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Switzerland, Tajikistan Sign DTA

by Ulrika Lomas,, Brussels

25 June 2010

Switzerland and the Republic of Tajikistan have signed a double taxation agreement (DTA) in the area of taxes on income and assets, contributing to the further positive development of bilateral economic relations. The agreement contains no provisions on the exchange of information in accordance with the Organization for Economic Cooperation and Development’s (OECD) standard.

According to the Swiss Federal Administration, the agreement largely follows the OECD model convention and Switzerland's agreements policy respectively. In accordance with the agreement, for dividend payments the source state is in principle entitled to levy a tax of up to 15% of the gross dividend. In the case of a stake of at least 20% in the capital of the company making the payment, this tax decreases to 5% of the gross dividend. As regards interest payments, the agreement makes provision for a general withholding tax of 10% with numerous exceptions. Regarding royalty payments, the tax is 5% of the gross amount.

The Federal Administration states that: “The conclusion of the DTA with Tajikistan promotes mutual trade and economic relations. Thanks to the DTA, new markets have been opened up and favourable conditions for future investments have been created.”

It adds: “There has been no DTA between Switzerland and the Republic of Tajikistan up to now. Because the minimum delay is being sought for bringing the agreement into effect, Switzerland and Tajikistan have expressly agreed to waive amending the agreement negotiated by inserting an extended administrative assistance clause in accordance with the OECD standard.”

A report on the agreement is due to be submitted to the Swiss cantons and business associations concerned for their comments. They have welcomed the signing of the agreement.

TAGS: tax | investment | business | double tax agreement (DTA) | interest | royalties | Organisation for Economic Co-operation and Development (OECD) | agreements | withholding tax | Switzerland | dividends | Tajikistan

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