公司有权就泰国股息收入申请应纳税额抵免，即使未实际缴纳税款

裁定方

德里高等法院

In the matter of 

Principal Commissioner of Income Tax Vs. M/s Polypex Corporation Limited (ITA 571/2019 dated 18.07.2023)

The Assessee earned dividend income from its subsidiary company based in Thailand. Assessee was liable to pay Income Tax @ 10% on such dividend income in Thailand. However, tax was exempted due to the statutory regime obtained in Thailand. While filing ITR in India, Assessee disclosed such income and claimed the credit of tax @ 10% which was payable in Thailand but not paid due to exemptions. 

The Income Tax department contended that tax was not paid by the assessee on dividend received from its subsidiary Company. Therefore, it could not be granted tax credit of tax which is not actually paid.

Hon’ble High Court held that as per Article 23(3) of Indo-Thai DTAA, “Thai Tax Payable" includes tax which would have been otherwise payable, but for an exemption or reduction of tax granted for that year or any part thereof, under the two statutory enactments of Thailand. Further, Article 23(6) provides that tax credit can be accorded by the rate of tax which would have been applicable, if income exempted from tax in accordance with the provisions of Indo-Thai DTAA, had not been so exempted.Under Article 23 of Indo-Thailand DTAA, credit for notional tax is granted to incentivize economic development/activity.In accordance with Article 23, it is clear the assessee was entitled to claim tax credit on dividend income received from its Thai subsidiary, in respect of "Thai Tax Payable", which it would have to pay. Therefore, if exemption is not available, the dividend income would have to suffered tax @ 10% in Thailand. 

1. 案情简介

• M/s Polypex Corporation Limited (“The Respondent” or “The Assessee”) has earned Dividend income from its subsidiary company based in Thailand.
• Such dividend income was taxable in the country in which the income emanated i.e., Thailand. However, such tax was not paid because of the statutory regime operating in that country.
• The Assessee included such income in its return of Income filed in India. 
• However, The assessee claimed the tax credit in respect of tax, which it would have to ordinarily pay in Thailand on such dividend income. However, such tax was exempted from levy due to the statutory regime obtained in Thailand. 
• The Assessee claimed credit of tax payable in Thailand in pursuant to Article 23 of Double Taxation Avoidance Agreement (DTAA) entered between India and Thailand even though such tax is not paid in Thailand.
• The Assessee claimed that it is entitled to claim credit tax, which it was spared from paying in Thailand.
• The Assessing Officer disagreed with the stand taken by the respondent and declined the tax credit sought in Return of Income.
• The Assessee carried the matter before the Commissioner of Income Tax (Appeals). The CIT(A) rejected the preferred appeals.
• In the Tribunal, however, the assessee was successful. It was able to persuade the Tribunal that, having regard to the tax sparing concept embedded in Indo-Thai DTAA, it was entitled to tax credit at the rate of 10%, on the dividend income received from the Thai subsidiary

2. Legal Extracts

Relevant extract of Double Taxation Avoidance Agreement (DTAA) is reiterated below for ready reference:

“Article 23: Elimination of Double Taxation

1. The laws in force in either of the Contracting State shall continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Convention.

2. The amount of Thai tax payable, under the laws of Thailand and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of India, in respect of profits or income arising in Thailand, which has been subjected to tax both in India and in Thailand, shall be allowed as a credit against the Indian tax payable in respect of such profits or income provided that such credit shall not exceed the Indian tax (as computed before allowing any such credit) which is appropriate to the profits or income arising in Thailand. Further, where such resident is a company by which surtax is payable in India, the credit aforesaid shall be allowed in the first instance against income-tax payable by the company in India and as to the balance, if any, against surtax payable by it in India.

3. For the purposes of the credit referred to in paragraph (2), the term "Thai tax payable" shall be deemed to include any amount which would have been payable as Thai tax for any year but for an exemption or reduction of tax granted for that year or any part thereof under the provisions of the Investment Promotion Act (B.E. 2520) or of the Revenue Code (B.E. 2481) which are designed to promote economic development in Thailand, or which may be introduced hereafter in modification of, or in addition to, the existing laws for promoting economic development in Thailand.

…..

6. Where under this Convention a resident of a Contracting State is exempt from tax in that Contracting State in respect of income derived from the other Contracting State, then the first-mentioned Contracting State may, in calculating tax on the remaining income of that person, apply the rate of tax which would have been applicable if the income exempted from tax in accordance with this Convention had not been so exempted.”

3. Contention of the Applicant

The Income Tax Authority (“The Applicant”) contented that:

• The tax was not paid by the assessee on dividend received from its subsidiary Company. Therefore, it could not be granted tax credit on dividend income as the same taxable in India at the rate of 30% plus surcharge and cess, as applicable.
• The Tribunal held that to obtain benefit under Article 23(2) of the Indo-Thai DTAA, it was not necessary that the assessee should have paid tax. Relevant point is whether it was liable to pay tax or not.  However, this was an erroneous conclusion, as it went beyond the scope and ambit of the Article 23 of the Indo-Thai DTAA. 
• The Assessee was not granted exemption under Article 23(2) of the Indo-Thai DTAA.
• The Assessee failed to furnish proof of such exemption being accorded to it. Thus, the Tribunal erroneously concluded that tax had not been paid in view of the exemption extended under the statutory regime prevailing in Thailand.
• The assessee did not pay tax, for reasons other than those provided in Article 23(2) of the Indo-Thai DTAA
• The exemption relied upon by the assessee was actually available to its Thai subsidiary. The exemption permitted the Thai subsidiary to not pay tax on the dividend distributed by it. However, income distributed and remitted to the Assessee became its income, and hence, the assessee cannot be allowed to rely upon the exemption under Thai law, to claim tax credit in India, under the Indian Income Tax Act.
• Therefore, the respondent could have claimed benefit of Article 23(2) of the Indo-Thai DTAA, only if he had paid tax in Thailand. 
• Since the respondent/assessee had not paid tax in Thailand, it was rightly declined tax credit by the AO.

4. Contention of the Respondent

The Assessee contended that:

• The concept of tax-sparing credit is given under several DTAAs including India-Thai DTAA. Under tax sparing provisions, tax credit may be claimed even for tax which, though payable, is exempted on account of incentives granted by the source country. 
• Benefit under Article 23 of the Indo-Thai DTAA is available to the recipient of income in India, as well as those who reside in Thailand. 
• The Thai subsidiary was granted an exemption from corporate income under the Investment Promotion Act. Besides this, the dividend distributed by the Thai subsidiary is also exempted from tax under the provision of Section 34 of the Investment Promotion Act.
• Section 70 of the Revenue Code of Thailand levies tax at the rate of 10% on companies incorporated under foreign law, qua assessable income which emanates from, or is received in Thailand.
• Tax could only be levied, as per the Indo-Thai DTAA, on the dividend distributed by the Thai company, in Thailand. 
• Since the dividend income received by the assessee has been offered to tax in India, at a higher rate i.e., 30% (exclusive of surcharge and cess), the respondent/assessee is entitled to tax credit at the rate of 10%, in accordance with Article 23 of the Indo-Thai DTAA. 

由于缺乏任何关于交叉授权的通知，因此不存在交叉授权。

Hon’ble High court analyzed the provisions of Article 23 of Indo-Thai DTAA as follows:

a. Interpretation of Article-23 of DTAA

• Article 23(1): As per Para 1 of Article 23,  provisions of the contracting state shall apply. However, in case of any conflict between provisions of contracting state and provisions of DTAA, the provisions of the Indo-Thai DTAA would prevail. 
• Article 23(2) allows tax credit of “Thai Tax Payable” against the tax payable in India. However, Paragraph 2 specifies the caveat that tax credit cannot exceed the amount of Income tax payable in India (as computed before allowing any such credit) on income arising in Thailand. 
• As per Article 23(3), "Thai Tax Payable" includes tax which would have been otherwise payable, but for an exemption or reduction of tax granted for that year or any part thereof, under the two statutory enactments of Thailand. Para 3 also alludes to the fact that the said statutes are designed to promote economic development in Thailand. 
• Provisions of Article 23(3) are configured to incentivize investments in Thailand, by granting tax credit of the amount which was payable as tax to the Thai state, but was not paid due to exemption or reduction granted under the said enactments. 
• Article 23(4) and (5) are a mirror image of Paragraphs 2 and 3 of Article 23 
• Article 23(6) provides a clue as to the rate at which tax credit can be accorded by, inter alia, providing that it would be that rate of tax which would have been applicable, if income exempted from tax in accordance with the provisions of Indo-Thai DTAA, had not been so exempted.

• 通常情况下，“应纳税额”是指已产生或到期但尚未缴纳的税款。然而，该术语的含义必须根据两个缔约国之间签署的条约来确定。应考虑缔约国的意图，而非该术语的普通含义。
• 因此，“泰国应纳税额”或“印度应纳税额”这一表述的含义，必须在《避免双重征税协定》（DTAA）或条约的定义中寻找。
• 根据《印度-泰国避免双重征税协定》第23条，为激励经济发展或活动，准予对名义税额进行抵免。这是缔约国作出的决定，因此，除非存在歧义，否则对“泰国应纳税额”或“印度应纳税额”这一表述的解释，应基于第23条第3款和第5款的字面含义。
• 上述条款体现了双方在促进投资以确保两国经济发展方面的共同利益。
• 税收饶让（tax sparing）这一概念的存在，可从克劳斯·沃格尔（Klaus Vogel）所著《双重征税公约》评论中的以下摘录中看出：
  • 每当抵免法适用于来自外国的收入时，来源国为经济或社会政策（特别是以鼓励经济发展的激励措施形式）提供的税收优惠，就会被居住国抽走。
  • 这种激励措施非但没有使纳税人受益，反而使居住国的税务机关受益（前提通常是，来源国征收的税额因减免而低于居住国的税额）。因此，税收激励被抵消了。
  • 居住国可以通过按来源国未减免前的税额计算抵免额，来避免这种影响。
  • 在发达国家与发展中国家签订的税收协定中，通常会准予名义税额抵免。许多发展中国家在税收协定谈判中坚持加入税收饶让条款，以通过提供税收优惠来吸引外国直接投资并促进经济增长。
  • 一些国家愿意提供税收饶让条款，允许其居民企业在来源国以与其他投资者几乎相同的条件下进行竞争。税收饶让条件在促进资本输入中性方面发挥了作用……

• 根据第23条，纳税人显然有权就其从泰国子公司收到的股息收入，针对其本应缴纳的“泰国应纳税额”申请税收抵免。因此，如果无法获得豁免，该股息收入在泰国将需缴纳10%的税款。

6. Conclusion

德里高等法院得出以下结论：

1. 税务机关的上诉基于这样一种主张：即所申请的税收抵免不能给予纳税人，因为纳税人并未在泰国缴纳税款，即《印度-泰国避免双重征税协定》第23条下的优惠仅在实际缴纳税款的情况下才能适用。
2. 关于《印度-泰国避免双重征税协定》，税收饶让抵免适用于泰国和印度的居民。这是嵌入在避免双重征税协定中，旨在激励投资以促进经济发展的机制。