U.S., Kazakhstan Competent Authority agreement on fiscally transparent entities

U.S., Kazakhstan Competent Authority agreement

Announcement 2015-4—which appears in the Internal Revenue Bulletin 2015-5 (dated February 2, 2015)—provides text of the Competent Authority agreement reached between the United States and Kazakhstan concerning fiscally transparent entities.

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Read the IRS announcement and the Competent Authority agreement as it appears in IRB 2015-5 [PDF 1.38 MB].

The Competent Authorities agreed that in applying provisions of the United States-Kazakhstan income tax treaty, income from sources within one of the Contracting States received by an entity, wherever organized, that is treated as fiscally transparent under the laws of either Contracting State will be treated as income derived by a resident of the other Contracting State to the extent that such income is subject to tax as the income of a resident of the other Contracting State.

As an example, Announcement 2015-4 explains that if a resident of the United States is a member of a limited liability company (LLC) that is treated for U.S. federal tax purposes as a partnership, the resident of the United States would be afforded benefits of the tax treaty on the income that the resident derives from Kazakhstan through the LLC to the extent of the resident’s share of that income. Similar rules would apply to a resident of the United States that is a partner of a partnership, a shareholder of a subchapter S corporation, an owner of an LLC that is disregarded as an entity separate from its owner, or an owner of a grantor trust.

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