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HMRC internal manual

Double Taxation Relief Manual

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HM Revenue & Customs
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DT: Yugoslavia: 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) Yugoslav tax payable under the laws of Yugoslavia and in accordance with this Convention whether directly or by deduction, on profits, income or chargeable gains from sources within Yugoslavia, 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 Yugoslav tax is computed.

(2) In the case of Yugoslavia:

(a) Where a resident of Yugoslavia derives income which in accordance with the provisions of this Convention may be taxed in the United Kingdom Yugoslavia shall, subject to the provisions of sub-paragraph (b) of this paragraph, exempt such income from tax but may, in calculating tax on the remaining income of that person, apply the rate of tax which would have been applicable if the exempted income had not been so exempted.

(b) Where a resident of Yugoslavia derives income which, in accordance with the provisions of Articles 10, 11 and 12 may be taxed in the United Kingdom Yugoslavia shall allow as a deduction from the tax on the income of that person an amount equal to the tax paid in the United Kingdom. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is appropriate to the income derived from the United Kingdom.

(3) For the purposes of paragraph (1) of this Article, the term `Yugoslav tax payable`shall be deemed to include any amount which would have been payable under the laws of Yugoslavia for any year but for an exemption or reduction of tax granted for that year or any part thereof under:

(a) the provisions specified in paragraph (4) of this Article, so far as these provisions were in force on, and have not been modified since, the date of 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 of tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character to the provisions specified in paragraph (4) of this Article, 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 unless the exemption or reduction of tax is certified by the competent authority of Yugoslavia as being for the purpose of promoting development in Yugoslavia;

(d) 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, Yugoslav tax was first granted in respect of that source.

(4) The provisions referred to in paragraph (3) (a) of this Article are:

 

–In the Socialist Republic of Bosnia and Herzegovina, Article 6 of the Law on the taxation of foreign persons (`Official Gazette of the SR Bosnia and Herzegovina`, No 36/1972);

–In the Socialist Republic of Montenegro, Article 6 of the Law on the taxation of foreign persons’ profits (`Official Gazette of the SR Montenegro`, No 21/1975);

–In the Socialist Republic of Croatia, Article 6 of the Law on the taxation of foreign persons (`Official Gazette of the SR Croatia`, No 5/1973);

–In the Socialist Republic of Macedonia, Article 6 of the Law on the taxation of foreign persons (`Official Gazette of the SR Macedonia`, No 15/1973);

–In the Socialist Republic of Slovenia, Article 7 of the Law on the taxation of foreign persons (`Official Gazette of the SR Slovenia`, No 3/1973):

–In the Socialist Republic of Serbia, Article 7 of the Law on the taxation of foreign persons (`Official Gazette of the SR Serbia`, No 22/1973);

–In the Socialist Autonomous Province of Kosovo, Articles 8 and 9 of the Law on the taxation of foreign persons (`Official Gazette of the SAP Kosovo`, No 16/1979);

–In the Socialist Autonomous Province of Vojvodina, Article 7 of the Law on the taxation of foreign persons (`Official Gazette of the SAP Vojvodina No 3/1974).

(5) For the purposes of the preceding paragraphs 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.