07.28.06
The Seychelles-Thailand tax treaty – illustration of signature, ratification and application phases
The Seychelles-Thailand tax treaty was signed on April 26, 2001 (signature), brought into force on March 13, 2006 (ratification) and will be applied from January 1, 2007 (application).
In accordance with the treaty, dividends, interest and royalties paid by a company residing in one country to a company residing in another country may be taxed in either country. However, if the beneficial owner of the company is a resident of another state, the tax charged may not exceed 10% of the gross amount in the case of dividends, 15% in the case of interest or royalties (exception – interest received by a financial institution is taxed at 10%). The Seychelles-Thailand tax treaty has provisions for mutual agreement procedures, non-discrimination and exchange of tax information.
This example also illustrates how long it can take between signing the treaty and ratification. Almost 5 years were spent to get the treaty ratified and during all this period the treaty had no real effect notwithstanding many web sites informed us that the Seychelles had signed double tax treaty with Thailand. And only from January 1 next year it will be possible to benefit from this treaty.