On 25 February 2019, the Norwegian government published an English-language notice announcing the activation of the MFN clause included in paragraph 4 of the Protocol to 2001 income and capital tax treaty with Chile. The activation is a result of the entry into force of Chile's 2016 tax treaty with Japan, which is effective from 1 January 2017. The notice includes that the following withholding tax rates apply as from 1 January 2017 with respect to interest income:
With respect to interest income eligible for the 4% rate indicated above, if the interest is paid as part of an arrangement involving back-to-back loans or similar arrangements, the rate will instead be 5% if paid to a bank or insurance company or as part of a sale on credit of machinery or equipment, otherwise the rate is 10%.
Further, with respect to royalty income, the following withholding tax rates apply as from 1 January 2017:
Although not included in the English-language notice, a separate Norwegian-language notice includes that from 1 January 2019, the general 15% withholding tax rate on interest is reduced to 10% as per the 2016 Chile-Japan treaty.
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