Approved by the Solution of SRNS of May 20, 2005 No. 173
Recommendations about application of the international treaties signed within EurAsEC, on avoidance of double taxation and prevention of evasion from the taxation (concerning taxes on the income (capital) and property) regarding confirmation of the tax residence and the amounts of the paid taxes in state members of EurAsEC
These Recommendations are developed for the purposes of application of provisions of international treaties - the agreements (conventions) signed within EurAsEC, on avoidance of double taxation and prevention of evasion from the taxation concerning taxes on the income (capital) and property regarding confirmation of the tax residence and the amounts of the paid taxes in state members of EurAsEC.
Agreements (convention) on avoidance of double taxation and prevention of tax avoidance concerning taxes on the income (capital) and property (further - the international agreements) are signed by the states for the purpose of exception of cases of the double taxation arising in case of application of national treatment of the taxation by two states to the same income of person with the permanent residence in one of the State Parties received by it from activities which framework went out of one state. Provisions of international treaties are applied in relation to the income and property of tax residents of the State Parties that found reflection in the article "Persons to Whom the Agreement Is Applied". The concept "the tax resident (person with the permanent residence)" (further - the tax resident) reveals in the article "Resident" which contain the concept of residence for the organizations and physical persons for the purpose of:
- determinations of the group of people to which regulations of the international treaty are applied;
- problem resolutions of double taxation which arose because of double residence (treats cases when owing to application of regulations of the legislation by the state person undertakes to pay tax in the amount applied to tax residents of this state in connection with certain conditions of its stay in this state);
- permissions of cases of double taxation which arose owing to the taxation of person in the country of the tax residence and in the country of source of emergence of the income (treats those cases when by the national legal system both states consider person as the tax resident and each state in this regard makes to it the tax claim following from this status).
Similar situations are excluded in case of application of the international treaty which limit the rights of the state to the taxation of the income and property of nonresidents established by the national legal system.
However the subject applying for application of provisions of the international treaty to it shall confirm the participation in the group of people to which its provisions extend, i.e. to provide the document on the tax residence in the state which is the agreement party.
Directly international agreements do not establish the procedure which needs to be executed for confirmation of the tax residence.
On the matter of the state, the signed international agreements, completely are based on normative instructions of national legal systems. It does not exclude possibility of approval (by signing of the protocol by competent authorities) the mechanism, single for two states, and samples of forms of confirmation of the tax residence. If competent authorities of the states do not establish general procedure, then after the introduction of agreements in force there is exchange of information about requirements imposed in each of the states for application of agreements.
The document confirming the tax residence is issued by tax authority or other body, authorized to issue confirmations for the purposes of application of agreements (further - competent authority), proceeding from the criteria accepted in the national legal system (for example, for the legal entity - place of registration, the place of the actual management; for physical person - stay in the state for at least 183 days, availability of the permanent dwelling, etc.).
As the document confirming the tax residence for the purposes of provision of preferences of agreements can be accepted:
- the document which form is established by the state where the foreign legal entity or physical person have the permanent residence;
- the document which form is established by the state which is source of the income or finding of property;
- the document of any form provided by the state in which the foreign legal entity or physical person have the permanent residence, containing the details which are unambiguously allowing to carry subject to tax residents of this state for the purposes of application of agreements;
- the document which form is approved by two states.
Irrespective of the fact which the form is used for the purposes of receipt of preferences, it shall be certified by the signature of the official and seal of competent authority, and also to contain provisions which unambiguously would testify to the rights of person who received it to application of agreements to it.
Availability in the document submitted to confirmation of the tax residence, such details as:
- full name of the legal entity (First name, middle initial, last name physical person);
- complete legal address (the address to which the physical person lives) in the state of the permanent location;
- identification taxpayer number appropriated to legal (physical) entity in the state of its permanent location;
- specifying on the fact that legal (physical) entity is person with the permanent location in this state for the purposes of application of agreements;
- the period for which the document is provided (in the absence of such information the document confirming the tax residence is applied for financial year in which it is issued), allows Tax Service to make the decision on application to the addressed person of preferences of agreements.
The registration certificate in the territory of foreign state, the statement from the trade register, the certificate of tax authority of statement on tax accounting as the taxpayer of foreign state and to that similar documents cannot be considered as the document confirming the tax residence.
The document confirming the tax residence is submitted in tax authority of foreign state together with the statement in writing. It can be represented both to, and after emergence of the obligation on the tax discharge on the income or property of the nonresident. Respectively, provision of preferences of the Agreement is made depending on the term of its representation (preliminary or subsequent release).
Preliminary release is performed when the document confirming the tax residence (in the original or in the form of the notarized copy), is provided to tax authority before the date of emergence of the obligation established by the legislation on entering of tax into the budget.
However the state which is source of the income or finding of property can establish other procedure for provision of preferences. For the purpose of assessment of nature of activities of the nonresident for extraction of the income in the territory of the state (the passive or vigorous activity leading to emergence of permanent mission) in some cases requirement for obligatory tax withholding, irrespective of availability of the document confirming the tax residence is imposed. By results of cameral check the tax returns to the tax agent or becomes engrossed in reading in repayment of obligations if the commercialization fact through permanent mission is determined.
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