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Egypt-Uzbekistan

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Update – Tax Treaty between Egypt and Uzbekistan

The income and capital tax treaty between Egypt and Uzbekistan was signed on 5 September 2018. The treaty is a complete revision of the treaty between the two countries that was signed in 1999 but never entered into force.

Taxes Covered

The treaty covers Egyptian individual income tax, corporate income tax, withholding tax, and any supplementary taxes. It covers Uzbekistan corporate income tax, individual income tax, and property tax.

Residence

The treaty includes the provision that where a company is considered resident in both Contracting States, the competent authorities will determine its residence for the purpose of the treaty through mutual agreement. If no agreement is reached, the company will not be entitled to any relief or exemption from tax provided by the treaty.

Permanent Establishment

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise carries on any activities involving the use of substantial equipment (including installation of such equipment) carried on in a Contracting State in connection with the extraction, exploration, or exploitation of natural resources situated in that State.

The treaty also includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services within 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 within any 12-month period.

Limited Force of Attraction Provision

Article 7 (Business Profits) includes a limited force of attraction provision whereby taxing rights are granted to a Contracting State on profits attributable to the sale of goods or merchandise or other business activities carried on in that Contracting State by a resident of the other State if the same or similar goods or merchandise or business activities are also sold or carried out by a permanent establishment maintained by that resident in the first-mentioned Contracting State.

Withholding Tax Rates

  • Dividends – 5% if the beneficial owner is a company that has directly held at least 25% of the paying company's capital throughout a 365-day period that includes the day of the payment of the dividend; otherwise 10%
  • Interest – 10%
  • Royalties – 12% (includes payments for technical assistance)

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;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State;
  • Gains from the alienation of shares or comparable interests if, at any time during the 365 days preceding the alienation, the shares or comparable interests derived more than 50% of their value directly or indirectly from immovable property situated in the other State; and
  • Gains from the direct or indirect alienation of shares, comparable interests, securities, or other rights representing the property of a company that is a resident of 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.

Anti-Abuse Rules

Article 28 (Anti-Abuse Rules) provides that a benefit under the treaty will not apply if the main purpose or one of the main purposes of any resident or any person connected with such resident is to take advantage of the treaty.

Entry into Force and Effect

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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