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TaxRobin
TaxRobin, Tax Consultant
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Experience:  International tax
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I am a UK resident and work in Algeria on a 3 week on

Resolved Question:

Hi,
I am a UK resident and work in Algeria on a 3 week on / off rotation.
I have a UK based Limited Company which I use to invoice a UK based agency for my services. The UK based agency gets payment from an International Super Major Company.
From my own UK based Ltd Co. income I pay myself a small salary and dividends to keep my UK income tax liability to zero.
However my own company is liable for corporation tax on profits.
The aforementioned International Super Major Company pays income tax and social security on my behalf at source in Algeria and I have a letter/certificate confirmation.
Can the tax paid in Algeria be used to offset my personal income tax or company corporation tax liability in the UK?
Any advice would be much appreciated or recommendation to a specialist in this field.
Submitted: 1 year ago.
Category: Tax
Expert:  TaxRobin replied 1 year ago.
Hello,There would be no tax offset for you personally on the taxes paid as you are not tax in the UK and Algeria.The corporation may be allowed relief form double taxation on the profits that are taxed in both countries when the treaty on double taxation between the UK and Algeria is entered into force.The treaty provision was signed in February 2015 but is not enforce yet. This will happen when both countries have completed their legislative procedures and exchanged diplomatic notes.The Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. When this relief will come into force is unclear but you should have your accountant check periodically for updates.
Customer: replied 1 year ago.
Relist: Other.
The persons experience and credentials are not of same standard as the person I was advised would answer "taxexpert"
Expert:  TaxRobin replied 1 year ago.
I am an expert in International tax situations.
It is your choice to request a second opinion.
Customer: replied 1 year ago.

Please accept my apology.

"There would be no tax offset for you personally on the taxes paid as you are not "tax" in the UK and Algeria."

I don't understand this statement, is the word "tax" supposed to be "taxed"?

Also would there be any possibility of backdating to Feb 2015 UK corporation tax reimbursements based on what is paid in Algeria. Is there any other way of reducing my UK company corporation tax liability?

Thanks.


Expert:  TaxRobin replied 1 year ago.
No apology is needed. You are more than welcome to request another. Your experience here is very important to all of us.I apologize for the typo, yes "tax" should have read "taxed".If the countries can activate the double tax treaty agreement, your corporation would be allowed to use the signed date (Feb 2015) and claim the relief. This would be handled as a credit for the corporation on the resident country filing. The residency of the company itself claiming the credit determines which country will allow for the credit from taxes paid to the other.The Algerian tax year runs form Jan to Dec so the calculations will need to be prorated to claim only the portions that over lap in the 2 different tax years (April to April in UK and Jan to Dec in Algeria).Any corporation tax paid in Algeria as a result of exercising that option will be admissible for credit against the United Kingdom corporation tax liability on the same income.
Customer: replied 1 year ago.

On my letter that states amount of tax paid in Algeria it states Algerian Income Tax (IRG), Employees Social Security and Employers Social Security. All amounts paid in Algerian Dinars

Is this admissable as offset against my company corporation tax liability? It would seem to me that the end client i.e. the Super Major Company is paying tax in Algeria as if I were an employee, where in fact I am getting payment from the UK based agency through my Ltd Co.

If this is a no go situation, is ther any other advice you can give to reduce my corporation tax liability.

Expert:  TaxRobin replied 1 year ago.
The actual corporation in Algeria is paying the employer's portion of the tax. That is the company that would claim a deduction (Or foreign credit if that same payor is taxed in the UK on the income form Algeria).One company could not pass the deduction to the other unless the amount was also invoiced and paid by the UK corporation.
Customer: replied 1 year ago.

Sorry, I don't understand the jargon.

Where do I stand with the tax situation?

Expert:  TaxRobin replied 1 year ago.
Sorry, did not mean to confuse your situation further than it already is.The tax is not deductible unless a UK company is paying it. Then it is used as a credit and not really a deduction.
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