Explanatory note

Under the Convention with Tunisia scheduled to this Order certain trading profits not arising through a permanent establishment are to be taxed only in the country of the taxpayer's residence. Profits attributable to a permanent establishment may be taxed in the country of the taxpayer's residence (Articles 5 and 7). Shipping and air transport profits are to be taxed only in the country in which the place of effective management of the enterprise is situated (Article 8).

The earnings of temporary business visitors are, subject to certain conditions, to be taxed only in the country of the taxpayer's residence (Articles 14 and 15).

Income derived by public entertainers from their personal activities may normally be taxed in the country in which those activities are exercised (Article 17). Pensions are normally to be taxed only in the country of the taxpayer's residence (Article 18). Remuneration for government service is normally to be taxed by the paying government only (Article 19). Some payments made to visiting students and business apprentices are to be exempt from tax in the country visited (Article 20).

Income from immovable property (Article 6) and capital gains (Article 13) arising from the disposal of such property may be taxed in the country in which the property is situated. Capital gains arising from the disposal of movable property are normally to be taxed only in the country of the taxpayer's residence but may also be taxed in the other country if they arise from the disposal of assets of a permanent establishment or a fixed base which the taxpayer has in the other country (Article 13).

The rate of tax in the country of source on dividends flowing to the other country is normally not to exceed 12 per cent where the dividend is paid to a company which controls at least 25 per cent of the voting power in the paying company, and is not to exceed 20 per cent in all other cases (Article 10). Tax on dividends paid by a resident of one country in respect of profits attributable to a branch in the other country shall not exceed 12 per cent of the attributable profits in the other country (Article 10).

The maximum rate of tax to be imposed by the source country upon interest paid to a resident of the other country is, in general, 12 per cent. However, it is not to exceed 10 per cent where the interest is derived by a bank or other financial institution (Article 11).

The rate of tax in the source country on royalties flowing to the other country is in general not to exceed 15 per cent (Article 12).

Where income continues to be taxable in both countries relief from double taxation is to be given by the country of the taxpayer's residence. The credit to be given in the United Kingdom for tax payable in Tunisia includes credit for tax spared under certain provisions of Tunisian law (Article 22).

There are provisions for consultation and the exchange of information between the competent authorities of the two countries (Articles 24 and 25) and for the safeguarding of nationals and enterprises of one country against discriminatory taxation in the other (Article 23).

The Convention enters into force 30 days after the exchange of instruments of ratification and will have effect in the United Kingdom from April in the following calendar year (Article 27).