Analysis of Notifications and Circulars for Week ending 16th November 2025

Analysis of the Amended India-Belgium DTAA Protocol: Enhancing Tax Cooperation and Combatting Evasion

Introduction to the Amended India-Belgium DTAA Protocol

On June 26, 2025, the amended Protocol to the Double Taxation Avoidance Agreement (DTAA) between India and Belgium came into force, marking a significant milestone in bilateral tax cooperation. The Ministry of Finance, Department of Revenue, formally notified these changes on November 10, 2025. This updated DTAA aims to bolster information exchange, introduce provisions on criminal tax matters, and strengthen cooperation for tax recovery between the two nations, aligning India’s treaty framework with modern international standards under the OECD’s Base Erosion and Profit Shifting (BEPS) project.

Key Features of the Amended Protocol

Expanded Scope of Information Exchange

The amended Article 26 replaces the original and introduces a significantly broader framework for exchanging information. Under the new provisions:

• Information relevant to the administration or enforcement of domestic tax laws can be exchanged, covering not just income tax but all taxes levied by central, state, or local authorities.
• The amendment removes restrictions that limited access to information held by banks, financial institutions, fiduciaries, nominees, or agents, effectively eliminating banking secrecy as a ground for refusal.
• Authorities can now exchange information foreseeably relevant for tax assessment, collection, enforcement, prosecution, and appeal processes.

This enhancement aligns the DTAA with international transparency standards, facilitating more effective detection and prevention of tax evasion and avoidance strategies such as base erosion and profit shifting.

Introduction of Criminal Tax Matters

A novel and critical inclusion is the definition and recognition of “criminal tax matters”. These involve tax issues where intentional conduct renders a person liable to prosecution under the criminal or tax laws of either contracting state. The protocol enables cooperation and information exchange in these matters irrespective of whether the tax violation occurred before or after the protocol’s entry into force. This represents a commitment by both countries to tackle serious tax crimes jointly, reflecting best practices in international tax enforcement.

Bilateral Cooperation in Tax Recovery

Beyond sharing information, the amended protocol strengthens mechanisms for mutual assistance in tax collection and recovery. This includes procedures for:

• Administrative cooperation to enforce domestic tax claims.
• Sharing relevant financial and offshore data to support recovery efforts.
• Upholding principles that no contracting state shall refuse assistance solely based on the absence of domestic interest in the requested information.

Such cooperation enhances both countries’ ability to collect taxes lawfully owed, reducing fiscal evasion risks and promoting tax certainty.

Significance and Impact on Indian Tax Administration

The amended India-Belgium DTAA protocol represents a strategic step forward in India’s commitment to global tax transparency and compliance. Key impacts include:

• Alignment with OECD BEPS Initiatives: The protocol’s incorporation of transparency measures aligns India with G20/OECD standards on combating tax base erosion and profit shifting.
• Enhancing Treaty Effectiveness: By broadening the scope of cooperation to various tax types and by addressing criminal matters, the treaty becomes a more effective tool for preventing tax abuse and evasion.
• Improved Tax Enforcement: The expanded framework supports Indian tax authorities in accessing relevant offshore and financial data, empowering improved enforcement strategies.
• Consistency with Global Trends: Many countries are updating their DTAAs to reflect contemporary issues such as tax transparency and mutual assistance in criminal tax matters; India’s action with Belgium places it in line with these international developments.

Ultimately, the notification of this protocol enhances India’s reputation as a transparent and compliant tax jurisdiction, facilitating cross-border investment while safeguarding public revenue.

Practical Considerations for Taxpayers and Professionals

Taxpayers and practitioners should note the following:

• The amended provisions are effective immediately for criminal tax matters and apply to other tax matters from the first taxable period beginning on or after June 26, 2025.
• Enhanced information sharing means increased scrutiny for cross-border transactions and offshore activities involving India and Belgium.
• Advisors should update compliance and advisory approaches to reflect these new cooperation tools, ensuring clients manage risks related to tax evasion and treaty benefits appropriately.
• Awareness of criminal tax matter provisions is crucial, as tax-related offences now fall distinctly under treaty cooperation, affecting prosecution and enforcement risks.

In conclusion, the India-Belgium DTAA amendment exemplifies evolving international tax policy emphasizing transparency, compliance, and cooperation, with significant practical impacts for tax administration and taxpayer behavior.