Summary-of-DTAA-with-different-countries-338024

Summary of DTAA of Nepal with India, Pakistan and Sri Lanka

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Nepal is in DTAA agreement with 11 different countries. A short comparative study of the DTAA of Nepal with India, Pakistan and Sri Lanka is shown in the table below. Please refer desktop version for more clarity.
A detailed version of DTAA with India can be found 
here
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ArticleIndiaPakistanSri Lanka
Dual ResidencyPermanent Home -- Vital Interests -- Habitual Abode -- nationals -- Mutual Agreement. For companies - Place of Effective management -- mutual agreementSameSame
Immovable Propertyincome from Immovable property (not capital gains) taxed in Source CountrySameSame
Business ProfitsProfits from PE only to be taxed in the source state. SameSame, In addition Profits attributable to PE or from business activities similar to PE or sales of merchandise same or similar to that of PE shall also be taxed in the country of source
Shipping and Air transportProfits in international traffic - taxed in country of Residence. Profits from containers - Taxed in the country of Residence except when solely used in the country of source. interest on investment directly linked with operation of ships - not to be treated as interest under article 11. Profits in international traffic - taxed in the country of residence. Profits from such operation from sources within the other contracting states may be taxed in the other contracting state in accordance with the domestic laws. Only 50% of such tax shall be chargeableSame
DividendsMay be taxed by the country of residence. May be taxed by source state, tax shall not exceed 5% if beneficial owner is a company which owns at least 10% of shares, 10% tax in all other cases. If the dividend is effectively connected with PE, such income is to be taxed under business profits and not dividend income. For detailed analysis Refer to this SameSame. but tax in source state shall not exceed 15% in all cases.
InterestMay be taxed in both states. Limit for tax in the source state is 10% of the gross amount. Exempt in the source country if derived by central banks, government or political subdivisions. If such interest income is effectively connected with PE, such interest is to be charged as business incomeSame, Except limit for tax in the source state is 10% for financial institutions, insurance company, or an investment company receiving income from financial investments. 15% in all other cases.Same, Except limit for tax in the source state is 10% for financial institutions, insurance company, or an investment company receiving income from financial investments. 15% in all other cases.
RoyaltiesSame as interest, limit for rate for tax in source state is 15%Same Same
Capital GainsIncome from capital gains from immovable property to be taxed in the country of source. i.e. where the asset is situated. Income from capital gains from alienation of PE or Fixed base including movable property to be taxed in the state of source .Income from alienation of ship or aircraft operated in international traffic is taxable only in the state of country of residence. Gains from the alienation of shares to be taxed in the country where its immovable assets are located. Other capital gains to be taxed in the country where the alienator is the resident (Country of residence) Same. except gains from disposal of shares of a company the property of which consists of immovable property situated in the other contracting state may be taxed in the other state i.e. state of source, and other than that shall be taxed in the resident state Same as India DTAA
Independent Personal ServicesTo be taxed in the country of residence, but, in the following circumstances, taxed in the country of source - a. has fixed base in another country. b. stay in the other country exceeds 183 days or more in any 12 months. Same. In addition paragraph 2 states that such income may be taxed in the state of source if remuneration is paid by the resident of such source state or is borne by the PE or fixed base of such state.Same as india DTAA except the limit of 183 day is 90 days.
Dependent Personal ServicesTaxed in the country of source. however, in the following conditions taxed in the country of residence. a)not present in another country for more than 183 days in the last 12 months. b)Remuneration is paid by a employer who is not resident of the other contracting state and remuneration is not borne by PE in the other state. Remuneration provided in ships/aircrafts operating in international traffic - country of residence.SameSame, but the limit of 183 days is 90 days.
Directors FeeCountry of SourceSame. In addition Salary of top level managerial position is also taxed in the state of source.Same as Pakistan DTAA
Artists/SportspersonCountry of Source/Countries where the services are performed. If substantially supported by public funds/ political subdivision/LA - Country of ResidenceSameSame
PensionsCountry of Residence.(Except government pensions - see below)Same. In addition, pension payments as a part of social security system shall be taxed in such state(state of source)Same as Pakistan DTAA
Government ServicesCountry of Source. However, in the following conditions Country of Residence - a) National of that state. b) did not become resident solely for the purpose of rendering services. Pension paid out of government funds to be taxable only in that state except when the individual is a resident and national of the other contracting state, Country of residence in that case.SameSame
Professors, Teachers and Research Scholars.No tax for 2 years from the date when entered into another contracting state. Teaching, research only in approved institutions and research should only be for public welfare purposes.Not Mentioned in DTAASame as India DTAA
StudentsFollowing income exempt - a) Payment made by persons outside the state for education purposes. b) Remuneration from employment related to education. Exemption shall be granted until a reasonable amount of time as may be required to complete studies in the other contracting state or maximum 6 years.Payments received by students from outside the contracting state for the purpose of education shall be exempt.                        individual present as an employee of or under a contract with a resident of other contracting state or as a participant in a program sponsored by the government of the other state for the primary purpose of a) acquiring technical, professional or business experience from a person other than the resident of the state in which he was a resident immediately before or a person other than related to such person or b) studying at a university or recognized institution. income related to personal activities of such persons shall be exempt from tax for 3 years if the aggregate amount is not in excess of US $3000 or equivalent in Pakistani Rupees or Nepali Rupees Same as pakistan DTAA
Other IncomeState of Residence. Windfall gain - State of Source.May be taxed in the country of residence as well as in the country of source.according to laws in force in either states.
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﻿﻿DTAA of Nepal with Pakistan
﻿﻿DTAA of Nepal with Sri Lanka
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Article	India	Pakistan	Sri Lanka
Dual Residency	Permanent Home -- Vital Interests -- Habitual Abode -- nationals -- Mutual Agreement. For companies - Place of Effective management -- mutual agreement	Same	Same
Immovable Property	income from Immovable property (not capital gains) taxed in Source Country	Same	Same
Business Profits	Profits from PE only to be taxed in the source state.	Same	Same, In addition Profits attributable to PE or from business activities similar to PE or sales of merchandise same or similar to that of PE shall also be taxed in the country of source
Shipping and Air transport	Profits in international traffic - taxed in country of Residence. Profits from containers - Taxed in the country of Residence except when solely used in the country of source. interest on investment directly linked with operation of ships - not to be treated as interest under article 11.	Profits in international traffic - taxed in the country of residence. Profits from such operation from sources within the other contracting states may be taxed in the other contracting state in accordance with the domestic laws. Only 50% of such tax shall be chargeable	Same
Dividends	May be taxed by the country of residence. May be taxed by source state, tax shall not exceed 5% if beneficial owner is a company which owns at least 10% of shares, 10% tax in all other cases. If the dividend is effectively connected with PE, such income is to be taxed under business profits and not dividend income. For detailed analysis Refer to this	Same	Same. but tax in source state shall not exceed 15% in all cases.
Interest	May be taxed in both states. Limit for tax in the source state is 10% of the gross amount. Exempt in the source country if derived by central banks, government or political subdivisions. If such interest income is effectively connected with PE, such interest is to be charged as business income	Same, Except limit for tax in the source state is 10% for financial institutions, insurance company, or an investment company receiving income from financial investments. 15% in all other cases.	Same, Except limit for tax in the source state is 10% for financial institutions, insurance company, or an investment company receiving income from financial investments. 15% in all other cases.
Royalties	Same as interest, limit for rate for tax in source state is 15%	Same	Same
Capital Gains	Income from capital gains from immovable property to be taxed in the country of source. i.e. where the asset is situated. Income from capital gains from alienation of PE or Fixed base including movable property to be taxed in the state of source .Income from alienation of ship or aircraft operated in international traffic is taxable only in the state of country of residence. Gains from the alienation of shares to be taxed in the country where its immovable assets are located. Other capital gains to be taxed in the country where the alienator is the resident (Country of residence)	Same. except gains from disposal of shares of a company the property of which consists of immovable property situated in the other contracting state may be taxed in the other state i.e. state of source, and other than that shall be taxed in the resident state	Same as India DTAA
Independent Personal Services	To be taxed in the country of residence, but, in the following circumstances, taxed in the country of source - a. has fixed base in another country. b. stay in the other country exceeds 183 days or more in any 12 months.	Same. In addition paragraph 2 states that such income may be taxed in the state of source if remuneration is paid by the resident of such source state or is borne by the PE or fixed base of such state.	Same as india DTAA except the limit of 183 day is 90 days.
Dependent Personal Services	Taxed in the country of source. however, in the following conditions taxed in the country of residence. a)not present in another country for more than 183 days in the last 12 months. b)Remuneration is paid by a employer who is not resident of the other contracting state and remuneration is not borne by PE in the other state. Remuneration provided in ships/aircrafts operating in international traffic - country of residence.	Same	Same, but the limit of 183 days is 90 days.
Directors Fee	Country of Source	Same. In addition Salary of top level managerial position is also taxed in the state of source.	Same as Pakistan DTAA
Artists/Sportsperson	Country of Source/Countries where the services are performed. If substantially supported by public funds/ political subdivision/LA - Country of Residence	Same	Same
Pensions	Country of Residence.(Except government pensions - see below)	Same. In addition, pension payments as a part of social security system shall be taxed in such state(state of source)	Same as Pakistan DTAA
Government Services	Country of Source. However, in the following conditions Country of Residence - a) National of that state. b) did not become resident solely for the purpose of rendering services. Pension paid out of government funds to be taxable only in that state except when the individual is a resident and national of the other contracting state, Country of residence in that case.	Same	Same
Professors, Teachers and Research Scholars.	No tax for 2 years from the date when entered into another contracting state. Teaching, research only in approved institutions and research should only be for public welfare purposes.	Not Mentioned in DTAA	Same as India DTAA
Students	Following income exempt - a) Payment made by persons outside the state for education purposes. b) Remuneration from employment related to education. Exemption shall be granted until a reasonable amount of time as may be required to complete studies in the other contracting state or maximum 6 years.	Payments received by students from outside the contracting state for the purpose of education shall be exempt. individual present as an employee of or under a contract with a resident of other contracting state or as a participant in a program sponsored by the government of the other state for the primary purpose of a) acquiring technical, professional or business experience from a person other than the resident of the state in which he was a resident immediately before or a person other than related to such person or b) studying at a university or recognized institution. income related to personal activities of such persons shall be exempt from tax for 3 years if the aggregate amount is not in excess of US $3000 or equivalent in Pakistani Rupees or Nepali Rupees	Same as pakistan DTAA
Other Income	State of Residence. Windfall gain - State of Source.	May be taxed in the country of residence as well as in the country of source.	according to laws in force in either states.
Download Links	DTAA of Nepal with India	DTAA of Nepal with Pakistan	DTAA of Nepal with Sri Lanka