(August 5, 2015)
On July 28, 2015 Jersey and the Republic of Seychelles have signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (hereafter: the DTA). Although signed, the DTA has not yet entered into force. For the DTA to enter into force, the respective ratification procedures have to have been finalized in both countries.
Below we will discuss some of the regulations included in the DTA of which we think they might interest our readers.
According to Article 2, Paragraph 3 of the DTA (“Taxes Covered”) the existing taxes to which the Agreement shall apply are in particular:
a) in the case of Jersey:
- the income tax; and
b) in the case of Seychelles:
(i) the business tax;
(ii) income and non monetary benefits tax act; and
(iii) the petroleum income tax.
Paragraph 4 of Article 2 of the DTA subsequently arranges that the Agreement shall also apply to any identical or substantially similar taxes that are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes.
In Paragraph 2 of Article 5 of the DTA (“Permanent Establishment”) under sub f, g and h it is arranged that the term “permanent establishment” a.o. includes especially:
f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources;
g) a building site or construction or assembly or installation project or supervisory activity connected therewith where such site, project or activity continues for a period of more than 183 days; and
h) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue for the same or a connected project within the Contracting Party for a period or periods exceeding in the aggregate183 days in any twelve month period commencing or ending in the fiscal year concerned.
Paragraph 4 of Article 5 of the DTA (“Permanent Establishment”) arranges that notwithstanding the provisions of paragraphs 1 and 2 of the same Article, where a person -other than an agent of an independent status to whom paragraph 5 (of Article 5 of the DTA) applies- is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting Party an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that Party in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 3 (of the DTA) which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
Paragraph 2 of Article 9 of the DTA (“Associated enterprises”) contains a so-called appropriate adjustment clause.
Paragraphs 1 of the Articles 10 (“Dividends”), 11 (“Interest”) and 12 (“Royalties”) of the DTA arrange that dividends, interest income and royalty income can only be taxed in the resident state of respectively the shareholder, the lender and the licensor. None of these articles allows the withholding of withholding taxes over dividends, interests or royalties by the source state.
With respect to capital gains Paragraph 1 of Article 13 of the DTA (“Capital Gains”) arranges that gains derived by a resident of a Contracting Party from the alienation of immovable property referred to in Article 6 and situated in the other Contracting Party may be taxed in that other Party.
Paragraph 4 of Article 13 of the DTA (“Capital Gains”) subsequently arranges that gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting Party may be taxed in that Party.
With respect to directors’ fees Article 15 of the DTA (“Directors’ Fees”) arranges that Directors’ fees and other similar payments derived by a resident of a Contracting Party in his capacity as a member of the board of directors of a company which is a resident of the other Contracting Party may be taxed in that other Party.
The DTA furthermore includes an article arranging for a Mutual Agreement Procedure (Article 23 of DTA) and an article on the Exchange of Information (Article 24 of the DTA).
Click here to be forwarded to DTA as available on the website of the Government of Jersey, which will open in a new window.
Are you looking for an other DTA? Then check our section DTAs & TIEAs, a very efficient way to locate numerous DTAs.
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