India: Tax treaty with Brazil amended to incorporate provisions similar to multilateral instrument

Effective on or after April 1, 2026

The government of India has notified a protocol amending the tax treaty with the Brazil signed in April 1988. The protocol entered into force on October 18, 2025, and is effective in India in respect of income arising on or after April 1, 2026.

As the treaty is not a covered tax agreement under the multilateral instrument (MLI), the two countries adopted a bilateral approach to amend the treaty to incorporate the provisions similar to the MLI.

Significant changes in the amended treaty include:

Modification of residency rules
Amendment in the definition of permanent establishment (PE) and introduction of anti-fragmentation rules in the definition of PE
Reduction in tax rates for dividends, interest and royalties
Introduction of provision relating to taxation of fees for technical services
Applicability of non-discrimination provisions to PE
Introduction of principal purpose test

Read an April 2026 report prepared by the KPMG member firm in India

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India: Tax treaty with Brazil amended to incorporate provisions similar to multilateral instrument

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