Double Tax Agreements: a Shield or a Sword

THE IMPLICATIONS OF TECH MAHINDRA LIMITED v CoT and SATYAM COMPUTER SERVICES LIMITED v CoT

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It is commonly stated that a double tax agreement is a shield to protect taxpayers from double taxation and cannot of itself give rise to taxation liabilities. However, the recent decisions of the Full Federal Court in Tech Mahindra Limited and Satyam Computer Services Limited mean that the “source of income provisions” found in many of Australia’s double tax agreements have “what amounts to some ‘sword-like effect in practice”. The decisions have immediate implications for Indian-resident taxpayers in receipt of payments for ‘technical services’ from Australian customers, but the possible implications are much broader.