Tax Treaty Case Law around the Globe 2018
1. Aufl. 2019
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S. 279Chapter 24 India: Payment for Use of a Standard Facility Does Not Amount to Fees for Technical Services
D.P. Sengupta
24.1. Introduction
The existing distribution of taxing rights between countries favours residence countries in many ways. The elaborate Base Erosion and Profit Shifting (BEPS) Project under way under the aegis of the OECD initially refused to address such a sensitive subject, although there is now grudging recognition, at least in the context of the digital economy, that such distribution of rights may itself be the reason for source country tax base erosion. The present case, which deals with the decision of the Supreme Court of India regarding a Danish shipping company, is an example of the inadequacy of the current rules in preventing tax base erosion in source countries.
24.2. Facts of the case
The taxpayer (A.P. Moller Maersk AS) is in the business of international shipping. Its place of effective management is in Denmark. The ships belonging to the taxpayer ply international waters and dock at various ports in India for the same purpose. There is a double taxation avoidance convention (DTC) between India and Denmark (hereinafter Denmark-India DTC). In respect of sh...