The income tax treaty between Ethiopia and Poland entered into force on 14 February 2018. The treaty, signed 23 July 2015, is the first of its kind between the two countries.
The treaty covers Ethiopian tax on income and profit, and tax on income from mining, petroleum and agricultural activities. It covers Polish personal income tax and corporate income tax.
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 Ethiopian tax that would have been payable by a resident of Poland but has been exempted or taxed at a reduced rate by virtue of special incentives under Ethiopian laws for the promotion of economic development of Ethiopia. The sparing credit is subject to certain conditions and will apply for the first five years of application of the treaty.
Article 28 (Limitation of Benefits) provides that the benefits of the treaty will not be available where the main purpose or one of the main purposes for entering into an arrangement was to obtain any benefits that would not otherwise be available.
The treaty applies in Ethiopia from 8 July 2018 and in Poland from 1 January 2019.
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