention en the Law of the Sea;

(b) the term “Malaysia” means the tertitories of the Federation of Malaysia, the territoﬁal waters of Malaysia anti the sea—bed and subsoil of the territorial watem, and the ai: space above such areas, and ineledes any area extending heyand the limits of the territorial waters 0f Malaysia, and the sea—bed and subsoil of any such area, which has been or may hereafter be designated under the Iaws of Malaysia and in accordance With international law as an area over Which Maiaysia has sovereign rights or jmiséictien for the purposes of expioring anti explaining the natural resources, Whether living or eon—living;

6693 EU. (A) 338.

{c} the terms "Centractizag State” 313d “the other Contracting State" mean the Republic of India or Malaysia as the context requires;

(at) the term “person" includes an indiviciual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxatiee laws 1'11 force in the respective Contracting States;

(8) the term “eempany” means any body corporate or any entity that is Heated as a body cerporate for tax purpeses;

(f) the terms “enterpzise of a Contacting State” and “elatexprise of the other Contracting State” meat: resyectively an entergrise earrieé on by a resicient of a Contracting State anti an enterprise carried on by a resident of the other Contracting State;

1' g) the term “internatioaai traffic” means any transpart by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is 01?”; ated soleiy between places in the other Contracting State;

(h)

1’ i)

(ii) any ‘ 93 person, partnership 0t association deriving its status as sect?" from the laws in force in a Contracting State;

{j} the term “tax” means Malaysian tax or Indian tax, as the context requires, bet shall net include any amount which is payable in respect of a default or omission in relation to the taxes to which this Agreement appiies or Which represents a peealty or fine imposed relating :9 those taxes;

(k) for the purposes of the Agreement, the term “ﬁscal year” wherever it appears mews:

(i) ii: the ease 0f India, the financial year heginnieg (m the Is: day of April;

(ii) in the ease of Maiaysia, the meaning as assigned by section 20 of the Income Tax Act, 3967.

As regards the application of the Agreement at any time :by a Centxacting State any term not defined therein shail, unless the context otherwise requires, have the meaaing that it has at that time under the law of that State for the purposes 0f the taxes to Which the Agreement ayplies and any meaning under the applieable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

P.U. (A) 338. 6694

Article 4 RESIDENT

Fer the purpases of this Agreement, the term “fcsidﬁﬁt of a Contracting State” means any person Who, under the laws of that State, is liable to tax therein by reason of his domiciie, residence, place of management or any other criterion of a similar nature and also includes that State anti any politicat subdivision 01' local aethotity er a statutory body established eader an Act of Parliament 01“ State Legisiative Assembly thereof. This term, hewever, does not include any person who is liahie to tax in that State in respect eniy of income frezn sources in that State.
Where by reasen of the provisions of paragraph 1 an individual is a resident of both Coatracting States, then his status shall be determined as follows:

he State in which he w he has a permanent tes, e: shall be deemed to he a h hie personal and economic terests);

(a) he shalt be deemed to be a resideg 4:) has a permanent home availabi home available to him in be resiéent only of the State wit relations are closer (centre

(1)) if the State in which he has determined, or if he ' in either State, he s” “E State in which it has

(a) if he has an t he shali be (ice? H he is a national;

1 centre of vital interests cannot be \a germanent home available to him _ _ emed to be a resident only of the bitual abode;

abode in both States or in neither ef them, to be a resideat :3er of the State of which

(d) if he is a national of both States or 0f neither of them, the competent aethorities of the Contracting States shall endeaveur to settle the question by mutual agreement.

Where by reason of the provisions cf paragraph 1 a person other then an imiividuai is a resident of bath Contracting States, then it shali be deemed to he a resident only of the State in whieh its place ef effective management is situated. If the State in which its piece of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.

Article 5 PERMANENT ESTABLISHMENT 1, For the purpeses of this Agreement, the term “permanent establishment”

means a fixed place of business through which the business of an enterprise is wholly er partly carrieti on.

6695 EU. (A) 338.

The term “permanent establishment” inciudes especialiy: (a) a place of management; (In) a breach; (c) an office; ((1) a factory; (e) a workshop; (f) a sales eutlet;

{g} a warehouse ia reiation to a goerson groviding storage facilities for others;

(It) a farm, plantatiun or other place where agriculturak, forestry, plantation er Ieiated activities are carried on; and

(i) a mine, an oil or gas weﬂ, a quarry or any other place of extraction of natural resources.

.3. 1’ a} A building site 01‘ construct? ation or assembly projeet 01' supervism'y aetivities in co Beetle rewith coasﬁtutes a permanent establishment only if sué ‘te, present or activities Lest mere than nine months.

(6) The furnishing 0f sen; _ eluding censultancy services, by an enterprise through mpioye s or other personnel engaged by the enterprise for vose ceastitutes a permanent establishment,

, ties of that nature continue (for the same

or ecimected pm} :15, Within the country for a period or periods

' g“ {e thah 90 days Within any twelve—month peried.

Netwithstand: Tithe prececiing provisions of this Article the term “permzment estabiishmeﬁt” shali be deemed net to include:

(a) the use of faeiiities solely for the purpese of storage or display of goods or merchandise belonging to the enterprise;

{5}) the maintenance of a stock of gooés or merchandise belonging to the enterprise seleiy for the purpose of smrage 01' ciisplay;

(c) the maiﬁtenaﬂee of a stock of goods or merchandise beloalging to the enterprise solely for the purpose of pxocessing by mother enterprise;

(:5) the maintenance of a. fixed place of business solely for the purpose 0f purchasing goods or merchandise or of collecting information, for the ente1prise;

(e) the maintenance of a fixed piace of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiiiary character;

{f} the maintenance of a fixed place of business solely for any eombiziaﬁon of activities mentioned in suhparagraphs (a) tn (8), provided that the overall activity 0f the fixed place of business resulting from this eomitination is of a preparatory 01' auxiliary character.

RU. (A) 338. 6696

S. Notwithstaading the provisioﬁs of paragraphs I and 2, where a person — other that: an agent of an ihdependent status to Whom paragraph 7 applies — is acting in a Contracténg State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first—mentioned Contracting State in respect of any activities which that person undextakes for the enterprise, if’such a person:

(a) has, and habitually exercises in that State an authority to cozzclede eentzacts in the name of the enterprise, uiﬂess the activities of sash person axe limited to those mentioned in paragraph 4 which, if exercised through a fixed piace nf business, would not make this ﬁxed place of business a permanent establishment under the provisions of that paragraph; .

(b) has 30 such authority, but habiteaﬂy maintains in the ﬁrst—mentioned State a stock of goods or merchandise from which he regularly delivers geods or merchandise on behalf of the enterprise; or

{9) habitually secures ortiers in the f' ‘ ned State, wholly or

331mm wholly for the enterprise 1*

of this Aﬂiclﬁ, an insutaaee ' regard to reinsurance, be

Notwithstandieg the preceding pre enterprise of a Contracting State shit , deemed to have a permanent estab ° the other Contracting State if it collects premiums in the t ’tory at ether State or insures risks siteated therein through a gerso ” ther than an agent of an indepeadent status to whom paragraph 7 a};
An enterprise shall [IQ Contracting State merely

deeméa' to have a permanent establishment in a use it carries on business it: that State threugh a broker, gegeral commas gent or any other agent of an indepenéent etatus, provitied that such pe us are acting in the erdinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholiy en behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commerciai and financial relations Which differ from those which woutd have been made between independent enterprises, he will not he considered an agent of an independent status within the meeting of this garagraph.

The fact that a company which is a resident of a Centracting State controls or is centrelleé by a company which is a resident of the other Contracting State 01: whieh carries on business in that ether State (whether threugh a permanent establishment or Otherwise), shall not of itself constitute either cempany a permanent estahiishmeht ef the other.

Articie 6 INCOME FROM MOVABLE PROPERTY

income derived by a resident of a Contracting State from immevable

property (including tneome from agriculture or forestry) situated in the other Contracting State may be taxed iii that other State.

6697 13.11. (A) 338.

The term “immovable prepetty” shah have the mesming Which it has under the law of the Contracting State in which the property in questien is situated. The term shail in any case inciude property accessory to immovable propezty, livestock and equipment used in agriculture and forestry, rights to which the provisions of genetal law respecting landed property appiy, usut'ruct of immovable property and rights to variable or ﬁxed payments as consideration for the working of, 01' the right to work, mineral deposits, sources amt other natural resources; ships, boats and aircraft shall not be regarded as immovabie property.
The provisions of paragraph 1 shah apply to income derived from the direct use, letting, or use in any other form of immevahle property.
The provisions of paragraphs 1 and 3 shall also apply to the income from immovable preperty at an enterprise and t0 income fmm immovable property used for the performance of independent petsonai services.

l. The profits of ex; enterp” only it: that State tmless the e Contracting State through? enterprise canies on bu '

.‘se carries or: hesiness ii; the ether t establishment situated therein. If the foresaid, the profits of the enterprise may

ES 011 business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State he attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or simiiar activities ueﬂer the same or simiiar conditions and dealing whoﬂy mdependeetiy with the enterprise of Which it is a pennanent estahiishment.

In determining the profits of a permanent establishment, thete shalt be aﬂowed as deductiens expenses which are ieemted for the purpeses of the permanent establishment, inclutiing executive arid genera} administrative expenses so incurred, whether in the State in which the permanent estabiishment is situated or elsewhere, in accordance with the provisions cf the tax laws 0f that State. However, me such deduction shall be ailewed in respect of amounts, if any, paid (otherwise than towards reimbursement at actual expenses) by the permanent establishment to the head office of the enterprise or any of its ether effiees, by way of royaities, fees er other simﬁar payments in return for the use ef patents, khow—how 01' other rights, or by way of commission or other charges for specific services petfonned 01' for management, or, exeept in the ease of banking enterprises, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent

RU. (A) 338. 6698

estabiishment, for amounts charged {otherwise than toward reimhmsement of actual expenses), by the permanent establishmth to the heacf ofﬁce of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know—how or other rights, or by way of commission or other charges for specific services performed 01' for management, or, except in the case of a banking entezprise, by way of interest eh moneys lent to the head ofﬁce of the enterprise or any ef its other effices.

in so far as it has been customary in a. Contracting State to determine the profits to he attributed to a permanent establishment on the basis of 3:1 apportionment 0f the total proﬁts of the enterprise to its vatious parts, nothing in paragraph 2 shall preclude that Contracting State from determhxing the ?roﬁts to he taxed by such an appertionment as may be customary; the method {3f apportionment adopted shail, however, be such

that the result shat} be in accordance With the principles contained in this Article.

for the enterprise.

For the perposes of the precegi' g pat“ taiwahs, the profits tn be attributed

to the permanent estahhshmen be {jetea'mined by the same methad

in other Articles of thi ment, then the previsiens of these Articles shall not he affecteé by th - evisions of this Article.

Article 8 SHIPPING AND AIR TRANSPORT

Profits derived by an enterpzise of a Contracting State item the eperatien of ships or aircraft in ihtemational traffic shalt he taxable only in that State.
Per the purposes of this Article, proﬁts from the opexation of ships or aircraft in internatienal traffic shall mean proﬁts derived by an enterprise described 223. paragraph 1 from the transportation by sea or air respectively of passengers, mail, livestock er goods carried 0:: by the owners or lessees or eharterers of ships or aircraft incleding:

{a} the sale 0f tickets for such trahspertation on behalf of other enterprises; anti

{5) the rental of ships or aircraft incidental to any activity directly connected with such transpertatien.

66:99 EU. (A) 338.

Profits of an enterprise 9f 21 anuaciing Siate described iii paragraph 1 from the use, maintenance, or team} of containers (including mailers, barges and related equipment for the transport of containers) used in connection with the operation of ships er aircraft in international traffic Which is supplementary or incidental t0 its international operation of ships at aircrafts shall :be taxable only in that Contracting State unless the containers are used 501er Witiiiﬂ the other Contracting State.
For tize purposes of this Article, interest, cm investments directly comaected with the operatiozz 9f ships 01' aircraft in international traffic shall be regaxcied as proﬁts derived fmm the operation 3f such ships or aitcraft if ihey are integral to the carryiﬁg on of such businegs, and the pmvisions of Article 11 3212111 not apply iii renting} to such interest.
The provisiozis cf paragraph I shall aim) apply to profits from the participation in a pool, a joint business or an intcmaﬁoaai operatiag agency.

3 . Where —

(a) an enterprise (5 wagering State participates directly at indirectly

ntmi or cagital of an enterprise of the ether

{13) the am :1 us paxticipatedirecﬂy oriudh-ecﬂyinthe management, central or caﬁiial of an enterprise of a Contraetjjlg State and an enterprise of the other Centracting State;

and in either case conditions are made or imgosed betweea the two enterprises in their commerciai or financial relations which differ from those which would be made between independem enterprises, then any profits which would, 33%: for those conditions, have accrued to one sf the enterprises, but, by reason of those conditions, have no: so acerueti, may be maimed in the profits of that enterprise and taxed accerdingly.

Where a Contracting State inciudes in the praﬁts of an enterprise of Ike State — and taxes accordingly — profits on which an enterprise of the other Contractiag State has been charged to tax in that other State anti the profits so included are prefits which wouki have accmed 10 the enterprise of the first—mentioncd State if ﬁle conditions made between the twa enterprises had been those which woulé have been made ?)etween independent enterprises, then that other State may make an 3§propriate adjustment to the amount of the tax charged therein on those proﬁts. In determining sack adjustment, tine regaré shall be had to the other provisions 0f this Agreement and the ccmpetent authorities of the Contracting States shali if necessary consult each other.

RU. (A) 338. 6790

Article 10 DIVIDENBS

I. Dividends paiﬁ by a company which is a resident of a Contracting State to a resident of the other Contracting State may he taxed in that other State.

2, However, such dividends may also be taxed in the Contracting State of which the comyeey paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the grass amount of the dividends. This paragraph shall :10: affect the taxation of the company i}: respect of the profits out of which the diviéends are paid.

The term “dividends” as used in this Article means income from shares or other rights, not being debt—claims, panic ating in profits, as well as income from other corporate rights which is eted t0 the same taxation Heatment as income from shares by the hi ' e State of which the company making the distribution is a residen ‘
The provisions of paragraphs 1 and ﬂea}! not apiﬂy if the beneficiai owner of the dividends, hehlg a rest § ontmcting State, carries on besiness in the ether Contracting Stat Which the compsmy paying the dividends is a resident, through . establishment situated therein, or perform; in that other Stat; ndent personal services from a fixed base situated therein, am} the h respect of which the dividenés are pair} is effectively eoneee ch permaneet establishment or fixed base. In seeh ease the J4 ions of Article ’7 or Article 15, as the case may he, shall apply.
Where a company whit: is a reeideot of a Coatracting State derives proﬁts or income from the other Contractiog State, that other State may not impose any tax on the dividends paid by the company, except insofar as seeh dividends are paid to a resiéent of that ether State or insofar as the helding in respect of which the (iividends are paid is effectively connected with a permanent establishment or a. fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistrihuted profits coesist wholly or partly of profits or income arismg in such other State.

Article 11

INTEREST

Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
However, such interest may also be taxed in the Contracting State in which it arises, and aeeortiing to the iawe of that State, but if the beneficial owner of the interest is a resident ef the other Contracting State, the tax so charged shall not exceed $10 per cent of the gross amount of the interest.

6701 EU. (A) 338.

Netwithstaudieg the provisions of paragraph 2, interest arising in a Contracting State shall be exemijt from tax in that State provided it is derived and beneficially {mned by:

(a) in the case of Malaysia: (i) the Government of Malaysia; (ii) the Gevemmeht of the States; (iii) Bank Negara Malaysia; (iv) the lace] authorities; (v) the statutory bodies whoiiy owned by the Government;

{vi) the Bxport—Import Bank of Malaysia Berhad (EXIM Bank};

(vii) B ank Pembahguhan Malaysia Berhad (Develepment Bank of Malaysia Berhati

and (ix) Malaysia {35} in the ease of that:

(ii) the poli . 1 subdivisions; atutory bodies Wheily owned by the Gevemment; cal autherities; (v) the Export-Impert Bank of India (EXIM Bank); (vi) the Reserve Bank of India; (vii) the Industrial Fiﬁance Corporation of India; (viii) the Industrial Develeprhent Bank of Inciia; (ix) the Nationa} Housiag Bank; and (x) the Small Industrial Development Bank of India; (a) any other institetion as may he agreed from time t0 time between

the competent authorities of the Contracting States.

The term “interest” as used in this Article means income from debt claims of every kind, Whether or not secured by mortgage and whether or not carrying 3 right to participate in the dehter’s prefits, and ,in particular, ineeme from government secerities and income from bonds or debentures, including premiums and prizes attaching to seek securities, bonds or debentures. Penalty charges for late payment shail net he regatéed as interest for the purpose of this Article.

RU. (A) 338. 6762

The provisions of paragraghs 1 and 2 311311 not app1y if the hﬁﬁﬁﬁciﬂl owner of the interest, being a rosidcnt of a Contracting State, amiss on business in the othcr Contacting State in which 111:: interest arises, through a permanent establishment situated therein, or performs in that other Stats independent personal scwices from a ﬁxed base situatod therein, and the debt 01211111 in respect of Which the iﬁterest is paid is effectively connectcd with such permanent establishment or fixed base. In such case, the pmvisions of Artie}: 7 01' Article 15, as the 0356 may be, shaﬂ apply.
Interost 311311 be ﬁeomed to arise: in a Conﬁracting State when the payer is a resident of that Stats. Whore, however, the person 9331ng the interﬁst, whether ho is a resident of a Contracting State or not, has in a Contracting Stats a permanent establishment Of a fixed base in connection With Which the iﬁdebtednoss on which the interest is paid was iﬂCﬂﬂ'ﬁd, and such interest is homo by such permanent establishment or fixed base, then such intmest shall be deomsd to arise i}; the State in which the permansnt establishmeﬁt or fixed bass lS situated.

exceeds tho amount w111'ci1 wou1d ha tho bonoﬁcial owner in the 2686: this Artic1c sha11 apply only to the excess part of the payment of each Contracting Statc, (1116 to this Agreement.

st—mentioned amount. In such case, : main taxable accordizzg to the laws g1 Eyeing had to the other provisions of

Article 12 ROYALTIES

L Royalties arisiag 1.12 a Contracting Stats and paid to a resident of the other Contracting Stats may be taxed in that other State.

2.. However, such royalties may also 136 taxed in the Contracting State in which they arias, and according to tho Iaws of that Stats, but if the recipient is the beneficial owner of the royaities, the 131; so charged shall not cxcead 10 per cent of the gross amount of the royalties.

3.?115 team “royalties” as used in this Articie means payments of any kind! receivod as a consideration for the 1186 of, or the right to use, aay copyﬁght of literary, 31:15:10 or scientific work inc1uding cinematograph films 01' films or tapes used for teievision or radio broadcasting, any patont, trade mark design or model plaza secret formuia or process, or for the 1156 of, 01' the tight to use, mdzzstrial, commercial or scientific equipment, 01 for information (know—how) concerning imiustrial, commercial or scientiﬁc oxpcrience.

6703 13.11. (A) 338.

The provisions of paragraphs 1 and 2 shall not apply if the heueficial owner of the royalties, being a resident of a Centracting State, carries on business in the other Cognacting State in which the royalties arise through a permanent estabiishment sitaated therein, or perfmms in that other State independent persona1 services from a fixed base situated therein, and the right 01' property in respect 9f which the royaities axe paid is effectively connected with such permasent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may he, shall

apply.

Royalties shall be deemed to arise in a Contracting State when the payer is a resiéeat of that State. Where, however, the person paying such roye1ties, whether he is a resident of a Contracting State or not, has in a Contracting State a yermaﬂent establishment or a fixed base 111 connection with which the obligation to pay the royalties was incurred, and such royalties are hams by such permanent establishment or fixed base, then such royalties shall he deemed to m‘i State in Which the permanent establishment or fixed base is simat ._
Where, by reason of a spec? elatiei hip betweea the payer and the beneficial owner or betweea h “ _ and some other gersan, the amount so, right 02' information for which

Article 13

FEES FOR TECHI'HCAL SERVICES

Fees for technicaﬂ services arising ii} a Contracting State which are derived by a resident of the other Contracting State may be taxed in that other State.
However, such fees for technical services may also be taxed in the Contracting State in which they arise and aceortiing to the laws of that State, but if the beneﬁcial owner of the fees for teclmieai services is a resiéent of the other Contracting State the tax 50 charged shah not exceed 10 pereeat of the gross amount of the fees for technicai servizes.
The term “fees for teehgicai services” means payment of any hind in consideration for the rendering of any managerial, technical or congiﬂtancy services including the provision of serviﬁes by technical or other personnel but does not include payments for services mentioned in Articie 15 and Articie 16 of this Agreemeﬁt.

RU. (A) 338. 6704

The provisions of paragraph 1 of this Article shall not apply if the beneficial owner of the fees for technical services, being a resident ef a Contracting State, carries 0:1 hesiness in the other Contracting State in Which the fees for technical services arise through a permanent establishment situated therein, or pexforms in that ether State independent pei‘somzel services from a fixed base situated therein, and the fees for technical services are effectively connected with such permanent estahhshment or fixed base. In sash case, the grovisions of Article 7 0r Artieie 15, as the case may be, shall appiy.
Fees for technical services shaﬂ he deemed to arise in a Contracting State when the payer is a tesirfeht at that State. Where, however, the person paying the fees for technieai services, whether he is a resident of a Contractiug State or net, has in a Centzactieg State a permanent establishment or a fixed base in connection with Which the ehiigatien to gay the fees for technical services was incurred, and seeh fees for technical services are home by such pennanent establishment 01' fixed base, then such fees fer technical services shaﬂ be deemed {0 ar' the Contracting State in Which the permahent establishment or fixe
Where, by reasen of a special etween the payer and m and some ether person,

paid exceeds, for Whatever

‘ reiationslﬁp, the provisions of st—mentiened ameunt. in such ease, emain taxable according to the law d being had to the ether previsions of

the excess part of the gaymenfe of each Centraeﬁhg State, this Agreement.

CA?ITAL GAINS

Gains derived by a resident of a Contractihg State from the alienatien of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
Gains from the alienation of mevable preperty farming part of the business ptoperty of a permanent establishment Which an enterprise of a Centracting State has in the other Contracting State or of movable property peﬂaining to a fixed base availahie to a resident of a Contracting State in the ether Contracting State fer the purpose of petfetming imiependent persenal services, incleding such gains from the alienation of such a permanent establishment (alone or with the whole enterprise} or of such ﬁxed base, may be taxed in that other State.
Gains from the alienation of ships 01' aircraft operated in international traffic, or movabie preperty pertaining to the eperation of such ships or ah'craft shali he taxable eely in the Centracting State of which the alienator is a resident.

6705 EU. (A) 338.

Gains derived by a resident of a Contracting State from the alienation of shares deriving more than 56 per cent of their value directly or indirectly from immovable property situated in the other Contracting State or any other right pertaining to such immovable property may be taxeé ii: that other State.
Gains from ttte aiienation of shares other that: those mentioned in paragraph 4 ii] a oompaoy which is a resident of a Contracting State may _ be taxed in that State.
Gains from the alienation of any property other than that referrer} to i}: paragraphs 1, 2, 3, 4 and 5, shalt iJe taxabie oniy in the Contracting State of Which the alienate: is a resident.

Article 15

INDEPENDENT PER ‘ ‘ L SERVICES

, a resident of a Contracting services or other independent e taxable only in that State except ch iitcome may also be taxed in

Income derived by an individual State from the performance of “ activities of a similar character in the foliowing eircmnstzmc the other Contracting State:

”goo regularly available to him in the other Contracting \ the purpose of performing his aotivities; in that ease, only

fixeti has way ite hated in that other State; or (b) ‘

period of tweive months commencing 0r enéing in the ﬁscal year concerned; is: that case, only so much of the income as is derived from his activities performed it} that other State may be taxeii in that other State.

The term “professional services” inclucfes especially independent scientiﬁc, literary, artistic, educationai or teaching activities as weii as the indepenéent activities of physicians, lawyers, engineers, architects, surgeons, dentists anti accountants.

Articfe 16 DEPENDERT PERSONAL SERVICES

Subject to the provisions of Articles 27, I9, 20, 21 anti 22, saiaries, wages and other similar remuneratioﬁ derived by a resident. of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other {Iontracting State. if the employment is so exoroised, such remuneration as is derived therefrom may be taxed in that other State.

P.U. (A) 338. 6766

2, Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall he taxable only in the first—mentiozied State if:

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve months period commencing or ending in the fiscal year concerned, and

{b} the remuneratiott is paid ?by, or on behalf of, an employer who is not a resident of the other State, arid

{c} the remuaemtion is not home by a permanent estabtishment or a fixed base which the employer has in the other State.

Notwithstanding the preeediﬂg provisions of this Article, remuneration derived in respect of an empioyment exercised aboard a ship or aircraft operated in international traffic, by an enterprise of a Contracting State may be taxed in that State.

Directors fees and other Sim” Contracting State in his came a comyany which is a resident in that other State,

Article 18 ARTISTES AND SPORTSPERSONS

Notwithstanding the gravisions of Articles 15 and 16, income derived by a resicient of a Contractihg State as an entertainer, sueh as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from personal activities as such exereised in the other Contracting State, may be taxed in that other State.
Where income in respect of yetsona} activities exercised by an entertainer or a sportsperson in his capacity as such aecmes not to the entertainer or sportsperson himself but to another hereon, that income may, notwithstanding the provisions of Attic1es 7, 15 anti 16, be taxed in the Contracting State in which the activities of the entertainer or sportsperson ate exercised.
The provisioos of paragraphs 1 aztd 2, 911311 hot agpiy to income from activities performed in a Contracting State by eatertainers or soortspersons if the activities are substantiaﬂy supporteé by public funds of one or both

‘ of the Cognaoting States or of poiitical subdivisions or local authorities thereof. In such case, the income shah he taxable only in the Contracting State of which the entertaieer or sportspersou is a resident.

6707 PH. (A) 338.

Artiele l9 PENSIONS

Subject to the provisions of paragraph 2 of Article 20, pensiohs, annuities and other similar Iemunetatioza paid to a resident of a Contractmg State in consideration of past employment shall be taxable only 1.11 that State.
The term “annuity” means a stated 322m payable periodically at stated times during life or during a specified or ascertaihahie period of time, under an obligation to make the payments in return for adequate ahd full consideration in money or mozteys worth.

Article 26

'lat remuneration, other than a, pension, L r,» a peiitical suhdivisien or a local ereof 29 an individual} in respect ‘ tate or political subdivision or least -- beefy thereef shall be taxable only it: that

(b) wages and other similar remuheratien shall in the other Contracting State if the services are rendered State and the individual is a resident of that State

who: (i) is a national Of that State; or

(ii) (iid not become a resident of that State solely for the purpose of rendering the sewices.

{a} Any pension paid by, Dr out of funds created by, a Contracting State or a political subdivision or a IoeaI authority or a statutory body thereof to an individual in respect of services renciereé to that State 01' political subdivision or local autlwrity or statutory body shall he taxable only in that State.

(17) However, such pension shall he taxable only in the other Connecting State it the indiviéual is a resident of, and a national of, that State.

The provisiens of Articles 16, 1'7, 18 and 19 shall apply to salaries, wages and other similar remaneretion and to pensions in respect of services teedered in ceameetien With a business carried on by a Contractihg State or a political sahdivision 01‘ a local authm‘ity or a statutory body thereof.

RU. (A) 338. 6708

Article 21 PROFESSORS, TEACHERS AND RESEARCH SCHOLARS

A professor, teacher or research scholar who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college or other similar approved institutien in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding 2 years from the date of his first artivai in that other State.
This Article shall apply to income from research only if such research is undertaken by the individual. in pubiic interest and hot primarily for the beneﬁt of some private person or persons.

3, For the pntgoses of this Article, at: individual shall be deemed to be a resident of a Contracting State if he is resi' ~‘ that State in the fiscal year in which he visits the ether Contractih “ or in the immediately preceding fiscal year.

A student who is at was » t of one of the Cenuaeting States immediately before visitieg the {E Contracting State and who 2s present in that other Contractin the selely for the purpose of his education or training, shall besides loans and scholarships be exempt from tax in that other State on:

(a) payments made to him by persens residing outside that other State for the purposes of his maietenahce, education or training; and

(b) Iemuheratioe which he derives from an employment which he exercises in the other Cozztraetiug State if the employment is directly related to his studies.

The benefits of this Article shall extend ehly for such period of time es may be reasonable at customarily required to cempiete the education or training endertaken, hut in no event shaﬂ any individuai have the benefits of this Article, fer more than six censeeetive years from the date of his first attivai fer the purposes of his educatien er traiazsing in that other State.

Article 23 OTHER iNCOME

Items of inmate of a resident of a Contracting State, wherever arising,

not dealt with in the foregoing Articles of this Agreement shall he taxable only in that State.

6709 13.13. (A) 338.

The provisions of paragraph 1 shall not apply to income, other than income frem immovable property as éefined in paragraph 2 of Article 6, if the recipient of sech income, being a resident of a Contracting State, carries on business in the other Contracting State through a germanent establishment situated therein, or performs in that other State independent gersoeal services from a ﬁxeé base situated therein, and the right or property in respect of Which the inceme is paid is effectively connected with such permanent estabiishment or fixed hase. In such case, the provisions of Article 7 or Artieie 15, as the case may he, shall appiy.
Nomithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not death with iii the foregoing Articles of this Agreement amt aris'mg in the othez Contracting State may also be taxed in that other State.

Article 24

METHODS FOR ELEME‘TAT UBLE TAXATION

The laws in force in either the C Ereating States Willi continue to govern the taxation of incem spective Contracting States except where previsions to the con de in this Agreement.
In the ease of india, ti 1e taxation shall be eliminateé as fellows:

Where a resident“ ﬂerives income which in accerdance with the provisions ef his Agreement, may be taxed' in Malaysia, India shall ailow as a. d ti flout the tax on the mcame of that resideiit an amount equai ; ameant of tax paid in Maiaysia whether directly or by (ieduetion a wee. Such amount shall not, however, exceed that part of the tax {as Computed before the (iechictien is given} which is attributable to the income which may be taxed in Malaysia.

1301' the purposes of paragraph 4, the term "tax yaid in Malaysia” shall be deemed to include the tax which wank}, under the laws of Malaysia and in accordance with this Agreemeet, have been payable on any income derived from sources it: Malaysia had the income not been taxed at a reduced rate or exempted from Malaysian tax in accordance with the provisioes of this Agreement and the special incentives uncier the Malaysian laws for the promotion of economic (ievelopment of Malaysia which were in force at the date 0f signature of this Agreement or any other grovisions which may subsequently be introduced in Malaysia in modification of or in addition to, those laws so far as they are agreed by the competent aethorities of the Contracting States to be of a substantiaily similar character.
In the ease of Malaysia, doebie taxation shali be eliminated as follows:

Subject to the iews ef Malaysia regarding the aﬂoweece as a ereéit against Malaysian tax of tax payahie in any country other than Malaysia, tax paid in India uiider the taxation ans of India and iii accordance with

P.U. (A) 338. 6719

the provisions of this Agrsement, by a rasident of Maiaysia in respact of income derived fmm india shall be aliowed as a credit against tax payable in Malaysia in resyect of that incamc. Where such income is a dividend paid by a comgmny Which is a msidcnt of India to a ﬂompahy which is a resident (1f Maiaysia and which owns not 1653 than 10 per cent of the voting shares of the company paying the dividend, the credit shall take into account tax paid in India by that company in respect of its income out of which tha dividend is paid. The cmdit shall 11m, howevar, exceed that part of the Malaysian tax, at; computeé before that credit is givcn, which is attributable to such item 0f income.

For the purposes of paragraph 2, the term “tax paid in India” shall be deemed to include thc tax which wouid, under the laws of Iﬂéia and in accnrdancc with this Agmement, have ham payable on any incume derived from sources in Iadia had the income not bean taxed at a reduced [3:6 0}: exemptgd from Iridian tax in accordance with the provisions of this Agmement and the special incentives 33d the indian laws for the pmmotion of econamic écvelapmeni of 111* Hiéféh wars in force at the

suhsequanﬂy ha introduced 111 India. ’ those iaws so far as ﬁlmy arc agl‘ d

L Natiouais of 2 Contra ihg State shall not be subjectad 1n the othar Contracting State to any taxation or any rcqaimment cemectsd thcrewith, which is other er more: burdensoms than thc taxation anti connected requirements to which nationals of that other Stats in the same scircumstances, in particular with respect to resicience, art: or may be subjectcd, This provision shall, notwithstanding the provisioﬁs 0f Articla 1,, also apply to persons who are not residents of 0:16 or both of the Contracting States.

The taxation on a permansnt establishment which an enterprise of a Contracting State has in the other Contracting Stats shall not be less favorably leviad if: that other States than tiac taxation lavied 011 enterprises of that oﬂmr State carrying on tha same activities. This provision shall not be construed as Ohliging a Contracting State 126 grant to rasidents 0f the ether Contracting State 21:23; yersonal aliowances, reliefs and reductions for taxatian pmposcs on account of civil status or family responsibilities which it grants to its own residsnth. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent estabiishmsm which a company of the othar Coatractihg State has in the ﬁrst mentioned State at a rats of tax Which is higher than that imposed on tht: profits of a similar company of the first mcntioaed Contracting State, nor as being in eonﬂict with the pmvisiomt of paragraph 3 of Articls 7.

6711 EU. (A) 338.

Except where the previsieus of paragraph 1 of Article 9, garagraph 7 of Article 11, at paragraph 6 of Article 12, or paragraph 6 9f Article 13, apply, interest, reyaities, fees for technical services and other (fishutsemeets paid by an entergrise of a Centraeting State to a resident of the other Contrasting State shall, fer the purgese of determining the gamble profits of such enterprise, he deductibie under the same conditions as if they had been paid :0 a resident of the first—mentioneé State.
Enterprises of a Centraeting State, the capital of Which is wholiy or paid}! oweed or eentrolied, directly or indirectly, by one 01: more residents of the other Conﬂuting State, shali not be subjected in {he fixstwmeﬁi‘ioned State to any taxatieﬁ 01' 3113; qunixement connected therewith which is other er more burdensome than the taxation and connected requirements to which other simiiar enterprises of the ﬁxst—mentioned State are or may be subjected.
The provisions of this Article shall apply to taxes covereé by this Agreement,
Where a person considers the tions of one or both of the Contracting States resuit or Will resui? him in taxation not in accordance with the provisions of this Agre H may, irrespective of the remedies provided by the domestic iew of mtes, present his case to the competent ' ' gem: of which he is 3. resident; or, if his case ‘ l of Article 25, to that of the Centractiiig State of he case must he presented within three years from the first notiﬁcation :the action resuiting in taxation net in aeeoréance With the provisions of the Agreement

2- The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Coetractieg State, with a view to the avoidance of taxation, Which is net in accordance with the Agreement. Any agreement reached shali he implemented notwithstanding any time limits in the domestic law of the Contracting States.

The cempetent authorities of the Cenh'acting States shall endeavour to reseive by mutual agreement any difﬁculties or doubts arising as to the interpretation or application of the Agreement. They may also consult tegether fer the eliminatien of double taxation in cases net provided for in the Agreement
The competent authorities of the Contracting States may eommuﬁieate with each ether directly for the purpose of reaching an agreemeni in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange ef opinions, such exchange may take place ﬂneegh the representatives of the competent authorities of the Contracting States.

RU. (A) 338. 6712

Article 27 EXCHANGE OF iNFORMATION

The competent authorities ef the Contracting States shall exchange such information as is foreseeahly relevant for eanying out the provisions of this Agreement 0: to the administration or enforcement oi the domestic laws concerning taxes of every kind anti description imposed on behalf of the Conuaeting States, 01' of their poiitieai subdivisions or ioeal authorities, insefax as the taxation thereunéet is not eomrary to the Agreement. The exchange of infermetiea is not restricted by Artieies 1 and 2.
A33}: information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State arid shalt be désclesed only to persons er authorities (including mums and administrative bodies) concerned with the assessmeﬁt or collection of, the enforcement or prosecution in respect of, the determinatien of appeals in relation to the es referred to in paragraph

information only for such emposes. The in public court proceedings 01' in judicial foregoing, infermation received by a other purposes when such informatiog under the laws of hot}: States anti the? State authorizes such use.

é. Notwithstanding the , State may he used for » used for such other purposes ht authority of the supplying

In :10 case shall the prov‘ ' as to impose on e Contractie

ragraphs I and 2 be construed so ohhgation:

ietretive measmes at variance With the ﬂaws and . e of that DI of the ether Contracting State;

(a) to carry out ad g administrative;

{b} to suppiy iuformatagh which is not ehtainabie unéer the Iaws er in the nermal eourse’” of the administration of that or at the other Contracting State:

(a) to supply itiformatien which Would (iisclose any trade, business, industrial, commercial er professional secret 01' trade process, at infermation the disclosure of Which would he century to ptthIiC policy (erdre public}.

If information is quaested by a Contracting State in accordance With this Article, the other Centraeting State shall use its information gathering measures to obtaie the requested infermation, even though that other State may not need such informatien for its ewe tax purpoeee. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shali such limitatiens be construed to permit a Contractihg State to decline to supply information 501er because it has no domestic intetest, in seek information.
In no case shall the provisions of paragraph 3 be eonstmed to permit a Contractihg State to decline to eupply ihformatien 501er because the informatien is held by a bank, other financial institution, nominee or person acting in an agency or a fideciary capacity or because it relates to ownership ihtereets in a person.

6713 EU. (A) 338.

Article 28 HWYAIION 0F BENEFITS

L The provisions of this Agreement shall in no case prevent a Contracting State from the application of the provisions of its domestic law aad measures eenceming tax avoidance or evasien, Whether or not described as such.

A resident of a Contracting State shall not be entitled to the benefits of this Agreement if its affairs were arranged in such a manner as if it was the main purpese or one of the main purposes to take the benefits of this Agreement.
The ease of legai entities not having banaﬁde business activities shail be covered by the provisions of this Articie.

Attic

MEMBERS OF DH’LGMATIC MI CONSULAR PQSTS

the fiscal ytiviieges of members of er the general rules of internatienal . agreements.

Nothing in this Agreement shat diplomatic missions or consul ‘ law or under the provisiens of

ENTR‘! INTO FORCE

i. The Centraetmgw hates shall notify each other in writing, through diplomatic channels 0 the compietien 0f the procedures required by the respective laws for the entry into force of this Agreement.

This Agreement shalt enter into fotee 0n the date of the iater of the notifications referred to in paragraph 1 at this Article.

3- The provisions of this Agreement shall have effect:

(a) in India, it; respect of income eletived ie any fiscal year beginning on or after the first day ef April next following the ealendat year in which the Agreement enters into force; and

(b) in Malaysia, in resgect of Malaysian tax, to tax chargeable for any year of assessment beginning ml or after the first day of January in the calendar year foliowing the year in which this Agreement enters into force.

The Agreement between the Gevermnent of Malaysia and the Government 0f India for the Avoidance of Botthle Taxation and Prevention of Fiscai Evasion with respect to Taxes en Income signed at Pimajaya on the 143‘ day of May, 2081 shalt cease to have effect when the provisions of this Agreement become effective in accordance With the previsiohs ef garagraph 3.

RU. (A) 338. 6714

Article 31

TERMINATION

This Agreement shalt remain in force incieﬁniteiy anti} terminated by a Centracting State. Either Centracting State may terminate the Agreement, through dipEomatic channeis, by giving notice of tetminatien at least six months hefere the end of any calendar yeax beginning after the expiration period of five years free] the date of entxy inte force of the Agreement. 111 such event, the Agreement shalt cease to have effect:

{a} in India, in respect, ef imeme éerived in any fiscai year on er after the first day of April next foliowing the calendar year in Whlch the notice is given;

{5} in Maiaysia, in respect of Malaysian tax, ta tax chargeabie for any year 9f assessment beginning on or after the first day at January in the calendar year folEowing the year in which the notice is given.

IN WITNESS WHERE-ee the undersigned, d111, " d thereto, have signed

this Agreement. ﬂay of May 2012, each in the being equaily authentic. In glisi) text Shel} prevail.

Dam. in duplicate at Putrajaya thi Hindi, Malay and English languag case of divergence ef interpretation,

(TAN SR] DR WAN ABDUL A2 WAN ABDmLAH) SECRETARY GENER

(VUAY Game) HIGH COMMISIQNER OF INDIA MINISTRY

0F TREAS‘ = TO MALAYSIA MALAYSIA OF MALAYSI FOR THE GOVERNMENT FOR THE GOVERNMENT OF OF MALAYSIA THE REPUBLIC OF INDIA PROTOCQL

At the time of signing the Agreement between the Government of Malaysia and the Government ef the Republic of India for the avoidance at double taxation and the prevention of fiscal evasion With respect to taxes on income, the uadersigned have agreed that the following provisions shail form an integral paxt of the Agreement:

With reference to paragraph 1 of Article 4, it is understeod that the second sentence of this paragraph is not to exclude residents of coutzfries atiopting a territorial priﬂciple in their taxation law.

2- It is understand that the persens who are entitled to tax benefits according te the Labaan Business Activity Tax Act, 1990 are not entitled to benefits {if this Agreement. However, the provisions of this Agreement shall apply to such Labuml comeanies that have math: an ineveeable election to be charged to tax in accordance with the Income Tax Act, 1967 ef Malaysia.

6715 EU. (A) 338.

It is mzderstood that the term “may be taxeél in the other Shite” Wherever appearing in the Agreement shouid not be consmzed as preventing £116 country of residence from taxing the income.
It is understood that both the Coatracting States shall review ﬂie provisions of Article 24- (Methods for Eliminatien of Doubic Taxation) in order to consider the extension of benefits in pmagzaphs 3 313d 5 of that Articie after the period ef 10 years from the ciate on which ﬂiis Agreement eniers into force.
Notwithstanding the provisions of paragraph 2 0f this Protocei, the competent authority of Malaysia Will provide information under Article 27(Exchange. of Infermatien) regarding the persons who are entitled to the beneﬁts of the Labzzan Business Activity Tax Act, 1990.
With reference to Articie 27 {Exchange of Information), if is imdersteod that the term ‘information’ includes any documents or certified copies of the decuments.

ton of Taxes, it is understood

With reference to Assistance iii { §v ,. or this purpose, then, {be two

that if Malaysia amends its domesti Centracﬁng States shall cons Article on Assistance in C

each {3 Er for the purpose of inserting f Taxes in this Agreement.

With reference to Tax Ex if Malaysia amends i _. Contracting States shall

ﬁation Abroad, it ﬁs understood that laws for this pm‘pese, then, the twe suit each other for ihe purpose of inserting

Putrajaya this 9 day of May 2912, each in the Hindi, Maia)! and English languages, all texts being equally authentic. In case {if divergence of interpretation, the English text shall prevail.

(TAN SR1 DR WAN ABDUL A212 (VUAY GoKHALE) WAN AEDULLAH) HIGH CGMMISIDNER SECRETARY GENERAL OF INDIA MINISTRY OF TREASURY, T0 MALAYSIA MALAYSIA OF FINANCE MALAYSIA

FOR THE GOVERNMENT F OR THE GOVERNMENT OF 8F MALA¥SIA THE REPUBLIC OF INDIA

Made 25 September 2012 [Perbz 0-6869124 chiﬁ (3K6); PN(PU2}80AIXVI]

DATO’ SERI AHMAD HUSNI MOHAMAD HANADZLAH Seamed Milzisier af Fintmce

{To 2):: Mid before the Dewau Rakyat pursnam £0 subsectian 132(6) 0f Ike Income Tax Act 1967 and subsectian 65A{5) of the Petroieum (Incame Tax) Act 1967]

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