On 26 May 2015, the Bahrain Council of Representatives approved for ratification the pending income tax treaty with Tajikistan. The treaty, signed 28 May 2014, is the first of its kind between the two countries.
The treaty covers Bahrain income tax, and Tajik income tax, tax on profits, and tax on immovable property.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise of one Contracting State furnishes services in the other State through employees or other personnel employed by the enterprise if the activities continue for a period or periods aggregating more than 6 months.
The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise of one Contracting State carries on any activity which is directly connected with the exploration for or production of crude oil or other natural hydrocarbons from the ground in the other State, or when refining crude oil in its facilities in the other State.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation.
The treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.
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