On 16 April 2015, the Rwandan Senate approved the law for the ratification of the pending income tax treaty with Barbados. The treaty, signed 22 December 2014, is the first of its kind between the two countries.
The treaty covers Barbados income tax and corporation tax, and covers Rwandan personal income tax, corporate income tax, and the tax on rent of immovable property.
The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise furnishes services in a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days in any 12-month period.
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. A provision is also included for a tax sparing credit for tax that would otherwise be payable but has been reduced or exempted under laws which establish schemes for the promotion of economic development in a Contracting State. Both Contracting States must mutually agree on which schemes qualify for the sparing credit.
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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