• Panama - United Kingdom
    Provisions of Tax Treaty Come Into Effect

    21-01-2014

    The provisions of the Income Tax Treaty between Panama and the United Kingdom came into effect on 1 January 2014.

    In accordance with the treaty, the following withholding taxes will apply:

    • Dividends:
      • 0% if the beneficial owner is a company, the capital of which is wholly or partly divided into shares and holds directly at least 15% of the capital of the company paying the dividends, provided that:
        1. the shares of the company receiving the dividends are regularly traded on a recognized stock exchange; or
        2. at least 50% of the shares of the company receiving the dividends are owned directly or indirectly by one or more individuals who are residents of either Contracting State or by one or more companies the shares of which are regularly traded on a recognized stock exchange, but only if the last-mentioned companies:
          • are residents of either Contracting State; or
          • would be entitled to benefits which are similar to or more favourable than the benefits provided by this paragraph pursuant to a comprehensive arrangement for the avoidance of double taxation between their state of residence and the Contracting State from which the benefits of this paragraph are claimed or pursuant to a multilateral agreement to which their state of residence and the Contracting State from which the benefits of this paragraph are claimed, are a party; or
        3. the company receiving the dividends is engaged in the active conduct of a trade or business in the Contracting State of which it is a resident (other than the activities of making or managing investments for the resident�s own account, unless these activities are banking or insurance carried on by a bank or an insurance company);
      • 0% if the beneficial owner is a pension scheme.
      • 15% in all other cases.

    • Interest:
      • 0% if the interest is paid in relation with the sale on credit of merchandise or equipment to an enterprise of a Contracting State.
      • 0% if the beneficial owner of the interest is a pension scheme.
      • 5% if at least one of the following conditions is met:
        1. the interest is beneficially owned by:
          1. an individual;
          2. a company whose principal class of shares is regularly traded on a recognized stock exchange;
          3. a financial institution which is unrelated to and dealing wholly independently with the payer; or
          4. a company other than a company mentioned under sub-paragraphs (ii) or (iii) provided that the competent authority of the Contracting State which has to grant the benefits determines that it was not the main purpose or one of the main purposes of any person concerned with the establishment, acquisition or maintenance of that company to secure the benefits of this Article;
        2. the interest is paid:
          1. by a Contracting State, a political subdivision or local authority thereof;
          2. by a bank in the ordinary course of its banking business; or
          3. on a quoted Eurobond.

    • Royalties: 5%
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