This document summarizes an international tax presentation on Italy and Turkmenistan. It discusses: 1. How international taxation is regulated based on OECD recommendations and tax treaties. Italy follows OECD standards including tax treaties and transfer pricing regulations. 2. The relevant tax treaty between Italy and Turkmenistan is outdated and diverges significantly from OECD standards, with both advantages and disadvantages. 3. Key aspects of Italian domestic tax provisions including foreign tax credits and branch profit exemptions. 4. Recommendations to facilitate cross-border investments including negotiating a new tax treaty, adopting arbitration clauses and ruling procedures, and including self-adjusting clauses to update the treaty over time.

1. Italy and Turkmenistan:
International Tax Issues
Marco Greggi

2. Outline of the Presentation
1. Understanding International Taxation:
• How it is regulated, ways and means to make the most
of the cross border investments, in full Compliance of
the Law;
2. Dealing with National Law;
• Italian provisions applicable;
3. Accelerating Cross-border Investments and
Commerce:
• Policy recommendations, the special Ruling procedure
to improve the legal framework (Italy – Turkmenistan).
2

3. International Taxation
1. De facto standard inspired by OECD
Recommendations and Treaty Model;
2. As OECD Member, Italy has got a Treaty Policy
consistent with OECD standards, including:
A. The use of OECD Model convention on double
taxation;
B. The implementation of Transfer Pricing regulations
between Associated Enterprises;
C. The request of Exchange of information between Tax
Administration for fiscal purposes.
3

4. Treaties and Agreements
• The relevant Treaty for Turkmenistan is the one signed
with the Soviet Union (entry into force: 1990);
• Significantly divergent from the OECD standard;
• Advantages:
• No withholding taxes on royalties (art. 5), no taxation on
construction sites for 36 months (art. 6), advantageous definition
for preparatory activities (art. 4, (4) (e));
• Disadvantages:
• Less accuracy in legal terminology (art. 4 permanent
representation), huge discrepancies with the international “state of
the art”, outdated in many respects and entirely non compliant
with the latest International standards (including UN and OECD).
4

5. Italian Domestic Provisions
•Tax credit (art. 165 Income tax Act) for taxes paid
abroad:
• Minimizing risks of double taxation if conditions are
met;
•Branch profit exemption:
• No taxation in Italy on foreign branches
•High withholding taxes to outbound dividends if no
treaty is in force;
• Turkmenistan case (15%);
• Possibility to triangulate … in the respect of the law;
5

6. Facilitating Investments
•A roadmap for the Business sector:
1. New Treaty, making the most of the current
experience;
2. Adoption of arbitration clauses and Ruling Procedure;
3. Tailor-made provisions for qualified business sector as
to customize the implementation of the Treaty;
4. Self-adjusting clauses as to update the Treaty to
possible further changes in the international arena;
• See the Italy – Kazakhstan Tax Treaty and the adjustment
mechanism on taxation at source).
6

7. Thank You
Professor Marco Greggi
Department of Law
Corso Ercole I D’Este, 37
44100 Ferrara, Italy
marco.greggi@unife.it
7