Latvia and Turkmenistan signed an Income Tax Treaty on 11 September 2012. This treaty came into force on 4 December 2012 and will be applicable from 1 January 2013.
The treaty generally follows the provisions of the OECD Model, but the definition of permanent establishment includes a building site or construction project including supervisory activities that continues for at least nine months. The business profits article contains restrictions on tax deductions for royalties paid between a permanent establishment and head office.
Under the treaty dividends are subject to a maximum withholding tax rate of 10%, and this is reduced to 5% where the recipient of the dividend has a shareholding of at least 25% in the company paying the dividend. Interest and royalties are subject to a maximum withholding tax of 10%.
