In part 4 of the series, I have discussed Article 24(3) which deals with PE non-discrimination in detail. In this part, I will discuss Article 24(4) which deals with deductibility based non-discrimination.
As per this clause, there should be no discrimination on the basis of the recipients of disbursements between a resident and non-resident as regards deductibility of amounts paid as interest, royalties and other disbursements by an enterprise to the residents of the other Contracting State.
Example – Where a resident of State ‘A’ pays interest, royalties or other disbursements to a resident of State ‘B’, then, the rules for deductibility of such payments in computing taxable profits of the resident of State ‘A’ should be the same as areapplicable in respect of the payments made to another resident of State ‘A’ itself.
The views in all sections are personal views of the author.