The above mentioned protocol entered into force on the 03/11/2021 with certain provisions having effect on the 03/11/2021 and the rest having effect as from 01/01/2022.
The main changes to the previous Treaty of 2014 are in summary the following:
Preamble Article 1 - Effective date 01/01/2022
The preamble has been amended to reflect the intention of the Contracting States to further develop their economic cooperation in tax matters and to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance including treaty-shopping arrangements.
Business profits – Article 7 - Effective date 03/11/2021
A new para. 4 has been added to Article 7 of the Convention which provides that a Contracting State has no right to make adjustments to the profits that are attributable to a permanent establishment (PE) of an enterprise of one of the Contracting States after 6 years from the end of the taxable year in which the profits would have been attributable to the PE. In case of fraud, gross negligence or wilful default the above provision does not apply.
Associated enterprises – Article 9 - Effective date 03/11/2021
Para 2 of Article 9 has been replaced by a new para which introduces provisions for relief from double taxation that may arise from transactions between associated enterprises.
A new para 3 has been added, which provides that the right of adjustment of profits is limited to 6 years from the end of the taxable year in which the profits would have accrued to the enterprise. In case of fraud, gross negligence or wilful default, this provision would not apply.
Mutual Agreement Procedure – Article 26
It has been amended so that where a person considers that the actions of one or both of the Contracting States result or will result in taxation not in accordance with the provisions of the Treaty, that person may, irrespective of the remedies provided by the domestic law of those States, present its case to the competent authority of either Contracting State.
Entitlement to benefits – Article 28A
Article 28A “Entitlement to benefits” is introduced so that a benefit under this Treaty shall not be granted, in respect of an item of income or capital, if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes (Principal Purpose Test) of the arrangement or transaction that resulted directly or indirectly in that benefit.