The Double Taxation Relief (Taxes on Income) (Kuwait) Order 1999

PART II PROTOCOL AS TO THE INTERPRETATION AND APPLICATION IN THE CONTRACTING STATES OF THE AGREEMENT BETWEEN THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE STATE OF KUWAIT FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL SIGNED AT LONDON ON THE 23RD DAY OF FEBRUARY 1999

At the moment of signing the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, this day concluded between the United Kingdom and the State of Kuwait, the undersigned have agreed upon the following provisions which shall be an integral part of the Agreement:

(1) With respect to paragraph (2) of Article 4:

• It is understood that:

  (a)

  an institution is a resident of a Contracting State if it was created by the Government of that State, a political sub-division or local authority thereof, and it is recognised as a Government institution by mutual agreement of the competent authorities of the Contracting States;

  (b)

  the Kuwait Investment Authority has been recognised as a Government institution for the purposes of sub-paragraph (a);

  (c)

  the Kuwait Investment Office is the London branch of the Kuwait Investment Authority acting as agent for the Government of the State of Kuwait.

(2) With respect to paragraphs (1) and (2) of Article 7:

It is understood that where an enterprise of a Contracting State sells goods or merchandise or carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall be determined only on the basis of the remuneration which is attributable to the actual activity of the permanent establishment for such sales or business. In particular, in the case of contracts for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, when the enterprise has a permanent establishment, the profits of such permanent establishment shall be determined only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the State where the permanent establishment is situated. The profits related to that part of the contract which is carried out by the head office of the enterprise shall be taxable only in the State of which the enterprise is a resident.

(3) With respect to paragraph (6) of Article 7:

• It is understood that if the information available to the competent authority of a Contracting State is inadequate to determine the profits to be attributed to the permanent establishment of an enterprise, nothing in that Article shall affect the application of any law of that State relating to the determination of the tax liability of a person by the making of an estimate by the competent authority, provided that the law shall be applied, so far as the information available to the competent authority permits, in accordance with the principles of Article 7.

(4) With respect to Articles 10(6), 11(5), 12(7) and 22(4):

• In the event that a resident of a Contracting State is denied relief from taxation in the other Contracting State by reason of one of those provisions, the competent authority of that other Contracting State shall provide advance notification of, and explain the reasons for, this to the competent authority of the first-mentioned Contracting State.

(5) With respect to Article 26:

• It is understood that:

  (a)

  the provisions of that Article will not be fully implemented by the State of Kuwait until the State of Kuwait harmonises the tax regimes applicable to enterprises which are carrying on activities in Kuwait;

  (b)

  nothing in that Article imposes a legal obligation on a Contracting State to extend to the residents of the other Contracting State, the benefit of any treatment, preference or privilege which may be accorded to any other State or its residents by virtue of the formation of a customs union, economic union, a free trade area or by virtue of any regional or sub-regional arrangement relating wholly or mainly to taxation, to which the first-mentioned State may be a party.