The State Tax Service has published a consolidated version of its tax treaty with Bosnia and Herzegovina, reflecting changes under the MLI based on each country’s submitted reservations and notifications.
Azerbaijan’s State Tax Service (STS) has released the consolidated versions of its tax treaty with Bosnia and Herzegovina, reflecting the changes introduced by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
These consolidated texts have been prepared based on the reservations and notifications submitted to the Depositary by the respective countries.
Azerbaijan-Bosnia and Herzegovina Tax Treaty (2012)
Taxes covered
The Convention applies to all income and capital taxes in Azerbaijan and Bosnia and Herzegovina, including taxes on total income, capital, property gains, wages, and capital appreciation. It covers Azerbaijan’s personal income, corporate profit, property, and land taxes, and Bosnia and Herzegovina’s personal income, corporate profit, and property taxes. It also extends to any new taxes that are substantially similar, with both countries required to notify each other of significant changes in tax laws.
Withholding rates
- Dividends: Dividends may be taxed in both the source State and the recipient’s State, but withholding tax in the source State is limited to 10% if the recipient is the beneficial owner. Dividends connected with a permanent establishment or fixed base in the source State are taxed under general business rules.
- Interest: Interest may be taxed in both States, with a 10% maximum withholding tax in the source State for beneficial owners. Payments to governments, central banks, or wholly government-owned financial institutions are exempt. Interest linked to a permanent establishment or fixed base in the source State is taxed there, with adjustments for amounts exceeding market rates.
- Royalties: Royalties may be taxed in both States, with a 10% withholding tax limit for beneficial owners. This includes payments for intellectual property, industrial or scientific equipment, and know-how. Royalties connected with a permanent establishment or fixed base are taxed under general business rules.
The MLI applies to withholding taxes on payments to non-residents for events occurring on or after 1 January 2025, and to all other taxes levied by either Contracting State on taxable periods beginning on or after 1 July 2025.
