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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
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DT: Tunisia: double taxation agreement, Article 22: Elimination of double taxation

(1) Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof):

(a) Tunisian tax payable under the laws of Tunisia and in accordance with this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within Tunisia (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Tunisian tax is computed;

(b) in the case of a dividend paid by a company which is a resident of Tunisia to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit shall take into account (in addition to any Tunisian tax creditable under the provisions of sub-paragraph (a) of this paragraph) the Tunisian tax payable by the company in respect of the profits out of which such dividend is paid.

(2) For the purposes of paragraph (1) of this Article, the term ‘Tunisian tax payable’ shall be deemed to include any amount which would have been payable as Tunisian tax forany year but for an exemption or reduction of tax granted for that year or any part thereof under any of the following provisions of Tunisian law:

(a)

(i) Article 10, paragraphs 1, 2 and 4 of Article 11, Article 14 (insofar as this extends the exemptions or reductions granted under the aforementioned paragraphs of Article 11) and, subject to the mutual agreement of the competent authorities in each case, paragraph 4 of Article 15 of Law No. 69-35 of 26 June 1969;

(ii) Article 3, paragraphs 2, 4 and 9 of Article 4 of Law No. 72-38 of 27 April 1972;

(iii) paragraph 2 of Article 11, Articles 12, 13, paragraph 2 of Article 14 paragraph 1 of Article 15 and, subject to the mutual agreement of the competent authorities in each case, Article 17 of Law No. 81-56 dated 23 June 1981 for the Encouragement of Investment in Manufacturing Industries and Industrial Decentralisation, as extended by Decree No. 81-861 dated 23 June 1981;

so far as they were in force on, and have not been modified since, the date of the signature of this Convention, or have been modified only in minor respects so as not to affect their general character; or

(b) any other provision which may subsequently be made granting an exemption or reduction which is agreed by the competent authorities of the Contracting States to be of a substantially similar character, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character;

Provided:

(c) that relief from United Kingdom tax shall not be given by virtue of this paragraph in respect of income from any source if the income arises in a period starting more than ten years after the exemption from, or reduction of Tunisian tax was first granted in respect of that source;

(d) that where an exemption or reduction of tax is granted to an enterprise under Law No. 72-38 of 27 April 1972 the tax which would have been payable but for that exemption or reduction shall be taken into account for the purposes of this paragraph only where the exemption or reduction is certified by the competent authority of Tunisia as having been given with a view to promoting industrial, commercial, scientific or educational development in Tunisia:

(3) Where a resident of Tunisia derives income or capital gains which, in accordance with the provisions of this Convention, may be taxed in the United Kingdom, Tunisia shall deduct from the amount of tax which it levies on the income or capital gains of such resident an amount equal to the income or capital gains tax paid in the United Kingdom. However, the amount deducted may not exceed that part of the tax on income or capital gains, as computed before the deduction is given, which corresponds to the income or capital gains taxable in the United Kingdom.

(4) For the purposes of paragraphs (1) and (3) of this Article profits, income and capital gains owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise from sources in that other Contracting State.

(5) Where profits on which an enterprise of a Contracting State has been charged to tax in that State are also included in the profits of an enterprise of the other State and the profits so included are profits which would have accrued to that enterprise of the other State if the conditions made between the enterprises had been those which would have been made between independent enterprises dealing at arm’s length, the amount included in the profits of both enterprises shall be treated for the purposes of this Article as income from a source in the other State of the enterprise of the firstmentioned State and relief shall be given accordingly under the provisions of paragraph (1) or paragraph (3) of this Article.