Korea-India Tax Treaty to be Amended


The Ministry of Strategy and Finance announced on January 16, 2014 that it had concluded to revise the tax treaty with India. The main contents of the agreements are as follows:




  • Mutual Agreement Procedure (MAP)

Mutual Agreement Procedure (MAP) will be provided for the countries to resolve on disputes over transfer pricing tax issues.




  • Tax Exemption on Profits from Transportation

Profits from international maritime transportation will be fully exempt (up from current 10%) in the source country.




  • Withholding Tax Rate to Decrease

Withholding tax rate on interests and royalties will be reduced to 10%, down from 15%.




  • Gains from Share Transfer

Gains derived from share transfer will be taxable in the source country if the transferor’s ownership ratio is at least 5%.




  • Rules to Prevent Granting of Treaty Benefits

Exclusion rules will be added to the treaty in order to prevent the granting of treaty benefits to a person aiming to obtain treaty benefits for tax avoidance.


The foregoing amendments to the Korea-India Tax Treaty will become effective after the formal agreement of both countries and ratification of the National Assembly, respectively.