On Ratification of the Protocol on Amendments and Additions to the Convention between the Republic of Kazakhstan and the Czech Republic for the Avoidance of Double Taxation and the Prevention of Tax Evasion with respect to Taxes on Income and on Capital

The Law of the Republic of Kazakhstan dated February 18, 2016 No. 453-V SAM

     To ratify Protocol on Amendments and Additions to the Convention between the Republic of Kazakhstan and the Czech Republic for the Avoidance of Double Taxation and the Prevention of Tax Evasion in Respect of Taxes on Income and on Capital, signed in Astana on November 24, 2014.

     President of the Republic of Kazakhstan N. NAZARBAYEV

  Protocol on Amendments and Additions to the Convention between the Republic of Agreement between Kazakhstan and the Czech Republic for the Avoidance of Double Taxation and the Prevention of Tax evasion with respect to taxes on income and on capital

Entered into force on June 28, 2016 - Bulletin of International Treaties of the Republic of Kazakhstan 2016, No. 5, art. 82

     The Republic of Kazakhstan and the Czech Republic, wishing to conclude a Protocol on Amendments and Additions to The Convention between the Republic of Kazakhstan and the Czech Republic on the Avoidance of Double Taxation and the Prevention of Tax Evasion in Respect of Taxes on Income and on Capital dated April 9, 1998 (hereinafter referred to as the Convention), agreed as follows:

  Article 1

     Subparagraph (a) of paragraph 3 of article 2 of the Convention should read as follows:       "a) in the Republic of Kazakhstan:        i) corporate income tax; ii) individual income tax; iii) property tax on legal entities and individuals; (hereinafter referred to as the "Kazakhstan Tax");".

  Article 2

     1. Subparagraph (a) of paragraph 1 of Article 3 of the Convention should read as follows: "(a) The term:        (i) "Kazakhstan" means the Republic of Kazakhstan and, when used geographically, the term "Kazakhstan" includes the State territory of the Republic of Kazakhstan and the zones in which Kazakhstan exercises its sovereign rights and jurisdiction, in accordance with its legislation and international treaties to which it is a party.;         (ii) "Czech Republic" means the territory of the Czech Republic in respect of which, in accordance with Czech law and in accordance with international law, the sovereign rights of the Czech Republic are exercised;".        2. Subparagraph (g) of paragraph 1 of Article 3 of the Convention should read as follows:       "(g) The term 'international carriage' means any carriage by a ship or aircraft operated by a resident of a Contracting State, except when the ship or aircraft is operated exclusively between locations in the other Contracting State;".

  Article 3

     Paragraph 1 of article 4 of the Convention should read as follows:       «1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that Contracting State, is liable to tax there on the basis of his place of residence, domicile, place of incorporation, place of effective management or any other criterion of a similar nature, and also includes a Contracting State and any administrative-territorial unit, or the local authority. However, this term does not include any person who is liable to tax in that Contracting State solely in respect of income from sources in that Contracting State or capital located therein.".

  Article 4

       1. Subparagraph (f) of paragraph 2 of Article 5 of the Convention should read as follows: "(f) Any place of extraction or exploration of natural resources.".        2. Subparagraph (a) of paragraph 3 of Article 5 of the Convention should read as follows: "(a) A construction site or a construction, installation or assembly facility or an observation activity related thereto, but only if such a site, facility or activity exists for a period exceeding twelve months;".       3. Paragraph 3 of Article 5 of the Convention should be supplemented with the following sentence:       "For the purposes of determining the time limits specified in this paragraph, an activity carried out by an enterprise associated with another enterprise in accordance with article 9 of the Convention is considered to be carried out by the enterprise with which it is associated if the activity meets the conditions:        a) is substantially similar to the activities carried out by the last mentioned enterprise, and b) is carried out within the same or related projects, with the exception of activities, carried out jointly.".         4. Subparagraph (e) of paragraph 4 of Article 5 of the Convention should read as follows: "(e) The operation of a permanent place of business solely for the purpose of carrying out any other preparatory or auxiliary activities for the enterprise;".        5. Paragraph 6 of article 5 of the Convention should be supplemented with the following sentence: "However, when the activity of such an agent is carried out entirely or almost entirely on behalf of such an enterprise, and conditions are created between such an enterprise and the agent in their commercial and financial relations that differ from those that can be established between independent enterprises, he is not considered an agent with an independent status within the meaning of this paragraph.".

  Article 5

     Paragraph 3 of Article 7 of the Convention should be supplemented with the following sentence:       "Similarly, the profits of a permanent establishment should not include amounts (other than compensation for expenses incurred) received by the permanent establishment from the head office of the enterprise or any of its other divisions in the form of royalties, fees and other similar payments for the use of patents or other rights, in the form of commissions for special services or management provided, or, with the exception of banking enterprises, in the form of income from debt claims in relation to a cash loan, provided to the head office of the enterprise or any other of its divisions.".

  Article 6

     Paragraph 3 of article 10 of the Convention should read as follows:       «3. The term "dividends", when used in this article, means income from shares or other rights that are not debt claims, participation in profits, as well as other income that is subject to the same taxation as income from shares in accordance with the laws of the State in which the company making the payments is resident.".

  Article 7

     1. Paragraph 3 of Article 11 of the Convention should read as follows: "3. Notwithstanding the provisions of paragraph 2 of this article, interest arising in a Contracting State and paid to a resident of the other Contracting State who is its beneficial owner shall be exempt from tax in the Contracting State in which the interest arises if it is paid:        a) The Government of the other Contracting State, an administrative-territorial subdivision or a local authority, the Central (National) Bank of the other Contracting State or a financial institution, wholly owned by the Government of the other Contracting State, if the purpose of establishing a financial institution is to support exports; or b) is associated with a loan or loan guaranteed by the Government of the other Contracting State, an administrative-territorial unit or local authority, the Central (National) Bank of the other Contracting State or a financial institution wholly owned by the Government of the other Contracting State, if the purpose of creating a financial institution is to support exports.".       2. Paragraph 4 of Article 11 of the Convention should be supplemented with the following sentence: "The term "interest" does not include any income that is considered as dividends in accordance with the provisions of paragraph 3 of Article 10 of this Convention.".

  Article 8

     Paragraph 2 of article 13 of the Convention should read as follows:       «2. Gains in value received by a resident of a Contracting State from the alienation of shares, interests or other rights in a company deriving more than 50 percent of its value from immovable property located in the other Contracting State may be taxed in that other Contracting State."

  Article 9

     The current provision of article 20 of the Convention shall be numbered by paragraph 1 of this article and article 20 of the Convention shall be supplemented by paragraph 2 as follows:       «2. In respect of grants, scholarships and other similar remuneration and remuneration from employment not specified in paragraph 1 of this article, the person referred to in paragraph 1 of this article, during such training, internship, shall be entitled to the same benefits, discounts or deductions in respect of taxes granted to residents of a Contracting State, in particular where it resides.".

  Article 10

     Paragraph 2 of article 21 of the Convention should read as follows:       «2. Notwithstanding the provisions of paragraph 1 of this article, if such income is derived by a resident of a Contracting State from sources in the other Contracting State, such income may be taxed in that other Contracting State.".

  Article 11

     Article 23 of the Convention should be worded as follows:

                            "Article 23 ELIMINATION OF DOUBLE TAXATION

1. In the case of a resident of Kazakhstan, double taxation is eliminated as follows: If a resident of Kazakhstan receives income or owns capital that, in accordance with the provisions of this Convention, may be taxed in the Czech Republic, Kazakhstan will allow: a) deduction from the income tax of such a resident of an amount equal to the income tax paid in the Czech Republic; b) deduction from the capital tax of such a resident of an amount equal to the capital tax paid in the Czech Republic.        In any case, such deduction should not exceed the amount of income or capital tax calculated prior to the deduction, depending on the circumstances, from income or capital that may be taxed in the Czech Republic.        2. In accordance with the provisions of the legislation of the Czech Republic on the avoidance of double taxation, in the case of a resident of the Czech Republic, double taxation is eliminated as follows: The Czech Republic, when calculating taxes on its residents, may include in the tax base from which such taxes are levied income or capital that, in accordance with the provisions of this Convention, may be taxed in the Republic of Kazakhstan, but will allow deduction from the amount of tax calculated from such a tax base, the amount of tax paid in Kazakhstan. Such deduction, however, may not exceed the amount of Czech tax calculated prior to the deduction of income or capital, which, in accordance with the provisions of this Convention, may be taxed in Kazakhstan.        3. If, under any provisions of the Convention, the income or capital earned by a resident of a Contracting State is exempt from taxation in that Contracting State, that Contracting State may nevertheless, in calculating the amount of tax on the remainder of such resident's income or capital, take into account the amount of the income or capital exempt from taxation."  

  Article 12

     Paragraph 1 of article 24 of the Convention should read as follows:       «1. Nationals of a Contracting State shall not be subject in the other Contracting State to any taxation or any related obligation other or more burdensome than taxation and related obligations to which nationals of the other Contracting State are or may be subject in the same circumstances, in particular with respect to residency. This provision, notwithstanding the provisions of article 1 of the Convention, also applies to persons who are not residents of one or both of the Contracting States.".       2. Paragraph 2 of article 24 of the Convention should read as follows: "2. Taxation of a permanent establishment that is an enterprise  A resident of a Contracting State has in the other Contracting State, or a permanent base which a resident of a Contracting State has in the other Contracting State, may not be less favourable in that other Contracting State than taxation on enterprises or residents of that other Contracting State engaged in similar activities. This provision should not be interpreted as binding.  A Contracting State shall provide residents of another State with  Of a Contracting State such personal tax benefits, discounts and deductions for tax purposes based on civil status or marital status as it grants to its residents.".

  Article 13

     Article 26 of the Convention should be worded as follows:                             "Article 26 EXCHANGE OF INFORMATION

     1. The competent authorities of the Contracting States shall exchange information necessary for the implementation of the provisions of this Convention.  The Convention or the administration or application of national legislation relating to taxes of any kind levied on behalf of the Contracting States or their administrative-territorial subdivisions or local authorities, to the extent that taxation is not contrary to this Convention. The exchange of information is not limited to articles 1 and 2 of this Convention.         2. Any information received by a Contracting State in accordance with paragraph 1 of this Article is considered confidential, as is information received in accordance with the national legislation of that Contracting State, and may only be disclosed to persons or authorities (including courts and administrative authorities) engaged in both assessment or collection, enforcement or prosecution, or consideration of appeals in respect of taxes referred to in paragraph 1 of this article, as well as supervision of all of the above. Such persons or authorities may use the information only for these purposes. They may disclose information during an open court hearing or when making court decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes in accordance with the laws of both Contracting States, and the competent authority of the requested Contracting State consents to such use.         3. The provisions of paragraphs 1 and 2 of this Article may not be interpreted as imposing on a Contracting State an obligation to: (a) take administrative measures contrary to the laws and administrative practices of that or the other Contracting State; (b) provide information that cannot be obtained under the laws or in the ordinary course of administration of that or the other Contracting State.;         c) to provide information that would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to government policy (ordre public).         4. If information is requested by one Contracting State in accordance with this Article, the other Contracting State shall take measures to collect the requested information, even if such information is not required by that other Contracting State for its own tax purposes.  The obligation contained in the previous sentence is subject to the limitations of paragraph 3 of this article, but such limitations cannot be interpreted as allowing a Contracting State to refuse to provide information solely because there is no intrinsic interest in such information.         5. The provisions of paragraph 3 of this article may not be interpreted as authorizing a Contracting State to refuse to provide information solely because the holder of the information is a bank, another financial institution, a nominee holder or a person acting as an agent or attorney, or because the information concerns a person vested with ownership rights."  

  Article 14

     It is understood for the purposes of the Convention that its provisions in no case prohibit a Contracting State from applying the provisions of its domestic legislation and measures against tax evasion or evasion described as such.

  Article 15

     Each Contracting State shall notify the other through diplomatic channels of the completion of the internal procedures for the entry into force of this Protocol. This Protocol, which is an integral part of the Convention, shall enter into force on the date of the last of these notifications and its provisions shall apply.:        (a) In respect of taxes withheld at the source of payment, taxes levied on income paid or credited on or after the first of January of the calendar year following the year of entry into force of this Protocol;         (b) In respect of other taxes, taxes levied for a taxable period beginning on or after the first of January of the calendar year following the year of entry into force of this Protocol; (c) In respect of article 13 of the Protocol, requests made on or after the date of entry into force of the Protocol.  

     In witness whereof, the undersigned, being duly authorized thereto, have signed this Protocol.

     Done in Astana on November 24, 2014, in two copies in the Kazakh, Czech, English and Russian languages, all texts being equally authentic. In case of a discrepancy, the English text is decisive.

     For the Republic of Kazakhstan For the Czech Republic

     RCPI's note!       The text of the Protocol in Czech and English is attached.

President    

Republic of Kazakhstan     

© 2012. RSE na PHB "Institute of Legislation and Legal Information of the Republic of Kazakhstan" of the Ministry of Justice of the Republic of Kazakhstan  

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