Given that the FYR Macedonian Parliament had already ratified the treaty on December 4 2012 and the ratification was published in the Official Gazette 154 on December 7 2012, it is expected that the treaty will be applicable as of 2016.
The treaty covers personal income tax and profit tax in FYR Macedonia and corporate income tax and the individual income tax in Kazakhstan. Although largely harmonised with the OECD model, certain treaty specifics are discussed below.
Construction sites including the assembly or installation projects and supervisory activities thereof, in duration exceeding six months are, according to the treaty, considered a permanent establishment (PE). The same principle applies to the supply of services (including consulting) in aggregate duration of more than six months within a 12 month period. PEs are also deemed to include installations for the purpose of exploration of natural resources or related supervisory service (including drilling rigs and natural resource exploration ships).
The treaty with Kazakhstan neither deviates significantly from the norm when it comes to withholding tax rates, nor offers any particular tax incentives at least from the FYR Macedonian perspective. Dividends are taxed at the 5% (in cases with minimum 25% capital participation) or 15% rate. A standard 10% withholding tax rate is applicable on interest as well as royalties.
As far as elimination of double taxation avoidance is concerned, the treaty defines that both countries will allow deduction from taxes in the amount of tax paid on it the other state.
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