Tax treaty clarification: capital gains test for immovable propertyrich shares and permitted additional taxation of permanent establishment profits. Protocol clarifies that for capital gains purposes, shares 'deriving more than 50 per cent of their value directly or indirectly from immovable property' are to be treated as shares principally consisting of immovable property. It also provides that India may tax profits of a Korean company's permanent establishment at a higher rate than for similar domestic companies, and that Korea may impose an additional tax on profits of a permanent establishment of an Indian resident under Korean law, subject to a capped additional tax after deducting income and other taxes on income imposed in Korea.
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Provisions expressly mentioned in the judgment/order text.
Tax treaty clarification: capital gains test for immovable propertyrich shares and permitted additional taxation of permanent establishment profits.
Protocol clarifies that for capital gains purposes, shares "deriving more than 50 per cent of their value directly or indirectly from immovable property" are to be treated as shares principally consisting of immovable property. It also provides that India may tax profits of a Korean company's permanent establishment at a higher rate than for similar domestic companies, and that Korea may impose an additional tax on profits of a permanent establishment of an Indian resident under Korean law, subject to a capped additional tax after deducting income and other taxes on income imposed in Korea.
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