LIBYAN ARAB JAMAHIRIYA
THE SOCIALIST PEOPLES LIBYAN ARAB JAMAHIRIYA AND THE GOVERNMENT OF REPUBLIC OF
INDIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME.
F. No. 501/17/73-FTD, dated 1-7-1982.
484(E).--Whereas the annexed Convention between the Socialist Peoples Libyan
Arab Jamahiriya and the Government of the Republic of India for the avoidance
of double taxation and the prevention of fiscal evasion with respect to taxes
on income has been ratified and the instruments of ratification exchanged as
required by Article 25 of the said Convention;
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961) and section 24A of the Companies (Profits) Surtax Act,
1964 (7 of 1964), the Central Government hereby directs that all the provisions
of the said Convention shall be given effect to in the Union of India.
BETWEEN THE SOCIALIST PEOPLES LIBYAN ARAB JAMAHIRIYA. AND THE GOVERNMENT OF
REPUBLIC OF INDIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF
FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
I SCOPE OF THE CONVENTION
1. This Convention shall
apply to taxes on income imposed on behalf of each Contracting State or local
authorities, irrespective of the manner in which they are levied.
2. They shall be
regarded as taxes on income all taxes imposed on total income, or on elements
3. The existing taxes to
which this Convention shall apply are:
With regard to the Socialist Peoples Libyan Arab Jamahiriya
Estate Revenue Tax.
on Commercial, Industrial and Professional profits, which comprise---
a. taxes on profits
realised from commercial, industrial and professional activities;
b. taxes on Companies.
on profits realised by practising Fee Professions.
on wages, salaries and the like.
on Income realised abroad.
Tax on Income.
Tax (Defence Tax).
arising from depositing money in banks and savings accounts.
c. With regard to the
Republic of India.
Income-tax including any surcharge thereon imposed under the Income-tax Act,
1961 (43 of 1961);
surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964).
2. The Convention shall
also apply to any identical or substantially similar taxes which are
subsequently imposed in addition to, or in place of, the existing taxes. At the
end of each year, the competent authorities of the Contracting States shall
notify to each other any changes which have been made in their respective
1. In this Convention,
unless the context otherwise requires:
a. the term " a
contracting State " and " the other Contracting State " mean '
India ' or ' Libya ', as the context requires;
b. the term "
person " comprises an individual, a company and any other body of persons;
c. the term "
Company " means any body corporate or any entity which is treated as a
body corporate for tax purposes;
d. the terms "
enterprise of a Contracting State " and " enterprise of the other
Contracting State " mean respectively an enterprise carried on by a
resident of a Contracting State and an enterprise by a resident of the other
e. the term "
competent authority " with respect to the Socialist Peoples Libyan Arab
Jamahiriya means the Ministry of Treasury, and with respect to India means the
Ministry of Finance (Department of Revenue).
2. For the purposes of
this Convention, the term " resident of a Contracting State " means
any person who, under the law of that State, is liable to taxation therein by
reason of his domicile, resident, place of management or any other criterion of
a similar nature;
3. As regards the
application of the Convention by a Contracting State any term not otherwise
defined shall, unless the context otherwise requires, have the meaning which it
has under the laws of that Contracting State relating to the taxes which are the
subject of the Convention.
prejudice to the provisions of this Convention, the Tax Home of any income
shall be deemed to be the Contracting State in which the income arises.
1. For the purposes of
this Convention, the term " permanent establishment " means a fixed
place of business in which the business of the enterprise is wholly or partly
2. The term "
permanent establishment " shall include especially:
a. a place of
management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a
mine, quarry or other place of extraction of natural resource. (g) a building
or building site which continues for a period of more than three months;
term " permanent establishment " shall not be deemed to include:
a. the use of facilities
solely for the purpose of storage and display of goods or merchandise belonging
to the enterprise;
b. the maintenance of a
stock of goods or merchandise belonging to the enterprise solely for the
purpose of storage and display;
c. the maintenance of
stock of goods or merchandise belonging to the enterprise solely for the
purpose, of processing by any other enterprise;
d. the maintenance, of a
fixed place of business solely for the purpose of purchasing goods or merchandise,
of for collecting information, for the enterprise;
e. the maintenance of a
fixed place of business solely for the purpose of advertising, for the supply
of information, for scientific research or for similar activities which have a
preparatory or auxiliary character, for the enterprise.
3. A person acting in a
Contracting State on behalf of an enterprise of the other Contracting State
other than an agent of an independent status to whom paragraph 5 applies--shall
be deemed to be a permanent establishment in the first-men tioned State if he has
and habitually exercises in that State, an authority to conclude contracts in
the name of the enterprise, unless his activities are limited to the purchase
of goods or merchandise for the enterprise.
4. An enterprise of a
Contracting State shall not be deemed to have a permanent establishment in the
other Contracting State merely because it carries on business in that other
State through a broker, general commission agent or any other agent of an
independent status, where such persons are acting independently in the ordinary
course of their business.
5. The fact that company
which is a resident of a contracting State controls or is controlled by a
company which is a resident of the other Contracting State, or which carries on
business in that other State (whether through a permanent establishment or
otherwise) shall not itself constitute for either company a permanent
establishment of the other.
from Immovable Property
1. Income from immovable
property may be taxed in the Contracting State in which such property is
2. The term "
immovable property " shall be defined in accordance with the law of the
Contracting State in which the property in question is situated.
1. The profits of an enterprise
of a Contracting State shall be taxable in the State where the enterprise is
situated and also in the State where it has a permanent establishment, in which
case, the tax shall be limited to the profits attributable to the permanent
2. Where an enterprise
of a Contracting State carries on business in the other Contracting State
through a permanent establishment situated therein, there shall in each
Contracting State be attributed to the permanent establishment the profits
which it might be expected to make if it were a distinct and separate
enterprise engaged in the same or similar activities under the same or similar
condition and dealing wholly independently with the enterprise of which it is a
3. In the determination
of the profits of a permanent establishment, there shall be allowed as
deduction expenses which are incurred for the purpose of the permanent
establishment whether such expenses have been incurred in the State in which
the permanent establishment is situated or elsewhere in accordance with
regulations of the State in which the income is taxable.
4. No profits shall be
attributed to a permanent establishment by reason of the mere purchase by that
permanent establishment of goods or merchandise for the enterprise.
5. For the purpose of
the preceding paragraphs, the profits to be attributed to the permanent
establishment shall be determined by the same method year by year unless there
is good and sufficient reason to the contrary.
6. Where profits include
items of income which are dealt with separately in other Articles of this
Convention, then the provisions of those Articles shall not be affected by the
provisions of this Article.
and Air Transport
from the operation of ships or aircraft in international traffic shall be
taxable only in the Contracting State in which the place of effective
management of the enterpriser is situated.
a. an enterprise of a
Contracting State participates directly or indirectly in the management,
control or capital of an enterprise of the other Contracting State, or
b. the same persons
participate directly or indirectly in the management, control or capital of
enterprise of a Contracting State and an enterprise of the other Contracting
State, and in either case conditions are made or imposed between the two
enterprises in their commercial or financial relations which differ from those
which would be made between independent enterprise, then any profits which would
but for those conditions, have accrued to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included in the profits
of that enterprise and taxed accordingly.
is to be understood that the procedures available in the respective laws of
each Contracting State in this regard shall be applied.
1. Dividends paid by a
Company which is registered in one of the Contracting States may be taxed in
2. The term "
dividends " shall be defined in accordance with the law of the Contracting
State in which the company in question is registered.
1. Interest arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in the Contracting State where it arises.
2. The provisions of
paragraph 1 shall not apply if the recipient of the interest, being a resident
of a Contracting State, has in the other Contracting State in which the
interest arises a permanent establishment with which the debt-claim from which
the interest arises is effectively connected. In such a case, the provisions of
Article 6 shall apply.
3. Interest shall be
deemed to arise in a Contracting State when the payer is that State itself, a
political sub-division, a local authority or a resident of that State.
1. Royalties arising in
a Contracting State may be taxable in that State.
2. The term "
royalties " as used in this Article means payments of any kind as a
consideration for the use of, or the right to use, any copyright of literary,
artistic or scientific work, any patent, trade mark, design or model, plan
secret formula or process of for the use of the right to use, industrial,
commercial, or scientific equipment, or for information concern inindustrial,
commercial or scientific experience.
3. The term "
royalties " as used in this Article shall exclude rentals and other income
in respect of cinematographic films. Such rentals, and income shall, for the
purpose of this Convention, be considered the profits from business.
1. Income derived by a
resident of a Contracting State in respect of professional services or other
independent activities of a similar character shall be taxable only in that
State unless he has a fixed base regularly available to him in the other
Contracting State for the purpose of performing his activities. If he has such
a fixed base, the income may be taxed in the other Contracting State brat only
so much of it as is attributable to that fixed base.
2. The term " professional
services " means independent activities according to the laws and
regulations in force in each Contracting State.
wages and similar emoluments arising in one of the Contracting States may be taxable
in the State where the services giving rise to that income are performed but if
such income is realised from work carried out on a ship or aircraft operating
in the field of international transport, it shall only be taxable in the State
where the place of effective management of the enterprise is situated.
fees and similar payments derived by a resident of a Contracting State in his
capacity as a member of the Board of Directors of a company which is a resident
of the other Contracting State may be taxed in that other State.
the provisions of Articles 12 and 13, income derived by public entertainers,
such as theatre, motion picture, radio or television artistes and musicians,
and by athletes, from their personal activities as such may be taxed in the
Contracting State in which these activities are exercised.
and other similar income paid to a resident of Contracting State in cosideration
of past employment shall be taxable only in that State.
1. Remuneration paid by
the Government of one of the Contracting States to any individual for services
rendered to that Government in the discharge of governmental functions shall be
exempt from tax in other State if the individual is not resident in that other
State or is resident in other State solely for the purpose of rendering those
services, so provided however, that such an individual has the nationality of
that Contracting State.
2. The provision of this
Article shall not apply to payments in respect of services rendered in
connection with any trade or business carried on by either of the Government
for purposes of profit.
3. In this Article,
" Government " shall be deemed to include public corporation and any
other similar parastatal bodies.
1. Payments which a
student or business apprentice who is or was formerly a resident of a
Contracting State and who is present in the other Contracting State solely for
the purpose of his education or training receives for the purpose of his
maintenance, education or training shall not be taxed in that other State,
provided that such payments are made to him from sources outside that other State.
2. The provision of this
Article shall also apply to the income which the student or business apprentice
may derive from an employment in the other Contracting State; provided that
such employment is related to his study or training and/ or that the income
deriving therefrom is required by the student or trainee to meet his living
Teachers and Researchers
professor, teacher or research worker from one of the Contracting States who
receives remuneration for teaching or carrying out research work during a
period of temporary residence not exceeding three months at a university,
college or/other institute of higher education or scientific research in the
other Contracting State shall be exempt from tax in that other State, in
respect of that remuneration, provided that the period of three months may be
extended by similar periods.
OF DOUBLE TAXATION
1. When a resident of a
Contracting State derives income which has also suffered tax in the other
Contracting State, the first-mentioned State shall allow a deduction from its
tax on the income of that person equal to the tax in the other Contracting
State; provided that the deduction shall not exceed that part of the tax, as
computed before the deduction is given which is applicable to the income taxed
in the other Contracting State.
2. Nothing in this
Article contained shall prevent the granting of such further relief as may be
appropriate under the provisions of the law of either Contracting State in
respect of any amount by which the tax in case of the States exceeds the credit
allowed on its account in the other State in accordance with the provisions of
1. The nationals of a
Contracting State shall not be subjected in the other Contracting State to any
taxation or any requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to which nationals of
that other State in the same circumstances are or may be subjected.
2. The term "
national " means:
a. all individuals
possessing the nationality of a Contracting State;
b. all legal persons,
partnerships and associations deriving their status as such from the law in
force in a Contracting State.
3. The taxation of a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State carrying on the
same activities. The provision shall not be construed as obliging a Contracting
State to grant to residents of the other Contracting State any personal
allowances, reliefs and reductions for taxation purposes on account of civil
status or family responsibilities which it grants to its own residents.
4. Enterprises of a
Contracting State, the capital of which is wholly or partly owned or controlled
directly or indirectly, by one or more residents of the other Contracting
State, shall not be subjected in the first-mentioned Contracting State to any
taxation or any requirements connected therewith which is other or more
burdensome than the taxation and connected requirements to which other similar
enterprises of that first mentioned State are or may be subjected.
1. Were a resident of a
Contracting State considers that the actions of one or both of the Contracting
State result or will result for him in taxation not in accordance with this
Convention he may, notwithstanding the remedies provided by the national laws
of those States, present his case to the competent authority of the Contracting
State of which he is a resident.
2. The competent
authority shall endeavour, if the objection appears to it to be justified and
if it is not itself able to arrive at an appropriate solution, to resolve the
case by mutual agreement with the competent authority of the other Contracting
State, with a view to the avoidance of taxation not in accordance with the
3. The competent
authorities of the Contracting States shall endeavour to resolve by mutual
agreement any difficulties or doubts arising as to the interpretation or
application of the Convention. They may also consult together for the
elimination of double taxation in cases not provided for in the Convention.
4. The competent
authorities of the Contracting States may communicate with each other directly
for the purpose of reaching an agreement in the sense of the preceding
paragraphs. When it seems advisable in order to reach agreement to have an oral
exchange of opinions, such exchange may take place through a Commission
consisting of representatives of the competent authorities of the Contracting
1. The competent
authorities of the Contracting States shall exchange such information as is
necessary for the carrying out of this Convention and of the domestic laws of
the Contracting States concerning taxes covered by this Convention in so far as
the taxation thereunder is in accordance with this Convention. Information
shall also be exchanged as is necessary for the prevention of fiscal evasion of
taxes which are the subject of this Convention. Any information so exchanged
shall be treated as secret and shall not be disclosed to any persons or
authorities other than these concerned with the assessment of collection of the
taxes which are the subject of the Convention.
2. In no case shall the
provisions of paragraph I be constituted so as to impose on one of the
Contracting States the obligation:
a. to carry out
administrative measures at variance with the laws or the administrative
practice of that or of the other Contracting State;
b. to supply particulars
which are not obtainable under the laws or in the normal course of the
administration of that or of the other Contracting State;
c. to supply information
which would disclose any trade, business, industrial commercial or professional
secret or trade process, or information, the disclosure of which would be
contrary to public policy.
and Consular Officials
in this Convention shall affect the fiscal privileges of diplomatic or consular
officials under the general rules of international law or under the provisions
of special agreements.
Convention shall enter into force upon the exchange of instruments of
ratification and its provisions shall have effect from the tax year commencing
after the said ratification.
agreement reached shall be implemented notwithstanding any time limits in the
national laws of the Contracting State.
Convention remains in force until denounced by one, of the Contracting States.
Either Contracting State may denounce the Convention through diplomatic
channels by giving notice of termination at least 6 months before the end of
any calendar year beginning 5 years after the agreement enters into force. In
such event the Convention shall cease to have effect after the end of the
calendar year during which notice of the denouncing of the Convention is given
by one Contracting State to the other.
witness of the agreement reached as above, the signatories have today signed
this Convention in virtue of the authority delegated to them for this purpose
by their respective Governments.
in duplicate at THIPOLI, on 2nd March 1981 corresponding to 25 Rabiul Akhar
1390 P.D. in the English, Hindi and Arabic languages, all texts being equally
authoritative except in the case of doubt, the English text shall prevail.
People Libyan Arab