UK- Ethiopia tax agreement
A new Double Taxation convention between the UK and the Federal Democratic Republic of Ethiopia was signed in London on 9 June 2011.
The new Convention generally follows the model approach set out in the OECD’s Model Double Taxation Convention. The agreement seeks to avoid double taxation in relation to income tax, corporation tax and capital gains tax in the UK. In Ethiopia the Convention will apply to the tax on income and profit imposed by the Income Tax Proclamation and the tax on income from mining, petroleum and agricultural activities imposed by respective proclamations.
Important features of the Convention include low withholding rates for dividends, interest and royalties, a “matching credit” provision for tax given up under Ethiopia’s investment incentive legislation and the latest OECD Model provision on exchange of information.
The new Convention will take force once both countries have finalised their respective legislative procedures.