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India has signed the revised Double Taxation Avoidance Agreement (DTAA) with the Syrian Arab Republic during the visit of Mr. H.E. Bashar Al Asad, Syria's president to India. The move has been taken for preventing arise of any fiscal evasion in respect of taxes on income. The agreement was signed by the India's external affairs minister Mr. Pranab Mukherjee and Syria's minister of economy and trade Mr. Amer Husni. Both nations had earlier entered into the double taxation avoidance agreement, which was prior notified on June 25, 1985.

The person has to pay tax on its foreign income in his own nation as well as in that country where it has been earned. As a result he is required to pay tax in both nations for same income. But the purpose of double taxation avoidance agreement is to avoid any such dual taxation procedure. As per this agreement, the person is required to pay tax only in that country where it has been earned or in case it has been taxed in both nations, tax relief is provided in one nation to palliate the hardship faced due to the dual taxation.

India has resigned the revised double taxation avoidance agreement with Syria for assuring that companies would come under purview of taxation only in those countries where they have their permanent establishments. The agreement covers branch, factory, place of management and sales outlet as the permanent establishments. As per the agreement, profit earned from projects includes building site, construction, assembly or installation projects may be taxed in the state of nation provided that such activities are continuing over there for 270 days or more. It provides that the profit arisen out of the furnishing of services that will include the consultancy services, may also be taxed in the state of source provided such activities are continuing in the state for more than 183 days within the time period of 12 months. Profits earned by any company by indulging into the shipping or aircraft operations in the worldwide traffic would be consider taxable in the native nation of the company. Any capital gains earned from the sale of share would be taxable in the country of source.

The agreement says that it would detail down taxes on total income along with the imposition of taxes levied on all gains earned by selling of movable or immovable property, taxes imposed on wages and salaries. The revised form of the Double Taxation Avoidance agreement constitutes the provision of anti-abuse which in turns make sure that any gain or benefit derived from the aforesaid agreement is availed by the national residents of the India and Syria.

The agreement states that the maximum tax rate which has to be charged in the nation of source on dividends is the 5% rate of the gross amount of dividends. The prescribed 5% tax rate would be applied only if the company receives dividends has minimum 10% stake in the firm which is paying dividends and in other cases it would be 10% of the whole amount. The agreement is said to impulse the economic growth rate in both India and Syria by allowing mutual co-operation and stimulating the flow of investment, technology and services between both nations. The Agreement facilitates the dissemination and exchange of information between tax authorities of two nations.