The double taxation agreement between the UK and Senegal that was signed on 26 February 2015 entered into force on 30 March 2016. In the UK the agreement is effective from any year of assessment beginning on or after 6 April 2016 for income tax or capital gains tax; and for corporation tax for any financial year beginning on or after 1 April 2016.
The agreement is effective in Senegal from 1 January 2017 for withholding taxes and from periods beginning on or after 1 January 2017 for other taxes.
It should be noted that the articles in respect of the mutual agreement procedure; the exchange of tax information and assistance in the collection of taxes are effective from 30 March 2016.
The agreement generally follows the provisions of the OECD Model. However it should be noted that a building site or construction or installation project constitutes a permanent establishment if it continues for at least six months.
A permanent establishment is also created by the provision of services in the other State through employees or other personnel engaged for the purpose if the activities continue on the same or a similar project for periods aggregating more than 183 days within any twelve month period beginning or ending in the relevant fiscal year.
The maximum withholding tax rate on dividends is 5% if the recipient company owns at least 25% of the shares in the company paying the dividend. If the beneficial owner of a dividend is a pension scheme the maximum withholding tax rate is 8%. In other case the maximum withholding tax is 10%.
In the case of royalties in relation to a copyright, patent, trademark, design or model, plan, secret formula or process or know-how concerning industrial, scientific or commercial experience the maximum withholding tax rate is 10%. In the case of payments for the use of, or the right to use, industrial, scientific or commercial equipment the withholding tax rate is 10% of the adjusted amount of the royalties. The adjusted amount for this purpose is 60% of the gross amount of the royalties.
