Egypt ratifies its DTA with Kuwait
The Egyptian President Abdel Fatah El Sisi issued Presidential Decree No. 155 of 2016 on February 23 2017, ratifying the double tax treaty concluded between Egypt and Kuwait on December 16 2014.
The convention between Egypt and Kuwait serves the purpose of avoiding double taxation in connection with the taxes applied on income in both countries and to mitigate the risk of tax evasion by both countries' taxpayers. This convention will be in force for five years and will continue to be valid for the same term/s unless one of the countries notifies the other with its termination notice six months before the termination date. Once effective, it will replace the previous tax treaty signed between the two countries in 2004.
All taxes applied to income, including the taxes on profits resulting from transferrable or non-transferrable belongings, real estate and the taxes applied to the salaries and wages paid by the projects, is subject to the convention. The provisions of the agreement are also applied to any similar taxes in its nature, which may be introduced after the date of signing the treaty.
The tax treaty states that profits achieved by a project of any of the two countries are subject to taxes in its country of origin only, unless the project is performing activities in the other country through a permanent establishment there. In such a case, the profits achieved by the permanent establishment shall be subject to taxes in that other country. Each country shall then determine its share of the profits.
As for international transport activities, the profits resulting from operating vessels or airplanes are subject to taxes only in the country in which the physical headquarters of the project is located. However, if the physical headquarters of a maritime project is a vessel, it is considered located inside the country of the vessel's port even if the port is not located in the country in which the vessel's operator is residing.
In regards to interest, the applied withholding tax shall not exceed 10% of the total interest paid. A lower 5% withholding tax rate will be applicable if the beneficial owner is a company owning at least 10% of the capital in the dividend-distributing entity. Interest and royalties are also subject to a 10% withholding tax rate.
The convention has also spotlighted the treatment of the income received by actors and sports players who are residing in one of the two countries and acting as cinema or theatre actors, radio or television presenters, musicians or sports players. The income from these activities can be subject to taxes in the country of residence unless the assignment/visit is totally or partially financed by public funds from his/her country.
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