New Delhi, Feb 25 || The revision of three‑decade‑old tax treaty between India and France will lower dividend levies for large French investors including Sanofi, Renault and L'Oreal and safeguard India's tax base, a report has said.
The report said the new agreement expanded New Delhi’s right to tax certain transactions such as capital gains arising from the sale of shares, including transactions where a French entity owns less than 10 per cent of an Indian company.
"The changes could benefit major companies such as Sanofi, Renault and L'Oreal, which have expanded their investments in India over the past few years," the report said.
The revised treaty "realigns the bilateral trade framework with India's current treaty policy" and international tax standards, the report cited global consultancy and financial services firm KPMG.
"It also underscores India's efforts to safeguard its tax base and promote a stable investment environment," the firm said.
The amended agreement cut the dividend tax to 5 per cent for French companies holding at least 10 per cent in an Indian firm and raised the tax to 15 per cent for holdings below 10 per cent.
The amended protocol deleted the most‑favoured‑nation clause which had allowed French entities to claim a lower tax rate in India, the report further said.
The protocol will come into effect after completing formalities and legal approvals in both countries.