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Korea, Rep of-Tajikistan

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Tax Treaty between South Korea and Tajikistan has Entered into Force

The income tax treaty between South Korea and Tajikistan entered into force on 28 September 2016. The treaty, signed 31 July 2013, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Korean income tax, corporation tax, special tax for rural development, and local income tax. It covers Tajik tax on income of physical persons and tax on profit of legal persons.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when 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 6 months within any 12-month period.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise 10%
  • Interest - 0% for interest paid in connection with the sale on credit of any industrial, commercial or scientific equipment, or paid in connection with the sale on credit of any merchandise by one enterprise to another enterprise; otherwise 8%
  • Royalties - 10%

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 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

Both countries apply the credit method for the elimination of double taxation.

Limitation on Benefits

Article 28 (Limitation on Benefits) includes the provision that no person will be entitled to the benefits of the treaty if its affairs were arranged in such a manner as if it was the main purpose or one of the main purposes to avoid taxes to which the treaty applies.

Effective Date

The treaty applies from 1 January 2017.

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