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HMRC internal manual

Double Taxation Relief Manual

DT: Jamaica: double taxation agreement, Article 9: Interest

  1. Interest arising in one of the territories which is derived and beneficially owned by a resident of the other territory may be taxed in that other territory.
  2. However, subject to the provisions of paragraphs (3) and (4) of this Article, such interest may also be taxed in the territory in which it arises, and according to the law of that territory, but the tax so charged shall not exceed 12½ per cent of the gross amount of the interest.
  3. Notwithstanding the provisions of Article 5, interest arising in Jamaica which is derived and beneficially owned by a resident of the United Kingdom shall be exempt from Jamaican tax if it is paid in respect of a loan made, guaranteed or insured, or any other debt-claim or credit guaranteed or insured, by the United Kingdom Export Credits Guarantee Department.
  4. Interest arising in one of the territories shall be exempt from tax in that territory if it is derived and beneficially owned by the Government of the other territory or by an instrumentality of that other territory which is not subject to tax in that other territory on its income. The term `instrumentality` as used in this paragraph means any agency or entity created or organised by either Contracting Government in order to carry out government functions.
  5. The term `interest` as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and other debt-claims of every kind, as well as all other income assimilated to income from money lent by the taxation law of the territory in which the income arises.
  6. The provisions of paragraphs (1) and (2) of this Article shall not apply if the beneficial owner of the interest, being a resident of one of the territories has in the other territory in which the interest arises a permanent establishment and the debt-claim from which the interest arises is effectively connected with a business carried on through that permanent establishment. In such a case, the provisions of Article 5 shall apply.
  7. Interest shall be deemed to arise in a territory where the payer is the Government of that territory or a political sub-division thereof, a local authority or a resident of that territory. Where, however, the person paying the interest, whether he is a resident of one of the territories or not, has in one of the territories a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred and such interest is borne by that permanent establishment, then such interest shall be deemed to arise in the territory in which the permanent establishment is situated.
  8. The relief from tax provided for in paragraph (2) of this Article shall not apply to interest on any form of debt-claim dealt in on a stock exchange where the beneficial owner of the interest-

 

 

  1. does not bear tax in respect thereof in the territory of which it is a resident; and
  2. sells (or makes a contract to sell) the debt-claim from which such interest is derived within three months of the date on which such beneficial owner acquired such debt-claim.

 

  1. Where, owing to a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest paid having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case the excess part of the payments shall remain taxable according to the law of each territory, due regard being had to the other provisions of this Agreement.
  2. The provisions of this Article shall not apply if the debt-claim in respect of which the interest is paid was created or assigned mainly for the purpose of taking advantage of this Article and not for bona fide commercial reasons.