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Directors Fees – Article 16 – OECD Model tax Convention.

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February 19, 2022 |

4 mins read

Directors Fees – Article 16 – OECD Model tax Convention

Taxation of Director’s Fees – Article 16

Article 16 – India USA Treaty

Directors’ 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.

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Article 16 – Issue For Consideration

What should be derived ?
Directors’ fees and similar payments

Who should derive ?
Resident of the other Contracting State

In what capacity ?
Member of BOD of a company which is a resident of the other Contracting State

Who has the right to tax ?
India also has the right to tax such income

Meaning of Director’s Fees and Other Similar Payments – Article 16

Meaning of director’s fees and other similar payments

International Taxation Course

Includes benefits in kind use of residence or vehicle, Stock option, Insurance coverage, Club memberships etc. 

Director in Dual Capacity

Director in dual capacity

Fees taxable Article 16 – $ 100
Fees taxable Article 15 – $ 10,000
Fees taxable Article 14 – $ 20,000

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Taxation of Top Level Managerial Remuneration – Directors Fees Article 16 – OECD Model tax Convention

Salaries, wages and other similar remuneration
derived by a resident of a Contracting State
in his capacity as an official in a top-level managerial position
of a company which is a resident of other Contracting State
may be taxed in that other State.

If there are no corresponding provision, income taxable under Dependent or Independent Personal Services clause

Characteristics

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Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.

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