TAX NEWS - 2010

Tax treaties

Chile-Thailand Tax Treaty – The 2006 tax treaty entered into force on 5 May 2010 and applies generally as from 1 January 2011. Once tax treaty is in effect, dividends will be subject to a 10% withholding tax rate (however, the reduced rate will not apply in Chile if the first category tax (corporate tax) is fully creditable in computing the amount of additional tax). A 10% tax rate will apply to interest derived from loans granted by banks and insurance companies, bonds and securities that are regularly and substantially traded on a regulated securities market and credit sales on machinery or equipment to a beneficial owner that is also the seller of the machinery or equipment. Otherwise, the rate will be 15%. A 10% tax rate will apply to royalties paid for the use of, or the right to use, industrial, commercial or scientific equipment; the rate will be 15% in all other cases.

China-Barbados Tax Treaty – The 2010 protocol to the 2000 treaty entered into force on 9 June 2010 and will apply as from 1 January 2011. Once the tax treaty is in effect, the protocol provides that the 5% dividend withholding tax rate will be available only to beneficial owners that are companies owning 25% or more of the equity interests of the Chinese company paying the dividend. Where the 25% ownership level is not met, the 10% tax rate will apply.

France-Malta Tax Treaty – The 2008 protocol to the 1977 treaty entered into force and effect on 1 June 2010. The protocol provides for a 0% rate on dividends paid by a French company to a company that holds directly at least 10% of the capital of the payer. Otherwise, the rate is 15%. However, if the conditions for application of the EC Parent-Subsidiary Directive are satisfied, no tax will be withheld. The withholding tax rate on interest is reduced to 5%.

Germany-United Arab Emirates Tax Treaty – Once the tax treaty is in effect, the treaty signed 1 July 2010 provides that dividends will be subject to a 5% withholding tax rate when paid to a resident of the other state (other than an individual or partnership) that holds directly at least 10% of the distributing company; otherwise, the rate will be 10% (except in the case of certain real estate investment companies, which will be subject to a 15% tax rate). Interest will be exempt and royalties will be subject to a 10% withholding tax rate. The treaty will apply retroactively to withholding taxes for amounts paid on or after 1 January 2009 (the 1995 treaty ceased to be effective after 31 December 2008).

Greece-Saudi Arabia Tax Treaty – Once the tax treaty is in effect, the tax treaty signed on 19 June 2008 provides that dividends and interest will be subject to withholding tax at a rate of 5%. Royalties will be subject to withholding tax at 10%.

Greece-Serbia Tax Treaty – The 1997 tax treaty entered into force on 8 June 2010 and applies as from 1 January 2011. Once tax treaty is in effect, the treaty provides that a 5% withholding tax will apply to dividends paid to a company that holds directly at least 25% of the capital of the payer, and 15% in all other cases. Tax rate on interest and royalties will be 10%.

Ireland-Morocco Tax Treaty – Once the tax treaty is in effect, the treaty signed on 22 June 2010 provides for a 6% withholding tax on dividends paid to a company that holds directly at least 25% of the capital of the payer company, and 10% in all other cases. Tax rate on interest and royalties will be 10%.

Ireland-Serbia Tax Treaty – The 2009 tax treaty entered into force on 16 June 2010 and will apply as from 1 January 2011. Once the tax treaty is in effect, the treaty provides for a 5% withholding tax on dividends paid to a company (other than a partnership) that holds directly at least 25% of the voting power of the company paying the dividends; otherwise, the rate will be 10%. Tax rate on interest will generally be 10%. A 5% rate will apply to royalties paid for the use of a copyright of a literary, artistic or scientific work (except for software); and a 10% tax rate will apply to royalties paid for a patent, trademark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

Ireland-United Arab Emirates Tax Treaty – Once in effect, the treaty signed on 1 July 2010 provides that dividends, interest and royalties will be exempt from withholding tax.

Kazakhstan-United Arab Emirates Tax Treaty – Once the tax treaty is in effect, the treaty signed on 22 December 2008 provides that dividends will be subject to withholding tax at a rate of 5% if the beneficial owner is a company (other than a partnership) that holds at least 10% of the distributing company; otherwise the domestic rate will apply. Interest and royalties will be subject to a 10% tax rate.

Malta-Jersey Tax Treaty – The 2010 tax treaty will enter into force on 19 July 2010 and its provisions will generally apply as from 1 January 2011. Once in effect, the treaty provides that dividends, interest and royalties will be exempt. However, the dividends article provides that, so long as Malta operates a full imputation system for company profits, Malta may charge tax on the gross amount of the dividends at a rate not to exceed that chargeable on the profits out of which the dividends are paid.

Malta-Serbia Tax Treaty – The 2009 tax treaty entered into force on 16 June 2010 and applies generally as from 1 January 2011. Once the tax treaty is in effect, dividends paid from Malta will be subject to withholding tax at a rate not to exceed that chargeable on the profits from which the dividends are paid. The withholding tax rate on interest will be 10%. A 5% tax rate will apply to royalties paid for the use or the right to use a copyright of literary, artistic or scientific work (including cinematograph films or films or tapes used for radio or television broadcasting), and a 10% tax rate will apply for royalties paid for the use or the right to use a patent, trademark, design or model, plan, secret formula or process, or for the use or the right to use industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

Singapore-Georgia Tax Treaty – The 2009 tax treaty entered into force on 28 June 2009 and will generally apply in Singapore beginning 1 January 2012 (in Georgia beginning 1 January 2011). Once in effect, the treaty provides that dividends, interest and royalties will be taxable only in the residence state.