Israel signs double taxation treaty with Moldova

Israel and Moldova signed an agreement for the prevention of double taxation. The agreement will come into force in 2007
 
An announcement issued by the Finance Ministry after the signing ceremony, quoted
Minister of Finance Abraham Hirchson, saying that, “The new taxation treaty was signed as part of the extension Israel’s tax charter network, and the removal of tax barriers that harm international trade and investment in Israel.”
 
The Israeli delegation was headed by Adv. Talia Dolan – Gadish the legal advisor of
the state revenue division.
 
The new treaty is based on the OECD model. The OECD Model Convention on Income and on Capital (MTC) serves as a model used by countries when negotiating bilateral tax agreements. These agreements are entered into by countries to clarify the situation when a taxpayer might find himself subject to taxation in more than one country.
 
Tax on royalties and interest payments in the country of origin will be deducted at a rate of 5%, and 5-10% on income from dividends.
 
Capital gains on assets will be exempted from tax in the country of origin.
 
The country of origin will reserve the right to charge taxes on property, or shares in a company, 50% of whose value is attributed to property holdings.
 
A company carrying out large scale projects such as a building, assembly, or installation project in another country will only be liable for tax on the revenue from the project if it continues for more than 12 months.
 
Revenue from the provision of services in another country will be liable for tax if the services continue for longer than six months.
 
The agreement covers also issues concerning the exchange of information by the Contracting States and non-discrimination.