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HMRC internal manual

Double Taxation Relief Manual

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HM Revenue & Customs
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DT: Barbados: 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) Barbados tax payable under the laws of Barbados and in accordance with this Agreement, whether directly or by deduction, on profits or income from sources within Barbados shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits or income by reference to which the Barbados tax is computed. Provided that in the case of a dividend the credit shall only take into account such tax in respect thereof as is additional to any tax payable by the company on the profits out of which the dividend is paid and is ultimately borne by the recipient without reference to any tax so payable.

(b) Where a company which is a resident of Barbados pays a dividend to a company resident in the United Kingdom which controls directly or indirectly at least 10 per cent of the voting power in the first-mentioned company, the credit shall take into account (in addition to any Barbados tax for which credit may be allowed under the provisions of sub-paragraph (a) of this paragraph) the Barbados tax payable by that first- mentioned 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 `Barbados tax payable` shall be deemed to include any amount which would have been payable as Barbados tax for any year but for an exemption or reduction of tax granted for that year or any part thereof under-

(a) any of the following provisions, that is to say:

(i) Sections 14(2), 15(2), 19(2) and 20 of the Pioneer Industries Act, 195854, as amended;

(ii) Sections 10, 15(2) and 16(1) of the Industrial Development (Export Industries) Act, 1969-43;

(iii) Sections 12, 14(2), 17(2) and 18(1) of the Industrial Incentives Act, 1963-31;

(iv) Sections 12, 14(2) and 15(1) of the Industrial Incentives (Factory Construction) Act, 1965-29;

(v) Sections 3 and 5 of the Hotel Aids Act, 1967-25;

(vi) Sections 21 and 46 of the Income Tax Act, 1968-51 so far as they were in force on, and have not been modified since, the date when this Agreement was signed, 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 which is agreed by the taxation authorities of the United Kingdom and Barbados 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:

(i) 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, Barbados tax was first granted in respect of that source;

(ii) that where the relief is a relief accorded by the Industrial Development (Export Industries) Act, 1969-43, it shall be taken into account for the purposes of this Article if, and only if, the company qualifying for the relief could have been declared to be a company either:

(aa) which was engaging in a pioneer industry under the provisions of Section 3 of the Pioneer Industries Act, 1958-54, as amended; or

(bb) which was an approved enterprise under the provisions of Section 4 of the Industrial Incentives Act, 1963-31.

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

(a) United Kingdom tax payable under the laws of the United Kingdom and in accordance with this Agreement, whether directly or by deduction, on profits or income from sources within the United Kingdom shall be allowed as a credit against any Barbados tax computed by reference to the same profits or income by reference to which the United Kingdom tax is computed. Provided that in the case of a dividend the credit shall only take into account such tax in respect thereof as is additional to any tax payable by the company on the profits out of which the dividend is paid and is ultimately borne by the recipient without reference to any tax so payable.

(b) Where a company which is a resident of the United Kingdom pays a dividend to a company resident in Barbados which controls directly or indirectly at least 10 per cent of the voting power in the first-mentioned company, the credit shall take into account (in addition to any United Kingdom tax for which credit may be allowed under the provisions of subparagraph (a) of this paragraph) the United Kingdom tax payable by that first-mentioned company in respect of the profits out of which such dividend is paid.

(4) For the purposes of this Article:

(a) profits or remuneration for personal (including professional) services performed in a Contracting State shall be deemed to be income from sources within that State;

(b) the services of an individual whose services are wholly or mainly performed in ships or aircraft shall be deemed to be performed in the Contracting State of which the person deriving the profits from the operation of the ships or aircraft is a resident;

(c) any amount which is included, for the purposes of tax in a Contracting State, in the chargeable profits or taxable income of a person who is a resident of the other Contracting State, and which is so included under any provision of the law of the first- mentioned Contracting State for the time being in force regarding taxation of income of a business of any form of insurance shall be treated as having a source in that first- mentioned Contracting State.