Let us now say that there is another agreement on double tax evasion (DBAA) between country C and country B, in which country C is exempt from paying taxes on income from investments in Country C. Thus, Country C will not pay taxes. India currently signs a double taxation agreement with more than 80 countries, which includes a comprehensive agreement with countries such as Australia, Canada, Germany, Mauritius, Singapore, the United Arab Emirates, the United Kingdom and the United States. To reduce these abuses, countries include in their agreement a clause called “benefit limitation” (THE LOB clause) that defines investments that are made solely to benefit from an agreement on double tax evasion (DBAA) or real investments that are real investments. Under the 2013 Finance Act, a person is not entitled to relief under the Double Taxation Avoidance Agreement unless he or she provides a tax residence certificate to the sender. To obtain a certificate of tax residence, an application must be made to the income tax authorities through Form 10FA (application for a residence certificate within the meaning of an agreement under sections 90 and 90A of the Income Tax Act 1961). As soon as the application has been successfully processed, the certificate is issued in Form 10FB. For example, in the case of a dual tax evasion agreement (DBAA) between India and Singapore, the benefit limitation (THE LOB clause) requires that the investor invested in India have spent at least 2 Lake Singapore dollar over a 12-month period, prior to that investment in India. Therefore, when an investor from a third country passes on his investment from a country that has entered into the agreement with the country of origin, where the investor ends up paying very little or no tax, this concept is referred to as contract shopping. In this case, the company was founded in Japan. It formed a consortium with four other companies and entered into an agreement with an Indian company, Petronet LNG Ltd, for the construction of a liquefied natural gas and degassing plant in Gujarat. Each member of the consortium should receive separate payments.
The contract included offshore procurement, offshore services, land supply, onshore services, construction and construction. The price was due for deliveries and offshore services in U.S. dollars, while the price of onshore supply as well as services, construction and assembly were partly in dollars and rupees. A tax agreement between two or more countries to avoid taxing elbe income twice is called the Double Taxation Avoidance Agreement (DBAA). This means that there are agreed tax rates and skill rates for certain types of income generated in a country. If a taxpayer resides in one country and earns income in another country, he is insured under the DBAA if those two countries have one country. DBAAs can be either complete, i.e. cover all types of income, or specifically target certain types of income. It depends on the nature of the businesses/businesses of the citizens of one country in another country.
Some common categories covered by DBAA are services, salaries, real estate, capital gains, savings/fixed accounts, etc.