[World Tax News] Austria Ministry Publishes a Decree Suspending Treaty With Russia and More

Editorial Team – [2024] 163 taxmann.com 405 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. Austria Ministry publishes a Decree suspending treaty with Russia

Austria’s Ministry of Finance has published the Decree on suspending the 2000 income and capital tax treaty with Russia. The following provisions are affected by the suspension:

Permanent establishment, including the associated protocol provision ( Art. 5 )
All distribution norms, including the associated protocol provisions ( Art. 6 to Art. 22 )
Equal treatment ( Article 24 )
Administrative assistance in the enforcement of taxes ( Art. 26.1 )
Limitation of benefits ( Art. 26.2 )
Protocol provision to Article 25

However, the following provisions are not affected by the suspension:

Personal scope of application, including the associated protocol provision (Article 1)
Taxes covered by the Agreement (Article 2)
General definitions, including the relevant protocol provision (Article 3)
Resident person, including the relevant protocol provision (Article 4)
Avoidance of double taxation (Article 23)
Mutual agreement procedure (Article 25)
Exchange of information, including the relevant protocol provision (Article 26)

Since the core provisions of the DTA are suspended, Austria is not prevented from taxing its relations with Russia without restriction in accordance with the provisions of Austrian national law.

Source: BMF Decree on Suspension of the double taxation agreement by Russia

2. Georgia introduces tax exemption for foreign enterprises registered in preferential tax countries

The Georgian Revenue Service has released Law No. 4197-XIVмс-Xмп, dated May 29, 2024, which amends the Tax Code of Georgia to introduce tax exemptions for the transfer of assets from foreign enterprises registered in countries with preferential tax regimes to Georgia. Key provisions of the law include:

(a) If the ownership of all assets (including shares) of a foreign enterprise registered in a country with preferential taxation is transferred to a Georgian enterprise before January 1, 2028:

- The income or benefit received by the foreign enterprise and its individual shareholders from this transaction, considered as income from a Georgian source under the Tax Code, is exempt from profit/income tax.
- Importing the assets/goods of the foreign enterprise into Georgia is exempt from import duty, with specific rules and conditions for this exemption to be defined by the Minister of Finance of Georgia.
- The Georgian enterprise is exempt from property tax on the received assets until January 1, 2030.

(b) Conditions for these exemptions include:

- The same natural person (or group of individuals) must own 100% of the shares in both the foreign and Georgian enterprises.
- The foreign enterprise must have owned the assets transferred to the Georgian enterprise as of the law’s enactment date.

This law was published on June 3, 2024, and took effect immediately upon publication.

Source: Law No. 4197-XIVмс-Xмп, dated May 29, 2024