treaties with Ireland, Brunei, Estonia, Lithonia, Morocco, Papua-NewGuinea, Tajikistan, Zimbabwe and Kenya. An organization is regarded as a resident of a country if under the laws of that country it is subject to taxation, due to domicile, residence, place of management, or other similar criteria. The DTAs provide additional procedures for dealing with individuals or entities with dual residency. DTAs cover income derived from a range of sources, including immovable property, business profits, dividends, royalties, interest, and personal services. The taxation treatment varies with the source of income. Thus, income arising from immovable property is likely to be taxed in the country in which the property is located. However, business profits are taxable only in the country where the entity is a resident, unless it conducts business in another country through a permanent establishment. A “permanent establishment� generally means a fixed place in which business is either wholly or partially undertaken, and usually includes a branch, office, factory, warehouse, or mine. Treatment given to income such as dividends, royalties, and interest differs under the various DTAs. Dividends, for example, may be taxable only in the country from which payment is made, or may be taxable in both but with a credit or deduction allowed in the receiving country. Each DTA also contains provisions for obtaining a credit in one country where tax has been levied on the income in the other country. The types of income which qualify vary among DTAs.
6.7
Value Added Tax
VAT is essentially a broad-based consumption tax on goods and services, operating at each stage of production and distribution. In effect, VAT covers all retailers, manufacturers, wholesalers, producers, and importers of goods, as well as service providers, other than those excluded by the Revenue Code.
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Baker & McKenzie