{"id":11660,"date":"2020-06-27T18:33:31","date_gmt":"2020-06-27T13:03:31","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=11660"},"modified":"2021-02-01T16:09:43","modified_gmt":"2021-02-01T10:39:43","slug":"tax-residency-certificate-and-how-to-get","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/","title":{"rendered":"An overview on Tax Residency Certificate &#038; Double Taxation Avoidance Agreement: How To Get It?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">A tax residency certificate (TRC) is needed to verify which country you are a tax citizen of. The TRC is a must-have authorization for those who possess strings of income sources in more than one country. Regardless of what tax residency you represent, your income will be taxable in either country, as per their domestic laws.&nbsp;&nbsp;<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#Overview_on_Tax_Residency_Certificate\" >Overview on Tax Residency Certificate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#The_concept_of_TRC_and_DTAA\" >The concept of TRC and DTAA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#Availing_benefits_under_the_DTAA_What_is_DTAA\" >Availing benefits under the DTAA: What\nis DTAA?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#How_to_avail_advantages_under_the_DTAA\" >How to avail advantages under the DTAA?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#How_can_one_obtain_TRC\" >How can one obtain TRC?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#What_time-constrained_is_related_to_the_benefits_under_the_DTAA\" >What time-constrained is related to the\nbenefits under the DTAA?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#What_happens_when_NRIs_breaches_the_provision_of_document_submission_including_TRC\" >What happens when NRIs breaches the provision of\ndocument submission, including TRC?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#Advantages_of_Double_Taxation_Avoidance_Agreement\" >Advantages of Double Taxation Avoidance\nAgreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#Requirements_of_availing_DTAA_benefits\" >Requirements of availing DTAA benefits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#Latest_amendment_in_DTAA_India_and_Sri_Lanka\" >Latest amendment in DTAA (India and Sri\nLanka)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#What_is_Multilateral_Instrument\" >What is Multilateral Instrument?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#What_is_the_Principal_Purpose_Test\" >What is the Principal Purpose Test?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#What_is_Base_Erosion_Profit_shifting\" >What is Base Erosion Profit shifting?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#Possible_disadvantages_of_BEPS\" >Possible disadvantages of BEPS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/corpbiz.io\/learning\/tax-residency-certificate-and-how-to-get\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Overview_on_Tax_Residency_Certificate\"><\/span>Overview on Tax Residency Certificate<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To avoid double taxation on an income, you have to\ntake advantage of the \u2018Double Taxation Avoidance Agreement\u2019 between the\ncountries. TRC discards the probability of double taxation by applying relevant\nDTAA so that one can avail of the benefits stated therein.&nbsp;<\/p>\n\n\n\n<p>If you represent India&#8217;s tax residency and seek any DTAA benefits, then you must obtain a tax residency certificate (TRC). Non-resident Indians (NRIs) might seek TRC to submit to their native country to avail treaty benefits.&nbsp;Form 10FA is typically required to obtain a tax residency certificate (TRC) in India. Similarly, the TRC in context to the foreign country could be obtained from the relevant tax authority.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_concept_of_TRC_and_DTAA\"><\/span>The concept of TRC and DTAA<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"657\" height=\"576\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-180.png\" alt=\"TRC and DTAA\" class=\"wp-image-11671\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-180.png 657w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-180-300x263.png 300w\" sizes=\"(max-width: 657px) 100vw, 657px\" \/><\/figure><\/div>\n\n\n\n<p><strong>Example\nIssue<\/strong>: Suppose\nyou are holding a status of NRI and reside in Australia. You are looking\nforward to selling out your bitcoins and transfer the gain to the NRO account.\nNow what are the issues that might encounter as bitcoin in India is prohibited?\nOn the other hand, you have the liberty of transferring that asset in your\nAustralia account and then the NRO account. What tax liability applies to this\ntype of income?&nbsp;<\/p>\n\n\n\n<p>The majority of countries, including India, see Bitcoin as an unorthodox instrument of generating assets. The Income Tax Department of India has not issued any provision on how bitcoin should be treated for tax liabilities. Whether the income transfer to India comes under liabilities or not, will depend on multiple factors.&nbsp;<\/p>\n\n\n\n<ul><li>Firstly,\nthe residential status will decide the fate of your income, whether taxable or\nnot. Consider yourself as an NRI; your income will be taxable in India earned\nover time. On the flip side, if you are a non-resident and obtained sales gains\nin Australia and then transfer to India, such a receipt will not be treated as\na taxable entity.&nbsp;<\/li><li>Secondly, the applicability of taxation provision on bitcoin will depend on the vicinity where they are located. It required to be scrutinized whether the gain (from the sale of bitcoins) has arisen in India or not. If these profits are made in India, such bitcoins will be considered capital assets for income tax purposes.&nbsp; <\/li><\/ul>\n\n\n\n<p>One may opt for indexation benefit to costs and pay a 20% tax on long term gains, provided bitcoins have been under the possession for three years. On the contrary, if the possession period is less than three years, bitcoins will be treated as short-term and taxed as per <a href=\"https:\/\/corpbiz.io\/learning\/online-income-tax-slab-and-rate-for-financial-year-2020-21\/\"><strong>income tax slab rates<\/strong><\/a>. Since the taxation rules of bitcoin have not been clear yet, you must go for expert assistance to boost up your understanding in regards to tax implications and adopt the compliance offered by the <strong>income tax department<\/strong><sup><a href=\"https:\/\/www.incometaxindia.gov.in\/Pages\/default.aspx\"><strong>[1]<\/strong><\/a><\/sup>.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Availing_benefits_under_the_DTAA_What_is_DTAA\"><\/span>Availing benefits under the DTAA: What\nis DTAA?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Double Taxation Avoidance Agreement, aka DTTA, is a\ntreaty between two countries with an aspiration to discard the probability of\ndouble taxation on the income in the respective countries. India, as of now,\nhad a DTAA treaty with countries.&nbsp;<\/p>\n\n\n\n<p><strong>For\nexample<\/strong>, an\nNRI living in the country &#8220;A&#8221; is managing an NRO Account with a bank\nsituated in India. The interest generated in this account shall be deemed as\nincome originating in India and taxed in country &#8220;A&#8221; which further\nleads to double taxation of the same income in either country.&nbsp;<\/p>\n\n\n\n<p>If India holds a Double Taxation Avoidance Agreement with country &#8220;A,&#8221; a tax will be deducted from this income as per the rate prescribed in the agreement. Otherwise, it will be taxed at 30.9 % (the current tax provision).&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_avail_advantages_under_the_DTAA\"><\/span>How to avail advantages under the DTAA?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Income Tax Act 1961 has now made it compulsory\nto obtain a Tax Residency Certificate (TRC) to take advantage of the Double\nTaxation Avoidance Agreement (DTAA). NRIs who seek the immediate benefit of\nDTAA have to mandatorily submit &#8216;Tax Residency Certificate (TRC)&#8217; to the\ndeductor (Bank). In general, this provision applies to all the NRIs who want to\navoid double taxation with effect from April 1 2013.<\/p>\n\n\n\n<p>To avail benefits under DTAA, NRIs have to submit the TRC along with PAN &amp; Form-10F. These certifications are further needed to be scrutinized by Government authority for tax.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_can_one_obtain_TRC\"><\/span>How can one obtain TRC?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <strong>FORM-10F<\/strong>\nis available at the official website of the income tax department. If you\nreside in overseas, you can approach to tax\/government authorities to serve\nthis purpose. It&#8217;s worth noting that documents other than TRC are not\nacceptable at the authority for the DTAA purpose.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_time-constrained_is_related_to_the_benefits_under_the_DTAA\"><\/span>What time-constrained is related to the\nbenefits under the DTAA?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>DTAA benefits grow with time. Hence, NRI needs to\nrender all the mandatory documents at the commencement of financial years to\nmaximize the profit under DTAA.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_happens_when_NRIs_breaches_the_provision_of_document_submission_including_TRC\"><\/span>What happens when NRIs breaches the provision of\ndocument submission, including TRC?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If NRIs fail to submit the required documents\nwithin stipulated timelines, then the interest earned on NRO deposits will be\nsubjected to a tax deduction of 30.9%.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_Double_Taxation_Avoidance_Agreement\"><\/span>Advantages of Double Taxation Avoidance\nAgreement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Double Tax Avoidance Agreement is established with\nan end goal to provide a better environment for NRIs and investors who seek\nmaximum benefit from sales gain and avoid dual taxation. It is a form of tax\nexemption that provides relief from an unfair tax deduction on income generated\nin other countries.&nbsp;<\/p>\n\n\n\n<p>Say, for instance, if an individual makes its way\nto abroad for an assignment and accepts payments that he\/she earned for a given\nperiod, the income earned might be taxed in both the countries. The individual\ncan apply for tax exemption at the time of tax filing for that given year,\nprovided he complies with the provision under DTAA.&nbsp;<\/p>\n\n\n\n<p>On the other hand, if foreign officials seek investment in India, the DTAA provisions can maximize tax deductions to income such investments. In some cases, DTAAs render nominal rates of tax. For instance, a TDS of 30% is applicable on the interest generated on NRI bank deposits. But DTAA can relive the concerned investor with the concessional rate of interest, which range somewhere around 10-15%.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/search-cases-under-section-153d-of-the-it-act-1961\/\">Search Cases under Section 153D of the IT Act, 1961: Lawfulness of Prior approval for assessment\n<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Requirements_of_availing_DTAA_benefits\"><\/span>Requirements of availing DTAA benefits<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A person who earns income is accountable for paying the tax for that specific jurisdiction. As we already mentioned, India entered into a treaty (DTAA)with many countries to discourage dual taxation.&nbsp; However, to claim this benefit, one has to make sure that its native country where he\/she lived has a DTAA with India. Here is the list of documents you requires to meet this requirement.&nbsp; <\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"576\" height=\"344\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-178.png\" alt=\"form to avail DTAA benefits\" class=\"wp-image-11662\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-178.png 576w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-178-300x179.png 300w\" sizes=\"(max-width: 576px) 100vw, 576px\" \/><\/figure><\/div>\n\n\n\n<p>You can obtain these documents from the official website of the income tax department or a Bank.&nbsp;The applicant needs to fill the following details in the form before submitting it to the relevant authority.&nbsp;<\/p>\n\n\n\n<ul><li><em>Nationality<\/em><\/li><li><em>Tax identification number<\/em><\/li><li><em>Address and period of residential status&nbsp;<\/em><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Verification<\/h3>\n\n\n\n<p>Form 10F will approve by the government of the\njurisdiction in which the assessee is a citizen for the period applicable.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Self-Declaration<\/h3>\n\n\n\n<p>The self-declaration is a legal document that\nauthorized the participation of assessee who resided in the foreign country and\npledged to follow all the provisions mentioned under DTAA.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Tax residency certificate<\/h3>\n\n\n\n<p>A tax residency certificate must be obtained from\nthe country in which the person was residing in a particular financial year. A\ntax residency certificate is issued on the submission of required documents and\npayment of prescribed fees.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Points to note<\/h3>\n\n\n\n<ul><li>PAN number needs to incorporate in Form 10F and the self-declaration form.<\/li><li>One can navigate the <a href=\"https:\/\/corpbiz.io\/income-tax-return-filing\"><strong>income tax<\/strong><\/a> India website to know whether a particular country has a signatory to DTAA.&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Latest_amendment_in_DTAA_India_and_Sri_Lanka\"><\/span>Latest amendment in DTAA (India and Sri\nLanka)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In Feb., the Union Cabinet passed the amendment\nregarding the agreement between Sri Lanka and India to obliterate dual taxation\nand fiscal evasion.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Key Points of the Latest amendment<\/h3>\n\n\n\n<p>The current DTAA agreement between Sri Lanka and\nIndia was signed on January 22, 2013, that eventually comes into effect on\nOctober 22, 2013. Srilanka and India trade practices don&#8217;t encourage\ncomplexities in the tax liabilities, and they are a collective power. Both the\ncountry is required to develop the new standards concerning DTAAs with\nInclusive Framework countries to discourage dual taxation.&nbsp;<\/p>\n\n\n\n<p>India is a signatory to multilateral instrument,\naka MLI, whereas Sri Lanka yet to enter into such convention.&nbsp;Hence, the\namendment of the India-Sri Lanka DTAA is required to insert the Principal\nPurpose Test (PPT) provisions to satisfy the minimum criteria. Note: If another\ncountry opts to sign MLI along with India, the inclusion of the Principal\nPurpose Test in the DTAA serves no purpose; hence, it needs to be discarded.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Multilateral_Instrument\"><\/span>What is Multilateral Instrument?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Multilateral Instrument is a multilateral\nconvention that allows jurisdictions to amend bilateral tax treaties to\nimplement measures to discourage multinational tax avoidance effectively. These\nmeasures are part of the OECD\/G20 Base Erosion and Profit Shifting (BEPS)\nproject.<\/p>\n\n\n\n<p>Around 100 countries in 2016 signed a Multilateral\nConvention for the implementation of the Tax Treaty. The Treaty discourages\nBase Erosion and Profit Shifting, which has a significant impact on\ninternational business in the current time.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Principal_Purpose_Test\"><\/span>What is the Principal Purpose Test?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Principal Purpose Test is an anti-abuse provision\nthat helps the government to combat the violation tax treaties in the Double\nTaxation Avoidance Agreement (DTAA).<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Significance<\/h3>\n\n\n\n<p>The revision of preamble text and implementation of\nthe Principal Purpose Test will put the break on tax violation and misconduct\nrelated to the transfers of assets from one country to another without\ncomplying with tax provisions.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Base_Erosion_Profit_shifting\"><\/span>What is Base Erosion Profit shifting?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Firms make profits through investment in one jurisdiction;\nmove them to another country by abusing tax treaties and mismatching in tax\nrules.&nbsp;The lower tax rate lures these firms to take such steps and\nencourage them to violate the country&#8217;s tax provision where the profit is\nmade.&nbsp;<\/p>\n\n\n\n<p>BEPS has become a severe matter of concern across\nthe globe due to unfair trade practices and tax violations. As per Organization\nfor Economic Cooperation and Development (OECD), BEPS is accountable for losses\nof 10% of global corporate income tax revenue, which is equivalent to a\nmonetary figure of around $100-$240 billion.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Possible_disadvantages_of_BEPS\"><\/span>Possible disadvantages of BEPS<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"571\" height=\"245\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-179.png\" alt=\"disadvantages of BEPS\" class=\"wp-image-11663\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-179.png 571w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-179-300x129.png 300w\" sizes=\"(max-width: 571px) 100vw, 571px\" \/><\/figure><\/div>\n\n\n\n<h4 class=\"wp-block-heading\">Loss to Governments<\/h4>\n\n\n\n<ul><li>Compromised\nrevenue and a higher cost to meet compliance requirements.<\/li><li>Tax\nsystem integrity gets compromised. <\/li><li>In\ndeveloping countries, the shortage of tax revenue triggers the under-funding of\npublic investment and compromised economic growth. <\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Individual taxpayers will be harmed<\/h4>\n\n\n\n<p>The loophole in the taxation system could help defaulters move their funds across the border without any tax liabilities which, in turn transfers the load on those taxpayers who are law-abiding and put their efforts to meet the compliance standards. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Businesses\nwill be harmed<\/h4>\n\n\n\n<ul><li>MNEs\nreputation may expose to risk if their ETR found to be too low.<\/li><li>The\ndomestic players may face trouble competing with MNEs that can conduct\ncross-border transaction with ease. <\/li><li>The\ndistortions induced by BEPS harms fair competition.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The unfair tax deductions could demotivate investors and NRIs. Thankfully DTAA can help these personals to maximize their tax reduction through proper filling and 100% compliance. TRC can act as an ID for the investor who wants to avoid the tax complexity around the income generated outside the country. Once the proper documentation (Form 10F and PAN) submits to the relevant tax authority, the chances are you can save a considerable amount of money through a nominal tax slab provision under DTAA. The tax residency certificate (TRC) is a hugely vital element for NRIs and foreign investors. Please don&#8217;t forget to drop your queries in the comment section if some doubts regarding this topic.&nbsp;<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/how-to-save-income-tax\/\">\nA Complete Guide on How to Save Income Tax\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A tax residency certificate (TRC) is needed to verify which country you are a tax citizen of. The TRC is a must-have authorization for those who possess strings of income sources in more than one country. Regardless of what tax residency you represent, your income will be taxable in either country, as per their domestic [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":11666,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[10],"tags":[709],"acf":{"service_id":"78"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":12990,"readingTime":7,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/11660"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=11660"}],"version-history":[{"count":20,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/11660\/revisions"}],"predecessor-version":[{"id":25349,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/11660\/revisions\/25349"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/11666"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=11660"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=11660"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=11660"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}