1. This Agreement shall remain in force indefinitely, as long as it is not reported by a Contracting State.

Any of the Contracting States may denounce the Agreement through the diplomatic route, submitting the notice of denunciation with at least six months in advance of the termination of any calendar year beginning after the end of the period. five years from the date of entry into force of the Agreement. In this case, the Agreement shall cease to have effect:

a) in Colombia,

(i) with respect to the income tax that is obtained and the amounts that are paid, paid into account or counted as expenditure, from the first day of January of the calendar year immediately following the one in which the warning;

(ii) in all other cases, from the date on which the notice is presented.

(b) in India, with respect to the income obtained in any fiscal year during or after the first day of April of the calendar year following that in which the notice of denunciation was filed;

IN FE OF THE CUAL, the undersigned, duly authorized to this effect, have signed this Agreement.

FACT in New Delhi on the 13th of May 2011, each in English, Spanish and Hindi, being the equally authentic texts. In case of divergence of interpretation, the English text will prevail.

PROTOCOL

At the time of the signing of the Agreement concluded today between the Government of the Republic of India and the Republic of Colombia to prevent double taxation and to prevent tax evasion with respect to income tax, below signatories have agreed on the following provisions, which will be an integral part of the Agreement:

1. With reference to Article 5 (3, it is understood that for the purposes of calculating the time limits referred to in that paragraph, those activities carried out by a related undertaking with another company within the meaning of Article 9 will be added to the period during which the company develops the activities, provided that the activities of the two companies are identical or substantially similar to the the same project or a related one.

2. In the case of Colombia, notwithstanding the provisions of Article 102), when a company resident in Colombia has not paid income tax on profits distributed to the shareholders (members or shareholders), because of exemptions or because the utilities exceed the maximum untaxed limit in the article 49 and in paragraph 1 of the article 245 of the Colombia Tax Statute, the distributed dividend may be taxed in Colombia at a rate not exceeding 15%, if the beneficial owner of the dividends is a shareholder (shareholder or shareholder) resident in India.

3. In the case of India, with reference to Article 12 (b) of Article 12 it is understood that the term "remuneration for technical services" includes payments in consideration for the provision of technical services or other personal services according to the provisions of section 9 of the income-tax Act. 1961.

4. It is understood that if the domestic legislation of a Contracting State is more beneficial for a resident of the other Contracting State than the provisions of this Agreement, the provisions of the domestic legislation of the State mentioned in the first place will be applied to the extent that they are most beneficial to this resident.

IN FE OF THE CUAL, the undersigned, duly authorized to this effect, have signed this Protocol.

FACT in New Delhi on the 13th of May 2011, each in English, Spanish and Hindi, being the equally authentic texts. In case of divergence of interpretation, the English text will prevail.

EXPLANATORY STATEMENT

CONVENTION TO AVOID DOUBLE TAXATION BETWEEN THE REPUBLIC OF COLOMBIA AND THE REPUBLIC OF INDIA

The Agreements to Avoid Double Taxation (ADT) International

Generalities

The global economic interdependence is booming from the end of the second world war and brings economic integration among the nations. This situation implies the need to remove obstacles to economic exchange, including double taxation.

During the twentieth century, the generality of the countries adopt a tax system that taxes their residents for the totality of their world income, that is, both for the income obtained in the State of residence and for the income obtained abroad. of that State. In turn, the vast majority of states tax the income generated by the economic activity carried out on their territory.

This situation leads to the fact that the residents of the States are subject to double taxation, since the income obtained abroad is subject to taxation both in their country of residence and in the foreign country in which they are located. which was generated, causing an excessive tax burden affecting international trade in goods and services, the exchange of technology and the mobility of capital or investment between States.

In order to mitigate the adverse effects caused by international double taxation, mechanisms have been created that over time have become globally accepted rules, which are commonly used by both the nations developed as by those in development.

One of the factors that most affects international investment is the tax burden and the permanent legal modification in this matter, which generates uncertainty, adding this to the already mentioned phenomenon of double taxation. This situation has led the different States to implement solutions, both unilateral and bilateral, in order to provide means to prevent cases of double taxation.

The answer to the problem of double taxation, understood as an obstacle to international investment and trade, has been the subscription of international agreements that minimize or eliminate the double taxation between states, as well as providing legal certainty by agreeing to a certain stability in tax conditions such as withholding tax on foreign payments.

At this point, it is worth clarifying that, with the aim of mitigating double taxation, the agreements to avoid double taxation delimit the scope of the tax authority of the States. Thus, in some cases the right of exclusive taxation by one of the Contracting States is enshrined or, in others, it is agreed to share taxation between them by limiting rates of retention at the source in order to minimize or eliminate the double taxation between countries.

In this regard, agreements to prevent double taxation have no effect on the elements of determining the tax such as costs or deductions and cannot be interpreted or used to create tax exemptions or, by effect, of the Treaty, an income may not be taxed in any of the two Contracting States, since its objective is that a certain income or property is not subject to double taxation.

On the other hand, these agreements contain provisions against non-discrimination between nationals and foreigners as well as dispute resolution mechanisms through a friendly procedure. In addition, it seeks to regulate international cooperation through mechanisms such as the exchange of tax information between tax administrations in order to combat tax evasion and fraud.

The tax power in the international trade area

The tax power, defined as the power or right that a State has to impose on its nationals or residents, is limited by legal principles of mandatory observance, such as of legality, equality, generality and non-confiscation. In addition, there are political constraints arising from the coexistence, in the same State, of different authorities endowed with tax power (national, regional and municipal).

In order to determine the legal relationship between the sovereign State and the taxable person, the latter determines criteria for binding or obligation to pay the tax, both subjective and objective in nature.

The subjectives take into account situations or circumstances relating to the subjects in order to establish their obligation to contribute within which, for the case under study, the nationality, the residence or the place of business stand out; the objectives refer to the event generating the tax, understood as the economic assumption determined in the law and which results in the birth of the tax obligation.

Based on subjective criteria such as nationality or residence, states require their nationals or residents to pay tribute to the general income of their income-world income-and property, without attending to the place in which they are income was generated or without regard to the place where the estate is located; on the basis of objective criteria, the States tax any business or activity carried out in their territory by subjecting the income generated there to taxation. national source-without considering subjective criteria, all of the above, without prejudice to exceptions that the legislator may consider in one case or another.

In this context, since the generality of the countries has adopted a subjective criterion that caters to nationality or residence in order to tax any income that occurs inside and outside its territory and, at the same time, the criterion Objective or tax on the income of national source obtained by non-residents, this generates double taxation to which entities such as the Organization for Economic Cooperation and Development OECD, the International Fiscal Association IFA, the Interamerican Bar Association, the Latin American Institute of Tax Law and the Market Common Central American have joined efforts in three ways:

(a) The search for general principles, which are likely to acquire the character of international uniform practice;

b) Concertation of bilateral or multilateral agreements; and

c) Harmonization of legislation.

Unilateral or internal methods implemented for the removal of international double taxation

One of the unilateral methods for the elimination of the International Double Tax is the method of imputation, used in Colombia. Under this method, taxes paid abroad by a resident of a State can be discounted-subtracted-from the tax payable on those same rents in that State of residence.

This method partially eliminates double taxation, as the discount of tax paid abroad is allowed up to the tax ceiling that is payable in the State of residence on that same income. In this way, if the rate of the tax paid abroad is higher than that generated by that income in the State of residence, it is not possible to eliminate double taxation.

With the subscription of an agreement to avoid double taxation, the internal method of elimination of double taxation becomes more effective because, in the event that under the provisions of the treaty a single serious country income the Double taxation is eliminated outright and in the case where a shared taxation is permitted with a tariff limitation in the State of the source, the total discount of the tax that has been paid on the outside can be requested completely double taxation.

Additionally, in the case of shared taxation, a tax limit is guaranteed, a situation that provides legal stability to foreign investors.

Fiscal Control Aspects of the Agreements to Avoid Double Imposition

The need to prevent tax evasion at the international level should be highlighted through the exchange of information, which is an essential requirement for the effective development of the functions of the tax administration. It can be said that the function of controlling the tax obligations does not represent anything other than that of administering and using information, with which, in the possibility of obtaining international collaboration, I know how much with a great opportunity for the strengthening of international oversight.

The exchange of information is an essential instrument for proper oversight in an international scenario characterized by an interdependent and globalized economy.

The importance for Colombia of agreements to avoid international double taxation

In the new international scenario in which the tax administration moves, we need to make progress on the adequacy of the tax system in order to increase investment and international trade. new legal and technical instruments, such as the agreements to avoid double taxation, that will allow the fair environment to be reached between the tax control and the offer of tax facilities to significantly improve the competitiveness of the country.

In this context, it is of particular importance to consolidate international agreements that provide clear rules in order to avoid international double taxation and to exercise effective control of evasion.

Government Policy

Consistent with the foregoing, the National Government in its State policy has directed its international fiscal strategy toward the subscription of treaties to avoid international double taxation as an instrument of investment attraction. foreign. Thus, it is intended to overcome the limited progress achieved due to the timidity with which until very recently the negotiation of these agreements was addressed, which has caused a disadvantage in relation to countries in the region such as Chile and Peru.

The government policy aims to strengthen foreign investment especially in those economies that represent a significant investment flow for the country, such as Spain, Switzerland, Chile, the United States and Canada, as well as attracting foreign investment. investment from emerging economies of greater size and global impact.

In this context and in the spirit of continuing to develop the policy promoted by the Government, the Higher Council of Foreign Trade proposed through a document dated March 27, 2007, the Joint Negotiating Agenda for both the International Investment Agreements AII (which has so far been developed under the coordination of the Ministry of Trade and Tourism) and the Agreements to avoid the Double Tax International ADT (which has been developed by Ministry of Finance and Public Credit in coordination with the Directorate of Taxation and Customs National DIAN).

This Agenda promotes the negotiation of these two instruments, in a coordinated manner and according to the interests of Colombia, seeking to ensure that the countries with which it is negotiated are those where greater foreign investment is generated toward the country.

The Agenda was elaborated taking into account, among others, the investment flow criteria of the countries interested in the subscription of agreements to avoid double taxation ADT:

" [...]

In addition to being a guide to prioritizing and concentrating efforts, the joint agenda is vital to ensure that the countries with which it is negotiated are those where greater foreign investment is generated toward Colombia. That is, negotiating without following the agenda would represent a high cost of opportunity by delaying negotiations that would represent a substantial impact on foreign investment.

For the elaboration of the Joint Negotiation Agenda, figures were used for 2005, for being the last year with which full information is available at the national level (source Bank of the Republic), as at international level. (UNCTAD source). The criteria for building the calendar are as follows:

2. Recent investment

While a foreign country may not have significant accumulated capital and installed in Colombia, it may have brought high investment flows recently, thus reflecting a dynamic relationship with Colombia. For the classification under this criterion, the investment flows of the last five years (2000-2005) were analyzed for each of the countries in the sample, and the relative position was averaged in the period (ordinal position). The result of this exercise was an orderly listing of the relative importance of the countries under this criterion [...] "

Within the documents that support the elaboration of the negotiation agenda 2011-2014 of Agreements of Reciprocal Promotion of Investments elaborated by the Ministry of Commerce, Industry and Tourism, with respect to the export data of Investment made by India, the following data appear:

It is appreciated that the export of capital to the rest of the world made by the Republic of India during the last years, taking into account the data used for the elaboration of the agenda of negotiations, has been increased by 23.3% " Colombia can be an active participant with its investment attraction strategies that will undoubtedly have a great benefit for the country, with the advantage that they represent foreign direct investment with a consequent generation of employment, increase of GDP and increase of the collection to various levels such as Income Tax, Tax Sales and territorial taxes.

Convention between the Republic of India and the Republic of Colombia to prevent double taxation and to prevent tax evasion on income and wealth taxes

The National Tax and Customs Directorate, based on the Model proposed by the Organization for Economic Cooperation and Development (OECD) and the United Nations Organization, drew up a proposal that was adjusted to the conditions and the tax system of the country, for which, the Convention with India was discussed and agreed upon from such considerations.

The models proposed by the OECD and the UN have had a great influence on the negotiation, implementation and interpretation of the tax conventions at global level. These proposals are known as dynamic conventions or models, allowing for regular and timely updating and modification in response to the ongoing processes of globalization and the liberation of world economies.

It is worth noting that Colombia's proposal, inspired by the OECD and UN proposals, must necessarily include some variations in order to adequately respond to the interests and the Colombian tax system.

The Convention maintains the power of imposition of States as to the right to tax any economic activity carried out on their territory, but with certain exceptions as will be seen later.

The first part of the Double Tax Agreement provides for the scope of application that delimits both the taxes included and the persons to whom it applies; it expressly relates the taxes on which it will be applied and defined clearly some terms and expressions for the purposes of the convention.

The terms on which the Convention is structured are defined below:

Defines the political and geographical areas of the signatory countries as well as expressions used in their text: "a Contracting State", "competent authority", "the other Contracting State", "person", "company", "company", "international traffic", 'competent authority' means 'national' 'resident' and 'business'. It is clarified that any term or expression not defined in it will have, unless of its context is inferred a different interpretation, the meaning that at that moment it ascribes to it the legislation of that State relative to the taxes that are object of the Convention, the meaning attributed by the tax legislation on which it would result from other branches of the law of that State prevail.

In the same way, it contains a special article defining residence and establishes rules for resolving conflicts that arise in this respect between the Contracting States.

The concept of "permanent establishment", of particular importance in the field of conventions, is defined, since it delimits the power of taxation of a State when permanent business activities are carried out in the same way resident of the other Contracting State.

The main part comprises the items 6 to 23, in which the tax authority of the Contracting States is defined and demarcated in relation to the taxes on the income and equity, establishing a rule for each type of income, in which the following stand out:

Article 6. Income from immovable property, which because of its close link with the economy of a country, can be taxed without restriction by each of the Contracting States;

Item 7. Business profits, which are taxed by the country of residence of the person exercising such business, except where it does so by means of a permanent establishment situated in the other Contracting State, in which case the another State may tax them;

Article 8. Maritime and air transport, which allows the taxation of income from international transport only to the country of residence of the undertaking carrying out the international transport

Article 9. Associated companies, the content of which is of international tax control when allowing the application of transfer pricing rules;

Article 10. Dividends, a rule of shared taxation which provides that dividends obtained by a resident of a Contracting State originating in a company resident in the other Contracting State shall be taxed by the State of residence of such a company with a tariff limited to 5%. In these events, the State of residence of the beneficiary of the dividends retains their right to tax them.

It is pertinent to point out that in cases where, for the purposes of Colombian domestic legislation, the utility is not taxed at the head of the company, in the protocol of that article, the possibility of taxing the dividend at a rate superior to that contained in the article in order to achieve due reciprocity.

Item 11. Interest, a rule of shared taxation which establishes a limitation for the State of the source (residence of the debtor), including certain cases in which they cannot be taxed by that State when such claims correspond to transactions certain economic relevance for each of the parties.

Article 12. Royalties, a rule of shared taxation that establishes a limitation for the State of the source (residence of the payer or user of the copyright or industrial property etc.).

Item 13. Capital gains, which includes different rules depending on the type of the property: real estate, taxation without limitation for each of the Contracting States; disposal of shares, in which the State of the source (State In the case of a residence of the issuing company, it retains its right of taxation; the disposal of vessels and aircraft operated in international traffic is taxed exclusively at the place of residence of the legal entity.

Article 14. Independent personal services, relating to the income obtained by a natural person in respect of professional services or other activities of an independent nature, which are taxed in the State of residence of the natural person, except where they are carried out through a fixed base from which the other State is available for the performance of its activities.

Item 15. Income from dependent work is taxed in the State of residence of the beneficiary as long as the employee does not remain in the other Contracting State for a period or periods whose duration does not exceed a total of 183 days in any period twelve months starting or ending in the tax year in question, including other rules relating to the residence of the employer or payments made by a permanent establishment which the employer has in the other State.

Article 16. Remuneration as a counsellor may be taxed without limitation in the State of residence of the taxpayer paying the remuneration.

Article 28, which corresponds to an anti-abuse clause, is useful as an instrument for combating fraud or tax evasion, while also allowing the application of anti-abuse provisions. tax fraud of domestic law of both countries.

A non-discrimination clause was agreed which guarantees equal treatment for residents of a State with respect to the residents of the other Contracting State. This protects both foreigners and Colombians both at the investment level and in the trade in cross-border goods and services.

To conclude, it is pertinent to highlight the inclusion of an information exchange clause that is of vital importance to tax administrations in their fight to prevent and prevent international tax evasion.

For the reasons outlined above, the National Government, through the Minister of Foreign Affairs and the Minister of Finance and Public Credit, requests the Honorable Congress of the Republic, to approve the bill "By means of which the" Agreement between the Government of the Republic of Colombia and the Republic of India is approved to avoid double taxation and to prevent tax evasion in relation to income tax " and its "Protocol", signed in New Delhi, on 13 May 2011.

Of the honorable Congressmen,

The Minister of International Relations,

MARIA ANGELA HOLGUIN HANG.

The Minister of Finance and Public Credit,

JUAN CARLOS ECHEVERRY GARZON.

EXECUTIVE BRANCH OF PUBLIC POWER

PRESIDENCY OF THE REPUBLIC

Bogotá, D. C., May 2, 2012

Authorized. Submit to the consideration of the honorable Congress of the Republic for the constitutional effects.

(Fdo.) JUAN MANUEL SANTOS CALDERÓN

The Foreign Minister,

(Fdo.) Maria Angela Holguin Cuellar.

DECRETA:

Article 1o. Approve the "Agreement between the Government of the Republic of Colombia and the Republic of India to prevent double taxation and to prevent tax evasion in relation to income tax" and its "Protocol", subscribed in New Delhi, on 13 May 2011.

Article 2o. In accordance with the provisions of Article 1 of Law 7ª of 1944, theAgreement between the Government of the Republic of Colombia and the Republic of India to prevent double taxation and to prevent tax evasion in relation to the with the income tax "and its" Protocol ", signed in New Delhi, on May 13, 2011, which by article 1 of this law is approved, will force the Colombian State from the date on which the international link is perfected with respect to the same.

Article 3o. This law governs from the date of its publication.

Dada en Bogotá, D.C., a los

Presented to the honorable Congress of the Republic by the Minister of Foreign Affairs and the Minister of Finance and Public Credit.

The Minister of International Relations,

Maria Angela Holguin Cuellar.

The Minister of Finance and Public Credit,

Juan Carlos Echeverry Garzón.

1998 424 LAW

(January 13)

by which the follow-up to the international conventions signed by Colombia is ordered.

The Congress of Colombia

DECRETA:

Article 1o. The National Government through the Foreign Ministry will submit annually to the Senate and Senate Foreign Relations Committees, and within the first thirty days of the legislative period, which begins every 20 years. July, a detailed report on how the existing International Conventions signed by Colombia with other States are being complied with and developed.

Article 2o. Each dependency of the National Government responsible for implementing the International Treaties of its competence and requiring reciprocity in them, will transfer the relevant information to the Ministry of Foreign Affairs and the Ministry of Foreign Affairs. Second.

Article 3o. The full text of this law will be incorporated as an annex to each and every International Convention that the Ministry of Foreign Affairs presents to the Congress.

Article 4o. This law governs from its promulgation.

The President of the honorable Senate of the Republic,

Amylkar Acosta Medina.

The Secretary General of the honorable Senate of the Republic,

Pedro Pumarejo Vega.

The President of the honorable House of Representatives,

Carlos Ardila Ballesteros.

The Secretary General of the honorable House of Representatives,

Diego Vivas Tafur.

COLOMBIA-NATIONAL GOVERNMENT

Publish and execute.

Dada en Santa Fe de Bogota, D. C., on January 13, 1998.

ERNESTO SAMPER PIZANO

The Foreign Minister,

Maria Emma Mejia Velez.

EXECUTIVE BRANCH OF PUBLIC POWER

PRESIDENCY OF THE REPUBLIC

Bogotá, D. C., May 2, 2012

Authorized. Submit to the consideration of the honorable Congress of the Republic for the constitutional effects.

(Fdo.) JUAN MANUEL SANTOS CALDERÓN

The Foreign Minister,

(Fdo.) Maria Angela Holguin Cuellar.

DECRETA:

ARTICLE 1o. Approve the "Agreement between the Government of the Republic of Colombia and the Republic of India to prevent double taxation and to prevent tax evasion in relation to the income tax "and its" Protocol ", signed in New Delhi, on 13 May 2011.

ARTICLE 2o. In accordance with the provisions of Article 1 of Law 7ª of 1944, the "between the Government of the Republic of Colombia and the Republic of India to avoid double taxation" taxation and in order to prevent tax evasion in relation to income tax "and its" Protocol ", signed in New Delhi, on 13 May 2011, which under Article 1 of this law is approved, will force the Colombian State from the the date on which the international link with respect to the link is improved.

ARTICLE 3o. This law governs from the date of its publication.

The President of the honorable Senate of the Republic,

ROY MONTEALEGRE BARRIERS.

The Secretary General of the honorable Senate of the Republic,

GREGORIO ELJACH PACHECO.

The President of the honorable House of Representatives,

AUGUSTO POSADA SANCHEZ.

The Secretary General of the honorable House of Representatives,

JORGE HUMBERTO MANTILLA SERRANO.

COLOMBIA-NATIONAL GOVERNMENT

Communicate and comply.

Execute, upon revision of the Constitutional Court, pursuant to article 241-10 of the Political Constitution.

Dada en Bogotá, D. C., 16 July 2013.

JUAN MANUEL SANTOS CALDERÓN

The Foreign Minister,

MARIA ANGELA HOLGUIN HANG.

The Minister of Finance and Public Credit,

MAURICIO CÁRDENAS SANTAMARIA.