Georgia: Kyrgyzstan ratifies double tax treaty with Georgia

Irina Lopatina

On June 22 2017, the parliament of Kyrgyzstan approved the bill ratifying the tax treaty signed with Georgia on October 13 2016. Currently, the ratification from the Georgian side is still pending, and in order to become law and to be ratified, the bill still needs to be signed by the presidents.

The 2016-signed treaty covers taxes on income and profit taxes. In the case of Georgia, these would be the profit tax and income tax, while in Kyrgyzstan the income tax on individuals and tax on income and profits of legal persons. The agreement will also be applicable to similar taxes that may be imposed at a later stage, on the condition that the signatory parties notify each other about the tax changes introduced.

Permanent establishments (PEs) are deemed to arise when a building, construction site or an installation project or related supervisory activity lasts for more than six months. Additionally, a PE also includes a place of management, a branch, an office, a factory, a workshop or a mine or oil/gas well.

In terms of withholding tax rates, dividends are to be taxed at 5% of the gross amount of the dividends if the beneficial owner holds at least 25% of the capital of the company paying the dividends and 10% of the gross amount of the dividends in all other cases. The withholding tax rate for interest has been set at 5%, while for royalties at 10%.

Once the double tax agreement enters into force its provisions shall have effect in respect of taxes withheld at source on or after the first day of January of the year following the one during which the agreement enters into force.

Irina Lopatina (irina.lopatina@eurofast.eu), Tbilisi

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