Royalty, interest withholding tax rates drop under Ireland-Chile tax treaty

Ireland’s government today announced that withholding tax rates for interest and royalties will drop under the Ireland-Chile tax treaty according to the terms of a “most favored nation” clause.

The Irish government said the Ireland-Chile tax treaty specifies that withholding tax on interest income and royalty income would be revised in the event that more favorable terms are agreed to by Chile with another OECD country.

Chile has agreed such terms with Japan, the government said, so those terms are now to apply to the Ireland-Chile tax treaty with effect from January 1, 2017.

Withholding tax rate on interest payments is thus reduced from 15 percent or 5 percent to 4 percent in certain circumstances and withholding tax on royalty payments for the use of, or the right to use, any industrial, commercial or scientific equipment is reduced from 5 percent to 2 percent, the government said.