The Double Taxation Relief (Taxes on Income) (Bolivia) Order 1995

Made: 18th October 1995

At the Court at Buckingham Palace, the 18th day of October 1995 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) (Bolivia) Order 1995.

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 the Republic of Bolivia 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 Bolivia;

• (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 Bolivia 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 BOLIVIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL

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

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;

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 — Shipping and air 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 and other trainees

Article 21 — Other income

Article 22 — Capital

Article 23 — Elimination of double taxation

Article 24 — Non-discrimination

Article 25 — Mutual agreement procedure

Article 26 — Exchange of information

Article 27 — 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 28 — Entry into force

Each of the Contracting States shall notify to the other 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 Bolivia:

in respect of taxes levied for fiscal periods beginning on or after 1st January in the calendar year next following that in which the Convention enters into force.

Article 29 — 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 Bolivia:

• (i) in respect of taxes imposed for annual periods, for any periods which end after the calendar year next following that in which the notice is given;

• (ii) in respect of other taxes, on 31st December 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 in duplicate at La Paz this 3rd day of November 1994 in the English and Spanish languages, both texts being equally authoritative.

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

R M Jackson

For the Government of the Republic of Bolivia:

Dr. Antonio Aranibar Q.

PART II — EXCHANGE OF NOTES

La Paz

3rd November 1994

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 Bolivia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital which has been signed today and to make on behalf of the Government of the United Kingdom the following proposals:

1

The Contracting States declare:

2

With respect to Article 7:

• (a) There may only be attributed to a building site or construction or installation project in the Contracting State in which the permanent establishment is situated, the profits which are derived from such activities. Profits derived as a result of supplies of merchandise from the main permanent establishment or from another permanent establishment of the enterprise or a third person in connection with such activities or realised independently of such activities, shall not be attributed to the building site or construction or installation project;

• (b) Income derived as a result of planning, design, construction or research activities and technical services carried out in a Contracting State by a resident of that State in connection with a permanent establishment maintained in the other Contracting State shall not be attributed to that establishment.

3

With respect to Article 11:

4

With respect to Articles 10, 11 and 12:

• (a) If the rates under the respective national law are lower than the rates determined in the Convention, the lower rates of the national legislation will apply, without affecting any future rulings.

• (b) If Bolivia has agreed in a Convention for the elimination of double taxation in force between it and any other member country of the Organisation for Economic Co-operation and Development to apply a lower rate of taxation to dividends, interest or royalties than that specified in Articles 10, 11 and 12 respectively, that lower rate shall be substituted for the rate specified in those Articles with effect from the date when that Convention enters into force.

I avail myself of this opportunity to extend to Your Excellency the assurance of my highest consideration.

R M Jackson

His Excellency the Ambassador of the United Kingdom of Great Britain and Northern Ireland.

La Paz

3rd November 1994

Excellency

I am in receipt of your Note of today 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 Bolivia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital which was signed today and to make on behalf of the Government of the United Kingdom the following proposals: (1) The Contracting States declare: This Convention shall not be opposed to the respective tax systems of the Contracting States and in particular to the Bolivian tax system based on source and to the United Kingdom tax system based on residence and worldwide income. (2) With respect to Article 7: (a) There may only be attributed to a building site or construction or installation project in the Contracting State in which the permanent establishment is situated, the profits which are derived from such activities. Profits derived as a result of supplies of merchandise from the main permanent establishment or from another permanent establishment of the enterprise or a third person in connection with such activities or realised independently of such activities, shall not be attributed to the building site or construction or installation project; (b) Income derived as a result of planning, design, construction or research activities and technical services carried out in a Contracting State by a resident of that State in connection with a permanent establishment maintained in the other Contracting State shall not be attributed to that establishment. (3) With respect to Article 11: It is assumed that the commission paid by a resident of Bolivia to a bank or other credit institution in relation to services provided by the bank or credit institution shall be regarded as interest in accordance with paragraph (3) of Article 11. (4) With respect to Articles 10, 11 and 12: (a) If the rates under the respective national law are lower than the rates determined in the Convention, the lower rates of the national legislation will apply, without affecting any future rulings. (b) If Bolivia has agreed in a Convention for the elimination of double taxation in force between it and any other member country of the Organisation for Economic Co-operation and Development to apply a lower rate of taxation to dividends, interest or royalties than that specified in Articles 10, 11 and 12 respectively, that lower rate shall be substituted for the rate specified in those Articles with effect from the date when that Convention enters into force.

The foregoing proposals being acceptable to the Government of The Republic of Bolivia, 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.

I take this opportunity to renew to Your Excellency the assurances of my highest consideration.

Dr Antonio Aranibar Q.

His Excellency the Minister of Foreign Affairs and Worship for the Republic of Bolivia.

Signed

N. H. Nicholls — Clerk of the Privy Council

Explanatory note

(This note is not part of the Order)

The Convention with Bolivia is set out in Part I of the Schedule to this Order.

The Convention provides for business profits not arising through 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, including income from agriculture or forestry, may be taxed by the country in which the property is situated (Article 6).

Shipping and air transport profits are generally to be taxed only by the country in which the place of effective management of the operator is situated (Article 8).

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

Dividends paid by a resident of one state to a resident of the other may be taxed by the source state, but the rate imposed will not exceed 15 per cent (Article 10).

Interest paid by a resident of one country to a resident of the other may be taxed by the source state, but at a rate which will not exceed 15 per cent. 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 15 per cent where the beneficial owner is a resident of the other country (Article 12).

Each country may generally tax capital gains in accordance with its domestic law, although gains from the alienation of ships or aircraft operated in international traffic shall be taxable only in the country of residence of the operator (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 taxpayer’s 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 that other 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 in 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).

Certain payments made to visiting students and business apprentices are generally exempt from tax in the country visited (Article 20). Other income (excluding income from trusts or estates) will generally be taxed only by the country of which the beneficial owner is a resident (Article 21).

Elements of capital may generally only be taxed by the country in which the owner is resident, but capital in the form of immovable property may also be taxed by the country in which it is situated (Article 22).

Where income continues to be taxable in both countries, relief from double taxation will be given, in effect, in accordance with the laws of each country. In the case of dividends, the United Kingdom will give credit for the underlying tax paid in Bolivia 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 23).

There are also measures safeguarding nationals and enterprises of one country against discriminatory taxation in the other country (Article 24), for consultation to resolve difficulties in the application or interpretation of the Convention (Article 25), for exchanges of information between the taxation authorities of the two countries (Article 26) and for the treatment of diplomatic or consular officials (Article 27).

The Exchange of Notes comprising Part II of the Schedule clarifies the intended interpretation of certain parts of the Convention and includes an agreement that if Bolivia subsequently agrees in a convention with any other member of the Organisation for Economic Co-operation and Development to apply lower rates of taxes to dividends, interest or royalties, those lower rates will apply to this Convention.

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. It will take effect in the United Kingdom from April 1st (in respect of corporation tax) and from April 6th (for income tax and capital gains tax) in the following calendar year (Article 28). 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).