The Income and Capital Tax Treaty between India and Uruguay entered into force on 21 June 2013. The treaty generally applies from 1 January 2014 for Uruguay and from 1 April 2014 for India. This treaty was signed in September 8, 2011.
Under the treaty the definition of a permanent establishment includes a farm, plantation or other place where agricultural or forestry activities take place. The definition also includes a construction, assembly or installation project or related supervisory activities if the activity continues for 183 days or more. A permanent establishment will also be created where services are provided in the other contracting state through employees or other staff engaged for the purpose of the project, where the activities continue for 90 days within a twelve month period.
The maximum withholding tax on dividends under the treaty is 5%. The maximum withholding tax on interest is 10% and on royalties and technical service fees the withholding tax is also 10%.
The treaty also contains articles in respect of non-discrimination, the exchange of tax information and a mutual agreement procedure in the case of tax disputes.
