March 24, 2022
Double taxation treaties of Uzbekistan (with Russia, Turkey and China)
Methods for elimination of double taxation
In practice, there are often situations when taxes are collected from the same subjects and from the same base in two States. This problem is better known as double taxation. It cannot be resolved at the national level, and therefore bilateral Agreements are usually used to prevent it. This Memorandum will consider the most significant aspects of the three agreements on the avoidance of double taxation of Uzbekistan (Hereinafter “Agreements”): with People’s Republic of China (hereinafter “Agreement with China”, of 03.07.1996), with the Russian Federation (hereinafter “Agreement with Russia”, of 02.03.1994) and with the Republic of Turkey (hereinafter “Agreement with Turkey”, of 08.05.1996).
All three agreements apply to taxes imposed on income. Another issue is what the term “income tax” means in various agreements.
E.g. in the Agreement with China, income taxes include all taxes levied on total income or part of income, including taxes on income from the sale of movable or immovable property, taxes on total wages or salaries paid by enterprises, and taxes on capital appreciation.
- a) in China:
(I) the individual income tax;
(II) income tax for enterprises with foreign investments and foreign enterprises;
(hereinafter referred to as ” Chinese taxes”);
- b) in Uzbekistan:
(I) tax on the income of enterprises, associations and organizations,
(II) the individual income tax on citizens of the Republic of Uzbekistan, foreign citizens and stateless persons;
(hereinafter referred to as “Uzbekistan tax”).
With the Russian Federation, taxes on income (profit) and property include all taxes levied on total income or part of income, including taxes on income from the alienation of movable or immovable property, as well as taxes on the increase in the value of property.
in the Russian Federation – the taxes levied in accordance with the following laws:
(I) “On taxes on profits of enterprises and organizations”;
(II) “On income tax from physical persons”;
(III) “On tax on property of enterprises”;
(IV) “About the tax to property of physical persons” (hereinafter referred to as “Russian tax”);
– in the Republic of Uzbekistan:
(I) tax on the income of enterprises, associations and organizations;
(II) income tax on citizens of Uzbekistan, foreign citizens and stateless persons;
(III) corporate property tax;
(IV) personal property tax (hereinafter referred to as “taxes of Uzbekistan”).
With Turkey, income taxes include all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property.
(a) in the case of the Republic of Uzbekistan:
(I) individual income tax imposed on the profits of citizens of Uzbekistan and persons without any citizenship;
(II) taxes imposed on profit of enterprises, organizations and other amalgamations in accordance with the legislation of the Republic of Uzbekistan;
(III) levies treated as taxes on income in conformity with the laws of the Republic of Uzbekistan (hereinafter referred to as ” Uzbek tax”)
(b) in the case of the Republic of Turkey:
(I) the income tax;
(II) the corporation tax;
(III) the levy imposed on the income tax and the corporation tax (hereinafter referred to as “Turkish tax”)
Company
Agreement with China: any body corporate, including a joint venture, or any entity that is treated as a body corporate for tax purposes.
Agreement with Turkey: any body corporate or any entity which is treated as a body corporate for tax purposes;
Agreement with Russia: any corporate Association or any organization that is considered a corporate Association for tax purposes.
International traffic
Agreement with China: any transport by a ship, aircraft or road vehicle operated by an enterprise which is a resident of a Contracting State, except when the ship, aircraft or road vehicle is operated solely between places in the other Contracting State.
Agreement with Turkey: any transport by an aircraft or a road vehicle operated by an enterprise of a Contracting State except when the aircraft or road vehicle is operated solely between places situated in the territory of the other Contracting State.
Agreement with Russia: any transportation by sea, river or air, rail or road vehicle carried out by an enterprise of a Contracting State, except in cases where such transportation is carried out between points located on the territory of another Contracting State
The competent authority
Agreement with China: in the case of China, the State Administration of Taxation or its authorized representative, and in the case of Uzbekistan, the State Taxation Committee or its authorized representative.
Agreement with Turkey:
- I) in relation to Uzbekistan-State tax Committee;
(II) in the case of the Republic of Turkey, the Ministry of Finance or its authorized representative;
Agreement with Russia:
– in the Russian Federation-the Ministry of Finance of the Russian Federation or its authorized representative;
– in the Republic of Uzbekistan – the State tax Committee of the Republic of Uzbekistan.
Resident
In agreement with China: means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of incorporation, place of head office or any other criterion of a similar nature.
In agreement with Turkey: means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, registered office or any other criterion of a similar nature.
In agreement with Russia: means any person who by the law of that State subject it to taxation based on domicile, permanent residence, place of registration, location of the actual governing body or any other criterion of a similar nature. However, this term does not include a person who is liable to tax in that Contracting State solely on the basis that he receives income from sources or from property in the same State.
A permanent establishment
In agreement with China: means fixed place of business through which the business of an enterprise is wholly or partly carried on.
In agreement with Turkey: means a fixed place of business through which the business of enterprise is wholly or partly carried on.
In agreement with Russia: means a permanent place through which an enterprise of a Contracting State carries out business activities in the other Contracting State.
Income from immovable property
Agreement with Russia: Income received by a resident of one Contracting State from immovable property (including income from agriculture or forestry) located in the other Contracting State is taxed in that other State.
Agreement with Turkey: Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
Agreement with China: Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
Business profits
Agreement with Russia: Profits received in one Contracting State by an enterprise of the other Contracting State are taxable only in the first mentioned State, if they are received through a permanent establishment located there and only in the part that relates to that permanent establishment.
Agreement with Turkey: The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
Agreement with China: the profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State, but only so much of them as is attributable to that permanent establishment.
Dividends
Agreement with Russia: Dividends paid by a company that is a resident of one Contracting State to a resident of the other Contracting State may be taxed in that other State.
Agreement with Turkey: Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State.
Agreement with China: Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
Methods for elimination of double taxation
Agreement with the Russia: If a resident of one Contracting State receives income in the other Contracting State which, in accordance with the provisions of this Agreement, may be taxed in the other State, the amount of tax on this income payable in that other State may be deducted from the tax levied on such person in connection with income in the first mentioned State. Such deduction, however, will not exceed the amount of the first State’s tax on said income calculated in accordance with its tax laws and regulations.
Agreement with Turkey: in the case of Uzbekistan, the avoidance of double taxation will be achieved as follows:
- a) if a resident of Uzbekistan receives income that, in accordance with the provisions of this Agreement, can be taxed in Turkey, then Uzbekistan will reduce the tax on the income of this resident in an amount equal to the income tax in Turkey directly or by reduction.
Such reduction, however, should not exceed the portion of income tax paid before the reduction that may relate to income taxable in Turkey;
- b) if a resident of Uzbekistan receives income that, in accordance with the provisions of this Agreement, can be taxed only in Turkey, then Uzbekistan may include this income in the tax base, but may allow a reduction in income tax in the part that can relate to income received in Turkey, accrued in accordance with the legislation and tax regulations of the Republic of Uzbekistan.
In the case of Turkey, the avoidance of double taxation will be achieved as follows:
- a) if a resident of Turkey receives income that, in accordance with the provisions of this Agreement, can be taxed in Uzbekistan, Turkey will reduce the tax on the income of this resident in an amount equal to the income tax in Uzbekistan directly or by reduction. Such reduction, however, should not exceed the portion of income tax paid before the reduction that may relate to income taxable in Uzbekistan;
- b) if a resident of Turkey receives income that, in accordance with the provisions of this Agreement, can be taxed only in Uzbekistan, then Turkey may include this income in the tax base, but may allow a reduction in income tax in the part of it that can relate to income received in Uzbekistan.
Agreement with China: In China, double taxation shall be eliminated as follows:
Where a resident of China derives income from Uzbekistan the amount of tax on that income payable in Uzbekistan in accordance with the provisions of this Agreement, may be credited against the Chinese tax imposed on that resident. The amount of the credit, however, shall not exceed the amount of the Chinese tax on that income computed in accordance with the taxation laws and regulations of China.
In Uzbekistan, double taxation shall be eliminated as follows:
Where a resident of Uzbekistan derives income, which, in accordance with the provisions of this Agreement, may be taxed in China, Uzbekistan shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in China. Such deduction, however, shall not exceed that part of the income tax, as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in China.