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Belgium Ratifies Tax Treaty with Uganda and Amending Protocol

On 28 February 2018, Belgium published the decree for the ratification of the 2007 income and capital tax treaty with Uganda, as well as the 2014 amending protocol to that treaty, which updates the definition of competent authority and the article on exchange of information. The treaty is the first of its kind between the two countries.

Taxes Covered

The treaty covers Belgian individual income tax, corporate income tax, income tax on legal entities, income tax on nonresidents, and the supplementary crisis contribution. It covers Ugandan income tax.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 10% of the paying company's capital; otherwise 15%
  • Interest - 10%
  • Royalties - 10%
  • Administration and management fees - 10% if service of an administrative or managerial nature is performed for a period of at least three months in any period of twelve months (beneficial owner may opt to have such fees taxed as if attributed to a permanent establishment or fixed base)

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State; and
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Belgium generally applies the exemption method for the elimination of double taxation, while Uganda applies the credit method. However, where the Ugandan tax is less than 15% of the net amount of the income, Belgium will not exempt that income, but will reduce to a half the Belgian tax that is proportionally relating to that income, calculated as if that income was income from Belgian sources. With respect to interest and royalty income, Belgium generally applies the credit method, subject to the provisions of Belgian law.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January 2006. The protocol will also enter into force once the ratification instruments are exchanged, but will apply from 1 January of the year following its entry into force.

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