India and Maldives have signed two agreements for the exchange of information with respect to taxes and for the avoidance of double taxation of income derived from the international air transport.
The agreement, which was signed during the visit of President of Maldives Abdulla Yameen Abdul Gayoom to India, is based on international standards of transparency and exchange of information.
The deal covers taxes of every kind and description imposed by the Governments of India and Maldives.
It will enable exchange of information, including banking information, between the two countries for tax purposes, which will help curb tax evasion and tax avoidance.
The Government of India in a statement said that the agreement will enhance mutual co-operation between the two countries by having effective exchange of information in tax matters.
"The second agreement provides for relief from double taxation for airline enterprises of India and Maldives by way of exemption of income derived by the enterprise of India from the operation of aircraft in international traffic, from Maldivian tax and vice-versa," the statement added.
The object of the second agreement is that profits from the operation of aircraft in international traffic will be taxed in one country alone and accordingly the taxing right is conferred upon the country to which the enterprise belongs.
The accord will provide tax certainty for airline enterprises of India and Maldives.
The agreement also provides for mutual agreement procedure for resolving any difficulties or doubts arising as to the interpretation or application of the agreement.