Double Taxation Agreement

• Author: Duke Pollard
• Profession: Sitting senior judge of the Caribbean Court of Justice (CCJ), the highest appellate municipal court of the Caribbean Community (CARICOM)
• Pages: 301-316

The Avoidance of Double Taxation and the Prevention of Fiscal Evasion 301

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THE AVOIDANCE OF DOUBLE TAXATION

AND THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME,

PROFITS OR GAINS AND CAPITAL GAINS

AND FOR THE ENCOURAGEMENT OF

REGIONAL TRADE AND INVESTMENT

Paragraph 1 of Article 72 of the Revised Treaty of Chaguaramas requires Member

States of the Caribbean Community to conclude among themselves an agreement for

the avoidance of double taxation in order to facilitate the free movement of capital in

the Community. The concern about the free movement of capital in the Community is

informed by the establishment of a single economic space through the revision of the

Treaty of Chaguaramas. Establishment of a CARICOM Single Market and Economy

requires, as an axiomatic corollary, the removal of all constraints on the free movement

of the factors of production, for example, capital, labour, technology and management

expertise.

Since, however, the Community is an association of sovereign states, despite its

misleading nomenclature, the single economic space is being superimposed on discrete

autonomous political and economic entities by way of convergent national legislation

to implement commitments assumed at the international plane. Consequently, the

Agreement under consideration will have to be enacted into domestic law in order to

confer on persons entitled, the benefits under the Agreement.

The basic principle expressed in the Agreement is that “irrespective of the nationality

or the State of residence of a person, income of whatever nature accruing to or derived

by such person shall be taxable only by the Member State in which the income arises,

except for the cases specified in this Agreement”.

Pursuant to the principle set out above the Agreement provides, inter alia, that:

(a) income from immoveable property shall be taxable only in the Member

State in which such property is located;

(b) except as otherwise provided, gains derived from the alienation of real

estate situated in a Member State shall be taxed only in that State;

(c) profits resulting from business activities shall be taxable only by the

Member State wherein the business activities are undertaken;

302 THE CARICOM SYSTEM

(d) profits derived by an enterprise of a Member State from the operation of

ships or aircraft in international traffic shall be taxable only in that Member

State;

(e) dividends paid by a company resident in a Member State to a resident of

another Member State shall be taxed only in the first-mentioned Member

State;

(f) interest arising in a Member State and paid to a resident of another

Member State shall be taxed only by the first mentioned Member State;

(g) royalties arising in a Member State and paid to a resident of another

Member State shall be taxed only in the first-mentioned Member State;

(h) management fees arising in a Member State and paid to a resident of

another Member State shall be taxed only in the first mentioned Member

State;

(i) income derived by an individual, who is a resident of a Member State

engaged in rendering professional services of an independent character

shall be taxable only by the Member State wherein such services are

rendered;

(j) pensions, annuities, alimony and other periodic payments of a similar

character paid by a resident of a Member State to an individual resident

of another Member State shall be taxed only by the State from which the

payment of such income is liable to be made.

The Agreement also provides for national treatment to other nationals of Member

States.

AGREEMENT AMONG THE GOVERNMENTS

OF THE MEMBER STATES OF THE CARIBBEAN

COMMUNITY FOR THE AVOIDANCE OF

DOUBLE TAXATION AND THE PREVENTION OF

FISCAL EVASION WITH RESPECT TO TAXES ON

INCOME, PROFITS OR GAINS AND CAPITAL GAINS

AND FOR THE ENCOURAGEMENT OF

REGIONAL TRADE AND INVESTMENT

The Governments of the Member States of the Caribbean Community desiring to

conclude an Agreement for the avoidance of double taxation and the prevention of

fiscal evasion with respect to taxes on income, profits or gains and capital gains and for

the encouragement of Regional Trade and Investment:

Have agreed as follows: