India to keep taxation out of bilateral investment treaty framework; Cabinet note ready
India will keep taxation outside the framework of bilateral investment treaties, with a revised model BIT expected to be considered by the Cabinet soon. The Finance Ministry has circulated a note, while negotiations with four-five countries are underway. Foreign investors will also have to exhaust local remedies before seeking arbitration.
India intends to exclude taxation from the scope of bilateral investment treaties, according to a Cabinet note prepared by the finance ministry. The government is not willing to relinquish its sovereign authority over taxation. Talks are underway to conclude BITs with four to five countries. The existing Model BIT was approved by the Cabinet in 2015.
Foreign investors will be required to exhaust local remedies before pursuing arbitration under the agreement. A bilateral investment treaty facilitates cooperation between nations to encourage and safeguard investments made by their citizens in each other's territories. Should an investor face grievances, they can seek resolution through arbitration involving the sovereign government.
Presently, a foreign investor must wait five years before initiating a treaty-based arbitration against India.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
