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United Kingdom-Tajikistan

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Tax Treaty between the U.K. and Tajikistan Signed

On 1 July 2014, the U.K. and Tajikistan signed an income and capital tax treaty. The treaty is the first of its kind between the two countries

Taxes Covered

The treaty covers U.K. income tax, corporations tax, and capital gains tax. It covers Tajikistan income tax, tax on profit, and tax on immovable property.

Residence

If a company is resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement based on its place of effective management. If the authorities cannot reach mutual agreement, the company will not be entitled to the benefits of the treaty aside from those covered in Article 21 Elimination of Double Taxation, Article 22 Non-Discrimination, and Article 23 Mutual Agreement Procedure.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a pension scheme or company directly holding at least 10% of the paying company's capital; 15% if the dividends are paid out of tax exempt income derived from immovable property by an investment vehicle that distributes most of the income annually; otherwise 10%
  • Interest - 10%, although an exemption applies when the beneficial owner is a bank, or is a pension scheme, as long as the interest is not derived from the carrying on of a business by the pension scheme or through an associated enterprise
  • Royalties - 7%

Double Taxation Relief

Tajikistan applies the credit method for the elimination of double taxation. In general, the U.K. applies the credit method, but the exemption method may be used in the case of dividends and profits of a permanent establishment if the conditions for an exemption under U.K. law are met.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged. For withholding taxes, it will apply from the first day of the month following its entry into force for both countries. For other taxes, the treaty will apply for Tajikistan from 1 January of the year following its entry into force, and for the U.K. it will apply for income tax and capital gains tax from 6 April following its entry into force, and for corporation tax from 1 April following its entry into force.

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