On 27 June 2016 the UK published the text of the double tax agreement with Turkmenistan. The agreement was signed on 10 June 2016 and has not yet entered into force. The following aspects of the treaty should be noted:

Permanent establishment

The definition of a permanent establishment includes a building site or construction or installation project if it lasts for more than twelve months. There is no provision for a permanent establishment to be created by performance of services in the other contracting state.

Withholding tax

The tax withheld in the source state on dividends is limited to 5% where the recipient company is the beneficial owner (directly or indirectly) of at least 25% of the capital in the company paying the dividend; and limited to 15% in all other cases.

The withholding tax on interest is limited to 10%, with some exemptions; and the withholding tax on royalties is also limited to 10%.

Mutual agreement procedure

The Article on the mutual agreement procedure does not include any provision for arbitration if the competent authorities cannot reach agreement on an issue.

Entry into force

The agreement enters into force when both countries have ratified the agreement and notified the other of the completion of the ratification procedures.

The agreement will take effect in Turkmenistan for all taxes including withholding tax from 1 January following the date of entry into force.

In the UK the agreement takes effect for withholding taxes from 1 January following entry into force; for corporation tax from 1 April following the date of entry into force and for income tax and capital gains tax from 6 April following entry into force.