The income tax treaty between Ethiopia and Palestine was signed on 9 July 2015. The treaty is the first of its kind between the two countries.
The treaty covers Ethiopian tax on income and profit, and the tax on income from mining, petroleum, and agricultural activities, and covers Palestine tax on income and profit.
Note – Article 13 (Technical Fees) includes the provision that the (beneficial) provisions of this Article will not apply if the main purpose or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the technical fees are paid was to take advantage of this Article by means of that creation or assignment.
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, which provides that where the income arising in a Contracting State is exempt or taxed at a reduced rate in that State, for a limited period of time in accordance with the laws and regulations of that State aimed at promoting economic development, then the tax on such income which has been exempted or taxed at a reduced rate in that State shall be credited against the tax on income owing in the State where the beneficial owner of the income is a resident.
The treaty will enter into force once the ratification instruments are exchanged and will apply in Ethiopia from 8 July next following the date of its entry into force and in Palestine from 1 January next following the date of its entry into force.
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