The agreement between Taiwan and the UK for the avoidance of double taxation for their nationals living in each other's country will come into force early next year, according to Taipei's representative in the UK.
Speaking to a group of Tai-wanese businesspeople gathered in London on Friday night at a dinner to celebrate the Mid-autumn Festival, Tien Hung-mao (田弘茂) said that the Cabinet has already ratified the agreement and that it will come into force on Jan. 1.
On the British side, the legislative procedure in the Parliament has not yet been completed, but the agreement is expected to be given the force of law by next April, Tien said.
Speaking about the agreement, Gerry Cook, senior policy adviser of the Inland Revenue, pointed out that the agreement will provide clear rules for determining the territory of residence for both individuals and companies, so that double taxation can be avoided.
"There is a mechanism in the agreement that will allow any dispute about double taxation to be resolved," he said.
According to the agreement, business profits are taxable only in the territory in which an enterprise is resident, unless the enterprise carries a business through a permanent establishment in the other territory, Cook said.
Other income in the form of dividends, interest or royalties paid by a company to a resident in the other territory may be taxed by both, but the rate must not exceed 10 percent, he said.
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