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NEWS

Prime Minister's Office of Spain : Spain and Uzbekistan sign treaty to avoid double taxation and tax evasion

www.4-traders.com/
8 July 2013

In Madrid on Monday, the State Secretary for the Treasury, Miguel Ferre, and the Chairman of the State Tax Committee of Uzbekistan, Botir Parpiev, signed the new treaty between the Kingdom of Spain and the Republic of Uzbekistan to avoid double taxation and prevent personal income and wealth tax evasion, as well as its governing Protocol. The signing of both texts was authorised at the Council of Ministers meeting on 28 June.

Signing this type of international treaty generates a variety of benefits.

  • Economic: generally-speaking, because investing companies prefer to operate in countries with which a treaty of this nature has been agreed as it reflects good economic and political relations, while the increased investment activity by these companies has positive effects in both countries.
  • Legal: by providing a stable framework with a strong outlook, which encourages projects based on long-term investments.
  • Fiscal: for taxpayers - both by avoiding double taxation and applying maximum levy rates in the State where the income is generated or due to the existence of regulations governing the resolution of disputes between the tax authorities - and for the authorities themselves - by establishing mechanisms for inter-communication and for avoiding tax evasion and tax fraud.

The previous treaty - signed with the USSR - became invalid with regard to Uzbekistan on 21 July 2010. With Uzbekistan being one of the EU's main trading partners in the region, this new treaty will help promote investment and trade relations between Spain and Uzbekistan in such sectors as construction, transport and energy. Furthermore, it will also enable legal certainty to be increased for the economic operators of both countries and guarantee the elimination of any possible double taxation situations that may arise, an, in certain cases also reduce the fiscal burden.

Uzbekistan is one of the countries in Central Asia enjoying the most dynamic and sustained growth, recording annual GDP growth figures of more than 7% in recent years. The country has abundant natural resources, including oil, natural gas, minerals and agricultural products, meaning it is one of the most attractive economies in the region for foreign investors.

The treaty also includes a section on the exchange of information under the terms of the OECD Model Treaty, which will enable a broad exchange of information between Spain and Uzbekistan on important tax-related issues, including banking information.

The treaty will come into force three months after the date on which both countries report compliance with domestic legal procedures for the entry into force of the treaty. Including the one signed today, Spain has now signed a total of 90 such treaties.