Following over a year of discussions, Ethiopia and the Netherlands have signed a double taxation agreement (DTA) with the aim of boosting bilateral economic cooperation, trade and investment.
The Ethiopian Finance and Economic Development State Minister, Alemayehu Gujo, and Netherlands ambassador to Ethiopia, Hans Blankenberg, signed the agreement in Addis Ababa on August 10, 2012.
The DTA exempts individuals and businesses in the two countries from paying taxes in both countries, and is intended to enable both nations to benefit from increased capital flows, exchange of technology, and goods and services trade.
Said to be based on the Organization for Economic Cooperation and Development Model Convention, the agreement also includes provision for the exchange of tax information between the two countries, and has an arbitration clause for the resolution of disputes.
In addition, it is reported that the withholding tax payable on interest and royalties paid from one country to the other has been fixed at 5%, as has the withholding tax payable on dividends where a shareholder from one country holds more than 10% of a company in the other.
Alemayehu said the agreement would take the already close relations between the two countries to a higher level, while Blankenberg added that it would help to enhance their relationship by providing Dutch investors in Ethiopia with certainty over the tax treatment of their investments, and expressed his hope that the DTA would boost the revenues Ethiopia earns from trade and investment with the Netherlands..
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