The Double Taxation Relief (Taxes on Income) (Uzbekistan) Order 1994

Made: 15th March 1994

At the Court at Buckingham Palace, the 15th day of March 1994 Present, The Queen’s Most Excellent Majesty in Council

Now, therefore, Her Majesty, in exercise of the powers conferred upon Her by section 788 of the said Act, and of all other powers enabling Her in that behalf, is pleased, by and with the advice of Her Privy Council, to order, and it is hereby ordered, as follows:—

1

This Order may be cited as the Double Taxation Relief (Taxes on Income) (Uzbekistan) Order 1994.

2

It is hereby declared—

• (a) that the arrangements specified in the Convention set out in Part I of the Schedule to this Order and in the Exchange of Notes constituting an Agreement set out in Part II of that Schedule have been made with the Government of Uzbekistan with a view to affording relief from double taxation in relation to income tax, corporation tax or capital gains tax and taxes of a similar character imposed by the laws of Uzbekistan;

• (b) that those arrangements include provisions with respect to the exchange of information necessary for carrying out the domestic laws of the United Kingdom and the laws of Uzbekistan concerning taxes covered by the arrangements including, in particular, provisions about the prevention of fiscal evasion with respect to those taxes; and

• (c) that it is expedient that those arrangements should have effect.

SCHEDULE

PART I — CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE REPUBLIC OF UZBEKISTAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Uzbekistan;

Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains;

Have agreed as follows:

ARTICLE 1 — Personal scope

This Convention shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2 — Taxes covered

ARTICLE 3 — General definitions

ARTICLE 4 — Residence

ARTICLE 5 — Permanent establishment

ARTICLE 6 — Income from immovable property

ARTICLE 7 — Business profits

ARTICLE 8 — International transport

ARTICLE 9 — Associated enterprises

ARTICLE 10 — Dividends

ARTICLE 11 — Interest

ARTICLE 12 — Royalties

ARTICLE 13 — Capital gains

ARTICLE 14 — Independent personal services

ARTICLE 15 — Dependent personal services

ARTICLE 16 — Directors' fees

Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17 — Artistes and sportsmen

ARTICLE 18 — Pensions

ARTICLE 19 — Government service

ARTICLE 20

Students Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that first-mentioned State, provided that such payments arise from sources outside that State.

ARTICLE 21 — Other income

ARTICLE 22 — Elimination of double taxation

ARTICLE 23 — Limitation of relief

ARTICLE 24 — Partnerships

ARTICLE 25 — Non-discrimination

ARTICLE 26 — Mutual agreement procedure

ARTICLE 27 — Exchange of information

ARTICLE 28

Members of diplomatic or permanent missions and consular posts Nothing in this Convention shall affect any fiscal privileges accorded to members of diplomatic or permanent missions or consular posts under the general rules of international law or under the provisions of special agreements.

ARTICLE 29 — Entry into force

Each of the Contracting States shall notify to the other through diplomatic channels the completion of the procedures required by its law for the bringing into force of this Convention.This Convention shall enter into force on the date of the later of these notifications and shall thereupon have effect:

• (a) in the United Kingdom:

• (i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April in the calendar year next following that in which the Convention enters into force;

• (ii) in respect of corporation tax, for any financial year beginning on or after 1st April in the calendar year next following that in which the Convention enters into force;

• (b) in Uzbekistan, in respect of Uzbekistan tax, from 1st January in the calendar year next following the year in which the Convention enters into force.

ARTICLE 30 — Termination

This Convention shall remain in force until terminated by one of the Contracting States.Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiry of five years from the date of entry into force of the Convention.In such event, the Convention shall cease to have effect:

• (a) in the United Kingdom:

• (i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April in the calendar year next following that in which the notice is given;

• (ii) in respect of corporation tax, for any financial year beginning on or after 1st April in the calendar year next following that in which the notice is given;

• (b) in Uzbekistan, in respect of Uzbekistan tax, from 1st January in the calendar year next following that in which the notice is given.

In witness whereof the undersigned, duly authorised thereto have signed this Convention.

Done at Tashkent this 15th day of October 1993.A translation of this convention into the Russian language shall be made and agreed by the Contracting States.In the case of divergence of interpretation the English text shall prevail.

For the Government of the United Kingdom of Great Britain and Northern Ireland:

DOUGLAS HOGG

For the Government of the Republic of Uzbekistan:

UTKUR SULTANOV

PART II — EXCHANGE OF NOTES

London

17th November 1993

Excellency

I have the honour to refer to the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Uzbekistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains which was signed in Tashkent on 15th October 1993 and to make on behalf of the Government of the Republic of Uzbekistan the following proposals:

Article 2: Taxes covered

Articles 7: Business profits

Articles 11 Interest and 12 Royalties

Article 22: Elimination of Double Taxation

Article 29: Entry Into Force

Withholding tax

Head of the Department of Treaty Law, Ministry of Foreign Affairs, Republic of Uzbekistan

17th November 1993

Excellency

I am in receipt of your note dated 17th November 1993 which states as follows:

I have the honour to refer to the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Uzbekistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains which was signed in Tashkent on 15th October 1993 and to make on behalf of the Government of the Republic of Uzbekistan the following proposals: At the time of signature of the Convention, the following specific Uzbekistan taxes are included within the meaning of Article 2(3)(b): (1) In respect of taxes payable by enterprises in accordance with the law of the Republic of Uzbekistan “On the Taxation of Enterprises, Associations and Organisations”; (i) tax on income; (ii) tax on income from movable and immovable property, as part of the general income of legal entities; (iii) tax on foreign currency income; and (iv) tax on capital gains. (2) In respect of taxes, payable by individuals in accordance with the law of the Repubblic of Uzbekistan “On the Taxation of Citizens, Foreign Citizens and Stateless Persons”; (i) tax on income; (ii) tax on income from movable and immovable property, as part of the general income of individuals; (iii) tax on foreign currency income; (iv) tax on capital gains; and (v) payments for the issue of patent or registration certificates to engage in private entrepreneurial activity. Interest Payable by a Permanent Establishment of a Resident of a Contracting State. In computing tax payable on its income or profits, there shall be allowed to a permanent establishment of a resident of a Contracting State, a deduction for interest incurred for the purpose of its trade or business whether paid to a bank or other person and without regard to the period of the loan, but that deduction shall not be available to the extent that the interest paid exceeds, for whatever reason, the amount which would have been agreed upon in the absence of a special relationship between the payer and the beneficial owner of the interest. Both Contracting States understand that where interest or royalties arising in one Contracting State are received by a resident of the other Contracting State and such resident is not the beneficial owner of the interest or royalties then such interest or royalties may be taxed in the first mentioned Contracting State using the rules applicable in its domestic legislation. The Contracting States agree that where Uzbekistan agrees to a lower rate of tax than 5 per cent in paragraph (2) of Article 11 or in paragraph (2) of Article 12 in any Convention between Uzbekistan and a third State which is a member of the Organisation for Economic Co-operation and Development, and that Convention enters into force either before or after the date of entry into force of this Convention, the competent authority of Uzbekistan shall notify the competent authority of the United Kingdom of the terms of the relevant paragraph in the Convention with that third State immediately after the entry into force of that Convention and such lower rate of tax shall be substituted for 5 per cent in paragraph (2) of Article 11 or paragraph (2) of Article 12, as the case may be, of this Convention with effect from the date of entry into force of that Convention, or of this Convention, whichever is the later. Interest Payable by a Company or other Taxable Entity which is a Resident of a Contracting State. In computing tax payable on its income or profits, there shall be allowed, to a company or other taxable entity which is a resident of a Contracting State and which is at least 20 per cent owned by a resident or residents of the other Contracting State, a deduction for interest incurred for the purpose of its trade or business whether paid to a bank or other person and without regard to the period of the loan, but that deduction shall not be available to the extent that the interest paid exceeds, for whatever reason, the amount which would have been agreed upon in the absence of a special relationship between the payer and the beneficial owner of the interest. The Contracting States understand that the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Union of Soviet Socialist Republics for the Avoidance of Double Taxation of Air Transport Undertakings and their Employees signed at London on the 3rd May 1974 and the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Union of Soviet Socialist Republics for the Avoidance of Double Taxation with respect to Taxes on Income and Capital Gains signed at London on 31st July 1985 shall continue to have effect: (a) in the United Kingdom, for any year of assessment, financial year or chargeable period, and (b) in Uzbekistan, for any taxable period, beginning, in either case, before the entry into force of the Convention. Each Contracting State shall endeavour to establish procedures to enable taxpayers to receive income dealt with under Articles 10, 11 and 12 without the imposition of withholding taxes where the Convention provides for taxation only in the State of residence.Where the Convention provides for taxation in the State where the income arises each State shall endeavour to establish procedures to enable taxpayers to receive income under deduction of tax at the rate provided for in the Convention.Where a claim is made by a taxpayer, tax withheld at source in a Contracting State at the rate provided for under domestic law shall be repaid in a timely manner where that tax is withheld at a rate in excess of that provided for under the terms of the Convention.

The foregoing proposals being acceptable to the Government of the United Kingdom of Great Britain and Northern Ireland, I have the honour to confirm that Your Excellency’s Note and this reply shall be regarded as constituting an agreement between the two Governments in this matter which shall enter into force at the same time as the entry into force of the Convention.

Signed

N. H. Nicholls — Clerk of the Privy Council

Explanatory note

(This note is not part of the Order)

The Convention with Uzbekistan is set out in the Schedule to this Order.

The Convention provides for business profits not arising from a permanent establishment to be taxed only in the country of the taxpayer’s residence. Profits attributable to a permanent establishment may be taxed in the country in which the permanent establishment is situated (Articles 5 and 7).

Income from immovable property and capital gains derived from such property may be taxed in the country in which the property is situated (Articles 6 and 13).

Shipping and air transport profits are generally to be taxed only in the residence state of the operator (Article 8).

The Convention includes rules for determining the taxable profits when a company in one country is related to a company in the other (Article 9).

The rate of tax imposed in the country of source on dividends derived by a resident of the other is not to exceed 5 per cent of the gross amount of the dividends when the beneficial owner is a company controlling, at least 10 per cent of the voting power in the company paying the dividends, and 10 per cent in all other cases (Article 10).

The rate of tax imposed in the country of source on interest derived by a resident of the other country is not to exceed 5 per cent of the gross amount flowing to the other country. Certain categories of interest (e. g. interest paid to the Government of the other country) will be exempt from tax in the source state (Article 11).

The rate of tax imposed in the source country on royalties is limited to 5 per cent where the beneficial owner is a resident of the other country (Article 12).

Capital gains arising from the disposal of moveable property are normally to be taxed only in the country of the taxpayer’s residence. Gains arising from the disposal of assets of a permanent establishment or fixed base which the taxpayer has in the other country may be taxed in that other country (Article 13).

The earnings of temporary business visitors and some other individuals are, subject to certain conditions, to be taxed only in the country of the taxpayers residence (Articles 14 and 15). Fees received by a resident of one country in his capacity as a director of a company resident in the other country may be taxed in the latter country (Article 16). Income derived from the activities of artistes and sportsmen may be taxed in the country in which those activities are performed (Article 17). Occupational pensions (other than those paid in respect of government service) and annuities are to be taxed only on the recipient’s country of residence (Article 18) while government service remuneration and pensions are normally to be taxed only by the paying Government (Article 19). Payments made to visiting students, apprentices and business trainees are generally exempt from tax in the country visited (Article 20). Other income (with the exception of income from trusts and estates of deceased persons under administration) not specified in the Convention remains taxable only in the recipient’s country of residence unless the income is attributable to a permanent establishment or fixed base that the taxpayer has in the country of source (Article 21).

Where income continues to be taxable in both countries credit will be given in the taxpayer’s country of residence for tax imposed by the other country. In the case of dividends, the United Kingdom will give credit for underlying tax paid in Uzbekistan where the shareholder is a United Kingdom company which controls at least 10 per cent of the voting power in the company paying the dividends (Article 22).

There are provisions safeguarding nationals and enterprises of one country against discriminatory taxation in the other country (Article 25), and for consultation (Article 26) and exchanges of information (Article 27) between the taxation authorities of the two countries.

The Convention will enter into force on the date of the later of the notifications by each country of the completion of its legislative procedures. The Convention is to take effect in the United Kingdom for any financial year beginning on or after 1st April in respect of corporation tax, and for any year of assessment beginning on or after 6th April for income tax and capital gains tax, in the calendar year next following that in which it enters into force. The date of entry into force will in due course be published in the London, Edinburgh and Belfast Gazettes.

Footnotes

[^f00001]: 1988 c. 1; section 788 is extended by section 277 of the Taxation of Chargeable Gains Act 1992 (c. 12).