United nation model on double taxation
CHAPTER 1
SCOPE OF THE CONVENTION
Article 1
PERSONAL SCOPE
This Convention shall apply to persons who are residents of one or both
the Contracting States.
Article 2
TAX COVERED
1. This Convention shall apply to taxes on income [and on
capital] imposed on behalf of a Contracting State or of its
political sub divisions or local authorities, irrespective
of the manner in which they are levied.
2. There shall be regarded as taxes on income [and on
capital] all taxes imposed on total income, [on total
capital,] or on elements of income [or of capital],
including taxes on gains from the alienation of movable or
immovable property, taxes on the total amounts of wages or
salaries paid by enterprises, as well as taxes on capital
appreciation.
3. The existing taxes to which Convention shall apply are in
particular:
a) (in State
A):___________________
b) (in State
B):___________________
4. The Convention shall apply
also to any identical or substantially similar taxes which
are imposed after the date of signature of the Convention in
addition to, or in place of, the existing taxes. At the end
of each year, the competent authorities of the Contracting
States shall notify each other changes which have been made
in their respective taxation laws.
CHAPTER II
DEFINITIONS
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context
otherwise requires:
a) the term “person” includes
and individual, a company and any other body of persons;
b) the term “company” means any
body corporate or any entry which is treated as a body
corporate for tax purposes;
c) the terms “enterprise of a
Contracting State” and “enterprise of the other Contracting
State” mean respectively an enterprise carried on by a
resident of a Contracting State and an enterprise carried
or by a resident of the other Contracting State;
d) The term “international
traffic” means any transport by a ship or aircraft operated
by an enterprise which has its place of effective management
in a Contracting State, except when the ship or aircraft is
operated solely between places in the other Contracting
State;
e) The term “competent
authority” means
i) (in State A):
___________________
ii) (in State B):
___________________
As regards the application of
the Convention by a Contracting State, any term not defined
therein shall, unless the context otherwise requires, have
the meaning which it has under the law of that State
concerning the taxes to which the Convention applies.
Article 4
RESIDENT
1. For the purposes this Convention, the term “resident of a
Contracting State” means any person who, under the laws of
that State, is liable to tax by reason of his domicile,
residence, place of management or any other criterion of a
similar nature.
2. Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, then
his status shall be determined as follows:-
a) He shall be deemed to be a resident of the State in which
he has a permanent home available to him; if he has a
permanent home available to him in both States, he shall be
deemed to be a resident of the State with which the personal
and economic relations are closer (center of vital
interests);
b) If the State in which he has his center of vital
interests cannot be determined, or if he has not a permanent
home available to him in either State, he shall be deemed to
be a resident of the State in which he has a habitual abode;
c) If he has a habitual abode in both States or in neither
of them, he shall be deemed to be a resident of the State of
which he is a national;
d) If he is a national of both States or of neither of them,
the competent authorities of the Contracting States shall
settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person
other than an individual is a resident of both Contracting
States, then it shall be deemed to be a resident of the
State in which its place of effective management is
situated.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention, the term “permanent
establishment” means a fixed place of business through which
the business of an enterprise is wholly or partly carried
on.
2. The term “permanent establishment” includes especially:
a) a place of management’
b) a branch;
c) an office;
d) a factory;
e) a workshop; and
f) a mine, an oil or gas well,
a quarry or any other place of extraction of natural
resources.
3. The term “permanent
establishment” likewise encompasses:
a) A building site, a
construction, assembly or installation project or
supervisory activities in connection therewith, but only
where such site, project or activities continue for a period
of more than six months.
b) The furnishing of services,
including consultancy services, by an enterprise through
employees or other personnel engaged by the enterprise for
such purpose, but only where activities of that nature
continue (for the same or a connected project) within the
country for a period or periods aggregating more than six
months within any 12-moths period.
4. Notwithstanding the
preceding provisions of the Article, the term “permanent
establishment” shall be deemed not to include:
a) The use of facilities solely
for the purpose of storage or display of goods or
merchandise belonging to the enterprise;
b) The maintenance of a stock
of goods or merchandise belonging to the enterprise solely
for the purpose of storage or display;
c) The maintenance of a stock
of goods or merchandise belonging to the enterprise solely
for the purpose of processing by another enterprise;
d) The maintenance of a fixed
place of business solely for the purpose of purchasing goods
or merchandise or the collecting information, for the
enterprise;
e) The maintenance of a fixed
place of business solely for the purpose of carrying on, for
the enterprise, any other activity of a preparatory or
auxiliary character.
5. Notwithstanding the
provisions of paragraphs 1 and 2, where a person –other than
an agent of an independent status to whom paragraph 7
applies- is acting in a Contracting State on behalf on an
enterprise of the other Contracting State, that enterprise
shall be deemed to have a permanent establishment in the
first-mentioned Contracting State in respect of any
activities, which that person undertakes for the enterprise,
if such a person:
a) Has a habitually exercises
in that State an authority to conclude contracts in the name
of the enterprise, unless the activities of such person are
limited to those mentioned in paragraph 4 which, if
exercised through a fixed place of business, would not make
this fixed place of business a permanent establishment under
the provisions of that paragraph; or
b) Has no such authority, but
habitually maintains in the first-mentioned State a stock of
goods or merchandise form which he regularly delivers goods
or merchandise on behalf of the enterprise.
6. Notwithstanding the
preceding provisions of this article, an insurance
enterprise of a Contracting State shall, except in regard to
re-insurance, be deemed to have a permanent establishment in
the other Contracting State if it collects premiums in the
territory of that other State or insures risks situated
therein through a person other than an agent of an
independent status to whom paragraph 7 applies.
7. An enterprise of a Contracting State shall not be deemed
to have a permanent establishment in the other Contracting
State merely because it carries on business in that other
State through a broker, general commission agent or any
other agent of an independent status, provided that such
persons are acting in the ordinary course of their business.
However, when the activities of such an agent are devoted
wholly or almost wholly on behalf of that enterprise, he
will not be considered an agent of an independent status
within the meaning of this paragraph.
8. The fact that a company which is a resident of a
Contracting State controls or is controlled by a company
which is a resident of the other Contracting State, or which
carries on business in that other State (whether through a
permanent establishment or otherwise), shall not itself
constitute either company a permanent establishment of the
other.
CHAPTER III
TAXATION OF INCOME
Article 6
INCOME FROM IMMOVABLE PROPERTY
1.Income derived by a resident of a Contracting State from
immovable property (including income from agriculture or
forestry) situated in the other Contracting State may be
taxed in that other State.
2.The term “immovable property”
shall have the meaning which it has under the law of the
Contracting State in which the property in question is
situated. The term shall in any case include property
accessory to immovable property, livestock and equipment
used in agriculture and forestry, rights to which the
provisions of general law respecting landed property apply,
usufruct of immovable property and right to variable or
fixed payments are consideration for the working of, or the
right to work, mineral deposits, source and other natural
resources, ships, boats and aircraft shall not be regarded
as immovable property.
3.The provisions of paragraph 1 shall also apply to income
derived fro the direct use, letting, or use of any other
form of immovable property.
4.The provisions of paragraphs 1 and 3 shall also apply to
the income from immovable property of an enterprise and to
income from immovable property used for the performance of
independent personal services.
Article 7
BUSINESS PROFITS
1.The profits of an enterprise of a Contracting State shall
be taxable only in that State unless the enterprise carries
on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise
carries on business as aforesaid, the profits of the
enterprise may be taxed in the other State but only so much
of them as is attributable to (a) that permanent
establishment; (b) sales in that other State of goods or
merchandise of the same or similar kind as those sold
through that permanent establishment; or (c) other business
activities carried on in that other State of the same or
similar kind as those effected through the permanent
establishment.
2.Subject to the provisions of paragraph 3, where an
enterprise of a Contracting State carries on business in the
other Contracting State through a permanent establishment
situated therein, there shall in each Contracting State be
attributed to that permanent establishment to profit which
it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a
permanent establishment.
3.In determination of the profit of a permanent
establishment, there shall be allowed as deductions expenses
which are incurred for the purposes of the permanent
establishment, including executive general administrative
expenses so incurred, where in the State in which the
permanent establishment is situated or elsewhere. However,
no such deduction shall be allowed in respect of amounts, if
any, paid (otherwise than towards reimbursement of actual
expenses) by the permanent establishment to the head office
of the enterprise or any of its other offices, by way of
royalties, fees or other similar payments in return from the
use of patent or other rights, or by way of commission, for
specific services performed or for management, or except in
the case of a banking enterprise, by way of interest on
moneys lent to the permanent establishment. Likewise, no
account shall be taken, in the determination of the profits
of a permanent establishment, or amounts charged (otherwise
than towards reimbursement of actual expenses), by the
permanent establishment to the head office of the enterprise
or any of its other offices, by way of royalties, fees or
other similar payments in return for the use of patents or
other rights, or by way of commission for specific services
performed or for management, or, except in the case of a
banking enterprise by way of interest on money lend to the
head office of the enterprise or any of its other offices.
4.Insofar as it has been customary in a Contracting State to
determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total
profits of the enterprise to its various parts, nothing in
paragraph 2 shall preclude that Contracting State from
determining the profits to be taxed by such an apportionment
as may be customary, the method of apportionment adopted
shall, however, be such that the result shall be in
accordance with the principles contained in this article.
5.For the purposes of the preceding paragraphs, the profits
to be attributed to the permanent establishment shall be
determined by the same method year by year unless there is
good and sufficient reason to the contrary.
6.Where profits include items of income which are dealt with
separately in other Articles of this Convention, then the
provisions of those Articles shall not be affected by the
provisions of this Article.
(NOTE: the question of whether profits should be attributed
to a permanent establishment by reason of the mere purchase
by that permanent establishment of goods and merchandise for
the enterprise was not resolved. It should therefore be
settled in bilateral negotiations.
Article 8
SHIPPING, INLAND WATERWAYS TRANSPORT AND AIR TRANSPORT
Article 8A (alternative A)
1.Profits from the operation of ships or aircraft in
international traffic shall be taxable only in the
Contracting State in which the place of effective management
of the enterprise is situated.
2.Profits from the operation of boats engaged in inland
waterways transport shall be taxable only in the Contracting
State in which the place of effective management of the
enterprise is situated.
3.If the place of effective management of a shipping
enterprise or of an inland waterways transport enterprise is
abroad a ship or boat, then it shall be deemed to be
situated in the Contracting State in which the home harbour
of the ship or boat is situated, or, if there is no such
home harbour, in the Contracting State of which the operator
of the ship or boat is a resident.
4.The provisions of paragraph 1 shall also apply to profits
from the participation in a pool, a joint business or an
international operating agency.
Article 8B (alternative B)
1.Profits from the operation of aircraft in international
traffic shall be taxable only in the Contracting State in
which the place of effective management of the enterprise is
situated.
2.Profits from the operation of ships in international
traffic shall be taxable only in the Contracting State in
which the place of effective management of the enterprise is
situated unless the shipping activities arising from such
operation in the other Contracting State are more than
casual. If such activities are more than casual, such
profits may be taxed in that other State. The profits to be
taxed in that other State shall be determined on the basis
of appropriate allocation of the over all net profits
derived by the enterprise from its shipping operations. The
tax computed in accordance with such allocation shall then
be reduced by ____percent. (The percentage is to be
established through bilateral negotiations).
3.Profits from the operation of boats engaged in inland
waterways transport shall be taxable only in the Contracting
State in which the place of effective management of the
enterprise is situated.
4.If the pace of effective management of a shipping
enterprise or of an inland waterways transport enterprise is
abroad a ship or boat, then it shall be deemed to be
situated in the Contracting State in which the home harbour
of the ship or boat is situated, or, if there is no such
home harbour, in the Contracting State of which the operator
of the ship or boat is a resident.
5.The provisions of paragraphs 1 and 2 shall also apply to
profits from the participation in a pool, a joint business
or an international operating agency.
Article 9
ASSOCIATED ENTERPRISES
1. Where
a) An enterprise of a
Contracting State participate directly or indirectly in the
management, control or capital of an enterprise of the other
Contracting State, or
b) The same persons participate directly or indirectly in
the management, control or capital of an enterprise of a
Contracting State and enterprise of the other Contracting
State, and in either case conditions are made or imposed
between the two enterprises in their commercial or financial
relations which differ from those which would be made
between independent enterprises, then any profits which
would, but for those conditions, have not so accrued, may be
included in the profits of that enterprise and taxed
accordingly.
2.Where a Contracting State
includes in the profits of an enterprise of that State-and
taxes accordingly-profits on which an enterprise of the
other Contracting State has been charged to tax in that
other State and the profits so included are profits which
would have accrued to the enterprise of the first-mentioned
State if the conditions made between the two enterprises had
been those whose which would have been made between
independent enterprises, then that other State shall make an
appropriate adjustment to the amount of the tax charged
therein on those profits. In determining such adjustment,
due regard shall be had to the other provisions of the
Convention and the competent authorities of the Contracting
State shall, if necessary, consult each other.
Article 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a
Contracting State to a resident of the other Contracting
State may be taxed in that other State.
2. However, such dividends may also be taxed in the
Contracting State of which the Company paying the dividends
is a resident and according to the laws of that State, but
if the recipient is the beneficial owner of the dividends
the tax so charged shall not exceed:
a) ___percent (the percentage
is to be established through bilateral negotiations) of the
gross amount of the dividends if the beneficial owner is a
company (other than a partnership) which holds directly at
least 10 percent of the capital of the company paying the
dividends.
b) ___percent (the percentage
is to be established through bilateral negotiations) of the
gross amount of the dividends in all over cases.
The competent
authorities of the Contracting State shall by mutual
agreement settle the mode of application of these
limitations.
The paragraph shall not affect the taxation of the company
in respect of the profits out of which the dividends are
paid.
3. The term “dividends” as used in this Article means income
from shares “jouissance” shares or “jouissance” rights,
mining shares, founders’ shares or other rights, not being
debt-claims, participating in profits, as well as income
from other cooperate rights which is subjected to the same
taxation treatment as income from shares by the laws of the
State of which the company making the distribution is a
resident.
4. The provisions of paragraphs 1 & 2 shall not apply if the
beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other
Contracting State of which the company paying the dividends
is a resident, through a permanent establishment situated
therein, or performs in that other State independent
personal services from a fixed base situated therein, and
the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or
Article 14, as the case may be, shall apply.
5. Where a company which is resident of a Contracting
State derives profits or income from the other Contracting
State, that other State may not impose any tax on the
dividends paid by the Company, except in so far as such
dividends are paid to a resident of that other State or in
so far as the holding in respect of which the dividends are
paid is effectively connected with a permanent establishment
or a fixed base situated in that other State, nor subject
the company’s undistributed profits to a tax on the
company’s undistributed profits, even if the dividends paid
or the undistributed profits consist wholly or partly of
profits or income arising in such other State.
Article 11
INTEREST
1. Interest arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that
other State.
2. However, such interest may also be taxed in the
Contracting State in which it arises and accordingly to the
laws of that State, but if the recipient is the beneficial
owner of the interest the tax so charged shall not exceed
____ percent (the percentage is to be established through
bilateral negotiations) of the gross amount of the interest.
The competent authorities of the Contracting State shall by
mutual agreement settle the mode of application of this
limitation.
3. The term “interest” as used in this Article means income
from debt-claims of every kind, whether or not secured by
mortgage and whether or not carrying a right to participate
in the debtor’s profits, and in particular, income from
government securities and income from bonds or debentures,
bonds or debentures. Penalty charges for late payment shall
not be regarded as interest for the purpose of this article.
4. The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the interest, being a resident of a
Contracting State, carries on business in the other
Contracting State in which the interest arises, through a
permanent establishment situated therein, or performs in
that other State independent personal services from a fixed
base situated therein, and the debt-claim in respect of
which the interest is paid is effectively connected with (a)
such permanent establishment or fixed base, or with (b)
business activities referred to under (c) or Article14, as
the case may be, shall apply.
5. Interest shall be deemed to arise in a Contracting State
when the payer is that State itself, a political
subdivision, a local authority or a resident of that State.
Where, however, the person paying the interest, where he is
a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base
in connection with which the indebtedness on which the
interest is paid was incurred, and such interest is borne by
such permanent establishment or fixed base, then such
interest shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
6. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and
some other person, the amount of the interest, having regard
to the debt-claim for which it is paid, exceeds the amount
which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other
provisions of this Convention.
Article 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that
other State.
2. However, such royalties may also be taxed in the
Contracting State in which they arise according to the laws
of the State, but if the recipient in the beneficial owner
of the royalties, the tax so charged shall not exceed _____
percent (the percentage is to be established through
bilateral negotiations) of the gross amount of the
royalties. The competent authorities of the Contracting
State shall be mutual agreement settle the mode of the
application of this limitation.
3. The term “royalties” as used in this Article means
payments of any kind received as a consideration for the use
of, or the right to use, any copyright of literary,
artistic or scientific work including cinematograph films,
or films or tapes used for radio or television broadcasting,
any patent, trade mark, design or model, plan, secret
formula or process, or for the use of, or the right to use,
industrial, commercial or scientific equipment or for
information concerning industrial, commercial or scientific
experience.
4. The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the royalties, being a resident of
Contracting State, carries on business in the other
Contracting State in which the royalties arise, through a
permanent establishment situated therein, and the right or
property in respect of which the royalties are paid is
effectively connected with (a) such permanent establishment
or fixed base, or with (b) business activities referred to
under (c) of paragraph 1 of Article 7. In such cases the
provisions of Article 7 or Article 14, as the case may be,
shall apply.
5. Royalties shall be deemed to arise in a Contracting State
when the payer is that State itself, a political
subdivision, a local authority or a resident of that State.
Where, the person paying the royalties, whether he is a
resident of a Contracting State or not, has in a Contracting
State a permanent establishment or a fixed base in
connection with which the liability to pay the royalties was
incurred, and such royalties are borne by such permanent
establishment or fixed base, then such royalties shall be
deemed to arise in the State in which the permanent
establishment or fixed base in situated.
6. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and
some other person, the amount of the royalties, having
regard to the use, right or information to which they are
paid, exceeds the amount which would have been agreed upon
by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply
only to the last-mentioned amount. In such case, the excess
part of the payments shall remain taxable according to the
laws of each Contracting State, due regard being had to the
other provisions of this Convention.
Article 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from
the alienation of immovable property referred to in Article
6 and situated in the other Contracting State may be taxed
in that other State.
2. Gains from the alienation of movable property forming
part of the business property of a permanent establishment
which an enterprise of a Contracting State has in the other
Contracting State or of movable property pertaining to a
fixed base available to a resident of a Contracting State in
the other Contracting State for the purpose of performing
independent personal services, including such gains from the
alienation of such a permanent establishment (alone or with
the whole enterprise) or of such fixed base, may be taxed in
that other State.
3. Gains from the alienation of ships or aircraft operated
in international traffic, boats engaged in inland waterways
transport or movable property pertaining to the operation of
such ships, aircraft or boats, shall be taxable only in the
Contracting State in which the place of effective management
of the enterprise is situated.
4. Gains from the alienation of shares of the capital stock
of a company the property of which consists directly or
indirectly principally of immovable property situated in a
Contracting State may be taxed in that State.
5. Gains from the alienation of shares other than those
mentioned in paragraph 4 representing a participation of
____percent (the percentage is to be established through
bilateral negotiations) in a company which is a resident of
a Contracting State may be taxed in that State.
6. Gains from the alienation of any other than that referred
to in paragraph 1, 2, 3, 4 and 5 shall be taxable only in
the Contracting State of which the alienator is a resident.
Article 14
INDEPENDENT PERSONAL SERVICES
1. Income derived by a resident of a Contracting State in
respect of professional services or other activities of an
independent character shall be taxable only in that State
except in the following circumstances, when such income may
also be taxed in the other Contracting State:
a. If he has a fixed
base regularly available to him in the other Contracting
State for the purpose of performing his activities; in that
case, only so much of the income as is attributable to that
fixed base may be taxed in that other Contracting State.;
b. If his stay in the
other Contracting State is for a period or periods amounting
to or exceeding in the aggregate 183 days in the fiscal year
concerned; in that case, only so much of the income as is
derived from his activities performed in that other State
may be taxed in that other State; or
c. If the remuneration
for his activities in the other Contracting State is paid by
a resident of that Contracting State or is borne by a
permanent establishment or a fixed base situated in that
Contracting State and exceeds in the fiscal year____ (the
amount) is to be established through bilateral
negotiations).
2. The term
“professional services” includes especially independent
scientific, literary, artistic, educational or teaching
activities as well as the independent activities of
physicians, lawyers, engineers, architects, dentists and
accountants.
Article 15
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 16, 18 and 19,
salaries, wages and other similar remuneration derived by a
resident of a Contracting State in respect of an employment
shall be taxable only in that State unless the employment is
exercised in the other Contracting State. If the employment
is so exercised, such remuneration as is derived there from
may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting
State shall be taxable only in the first mentioned State if:
a) the recipient is present in
the other State for a period or periods not exceeding in the
aggregate 183 days in the fiscal year concerned; and
b) the remuneration is paid by, or on behalf of, an employer
who is not a resident of the other State; and
c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the
other State.
3. Notwithstanding the
preceding provisions of this Article, remuneration derived
in respect of an employment exercised abroad a ship or
aircraft operated in international traffic, or abroad a boat
engaged in inland waterways transport, may be taxed in the
Contracting State in which the place of effective management
of the enterprise is situated.
Article 16
DIRECTORS’ FEES AND REMUNERATION OF TOP-LEVEL MANAGERIAL
OFFICIALS
1.Directors’ fees and other similar payments derived by a
resident of a Contracting State in his capacity as a member
of the Board of Directors of a company which is a resident
of the other Contracting State may be taxed in that other
State.
2.Salaries, wages and other similar remuneration derived by
a resident of a Contracting State in his capacity as an
official in a top-level managerial position of a company
which is a resident of the other Contracting State may be
taxed in that other State.
Article 17
INCOME EARNED BY ENTERTAINERS AND ATHLETES
1. Notwithstanding the provisions of Article 14 and 15,
income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or
television artiste, or a musician, or as an athlete, from
his personal activities as such exercised in the other
Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised
by an entertainer or an athlete in his capacity as such
accrues not to the entertainer or athlete himself but to
another person, that income may, notwithstanding the
provisions of Articles 7, 14 and 15 be taxed in the
Contracting State in which the activities of the entertainer
or athlete are exercised.
Article 18
PENSIONS AND SOCIAL SECURITY PAYMENTS
Article 18A (alternative A)
1.Subject to the provisions of paragraph 2 of Article 19,
pensions and other similar remuneration paid to a resident
of a Contracting State in considering of past employment
shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1, pensions
paid and other payments made under a public scheme which is
part of the social security system of a Contracting State or
a political subdivision or a local authority thereof shall
be taxable only in that State.
Article 18B (alternative B)
1.Subject to the provisions of paragraph 2 of Article 19,
pensions and other similar remuneration paid to a resident
of a Contracting State in consideration of past employment
may be taxed in that State.
2. However, such pensions and other similar remuneration may
also be taxed in the other Contracting State if the payment
is made by a resident of that other State or a permanent
establishment situated therein.
3. Notwithstanding the provisions of paragraphs 1 and 2,
pensions paid and other payments made under a public scheme
which is part of the social security system of a Contracting
State or a political sub division or a local authority
thereof shall be taxable only in the State.
Article 19
REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE
1. (a) Remuneration, other than a pension, paid by a
Contracting State or a political subdivision or a local
authority thereof to an individual in respect of services
rendered to that State or subdivision or authority shall be
taxable only in that State.
(b) However, such remuneration
shall be taxable only in the other Contracting State if the
services are rendered in that other State and the individual
is a resident of that State who:
(i) Is a national of that
State; or
(ii) Did not become a resident
of that State solely for the purpose of rendering the
services.
2. a) Any pension paid by, or
out of funds created by a Contracting State or a political
subdivision or a local authority thereof to an individual in
respect of services rendered to that State or subdivision or
authority shall be taxable only in that State.
b) However, such pension shall
be taxable only in the other Contracting State if the
individual is a resident of, and a national of, that other
State.
3. The provisions of Article
15, 16 and 18 shall apply to remuneration, and pensions in
respect of services rendered in connection with a business
carried on by a Contracting State or political subdivision
or a local authority thereof.
Article 20
PAYMENTS RECEIVED BY STUDENTS AND APPRENTICES
1. Payments which a student or business apprentice who is or
was immediately before visiting a Contracting State a
resident of the other Contracting State and who is present
in the first-mentioned State solely for the purpose of his
education or training receives for the purpose of his
maintenance, education or training shall not be taxed in
that State.
2. In respect of grants, scholarships and remuneration from
employment and covered by paragraph 1, a student or business
apprentice described in paragraph 1 shall, in addition, be
entitled during such education or training to the same
exemptions, relief’s or reductions in respect of taxes
available to residents of the State which he is visiting.
Article 21
OTHER INCOME
1. Items of
income of a resident of a Contracting State, wherever
arising, not dealt with in the foregoing articles of this
Convention shall be taxable only in that State.
2.The provisions of paragraph 1 shall not apply to income,
other than income from immovable property as defined in
paragraph 2 of Article 6, if the recipient of such income,
being a resident of a Contracting State, carries on business
in the other Contracting State through a permanent
establishment situated therein, or performs in that other
State independent personal services from a fixed base
situated therein, and the right or property in respect of
which the income is paid is effectively connected with such
permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14, as the case may be,
shall apply.
3.Notwithstanding the provisions of paragraphs 1 and 2,
items of income of resident of a Contracting State not dealt
with in the foregoing articles of this Convention and
arising in the other Contracting State may be taxed in that
other State.
CHAPTER IV
TAXATION OF CAPITAL
Article 22
CAPITAL
1. [Capital represented by immovable property referred to in
Article 6, owned by a resident of a Contracting State and
situated in the other Contracting State, may be taxed in
that other State.]
2. [Capital represented by movable property forming part of
the business property of a permanent establishment which an
enterprise of a Contracting State has in the other
Contracting State or by movable property pertaining to a
fixed base available to a resident of a Contracting State
for the purpose of performing independent personal services,
may be taxed in that other State.]
3. [Capital represented by ships and aircraft operate in
international traffic and by boats engaged in inland
waterways transport, and by movable property pertaining to
the operation of such ships, aircraft and boats, shall be
taxable only in the Contracting State in which the place of
effective management of the enterprises is situated.]
4. [All other elements of capital of a resident of a
Contracting State shall be taxable only in that State.]
CHAPTER V
METHODS FOR ELIMINATION OF DOUBLE TAXATION
Article 23A
EXEMPTION METHOD
1. Where a resident of a Contracting State derives income
[or owns capital] which, in accordance with the provisions
of this Convention, may be taxed in the other Contracting
State, the first-mentioned State shall, subject to the
provisions of paragraphs 2 and 3, exempt such income [or
capital] from tax.
2. Where a resident of a Contracting State derives items of
income which, in accordance with the provisions of Articles
10, 11 and 12, may be taxed in the other Contracting State,
the first-mentioned State shall allow as a deduction from
the tax on the income of that resident an amount equal to
the tax paid in that other State. Such deduction shall not,
however, exceed that part of the tax, as computed before the
deduction is given, which is attributable to such items of
income derived from that other State.
3. Where in accordance with any provision of the Convention
income derived [or capital owned] by a resident of a
Contracting State is exempt from tax in that State, such
State may nevertheless, in calculating the amount of tax on
the remaining [or capital] of such resident, take into
account the exempted income [or capital].
Article 23B
CREDIT METHOD
1. Where a resident of a Contracting State derives income
[or owns capital] which, in accordance with the provisions
of this Convention, may be taxed in the other Contracting
State, the first-mentioned State shall allow as a deduction
from the tax on the income of that resident, an amount equal
to the income tax paid in that other State: [and as a
deduction from the tax on the capital of that resident, an
amount equal to the capital tax paid in that other State].
Such deduction [in either case] shall not, however, exceed
that part of the income tax or capital tax,] as computed
before the deduction is given, which is attributable, as the
case may be, to the income [or the capital] which may be
taxed in that other State.
2. Where, in accordance with any provision of this
Convention, income derived [or capital owned] by a resident
of a Contracting State is exempt from tax in that State,
such State may nevertheless, in calculating the amount of
tax on the remaining income [or capital] of such resident,
take into account the exempted income [or capital].
CHAPTER VI
SPECIAL PROVISIONS
Article 24
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected
in the other Contracting State to any taxation or any
requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to
which nationals of that other State in the same
circumstances are or may be subjected. The provision shall,
notwithstanding the provisions of Article 1, also apply to
persons who are not residents of one or both of the
Contracting States.
2. The term “nationals” means:
(a) All individuals possessing
the nationality of a Contracting State;
(b) All legal persons, partnerships and associations
deriving their status as such from the laws in force in a
Contracting State.
3. Stateless persons who are
residents of a Contracting State shall not be subjected in
either Contracting State to any taxation or any requirement
connected therewith which is other or more burdensome than
the taxation and connected requirements to which nationals
of the State concerned the same circumstances are or may be
subjected.
4. The taxation on a permanent establishment which an
enterprise of a Contracting State has in the other
Contracting State shall not be less favourably levied in
that other State carrying on the same activities. This
provision shall not be constructed as obliging State any
personal allowances, relief’s and reductions for taxation
purposes on account of civil status or family
responsibilities, which it grants to its own residents.
5. Except where the provisions of paragraph 1 of Article 9,
paragraph 6 of Article 11, or paragraph 6 of Article 12,
apply, interest, royalties and other disbursements paid by
an enterprise of a Contracting State to a resident of the
other Contracting State shall, for the purpose of
determining the taxable profits of such enterprise, be
deductible under the same conditions as if thy had been paid
to a resident of the first-mentioned State. [Similarly, any
debts of an enterprise of a Contracting State to a resident
of the other Contracting State shall, for the purpose of
determining the taxable capital of such enterprise, be
deductible under the same conditions as if they had been
contracted to a resident of the first mentioned State].
6. Enterprises of a Contracting State, the capital of which
is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other
Contracting State, shall not be subjected in the
first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than
the taxation and connected requirements to which other
similar enterprises of the first-mentioned State are or may
be subjected.
7. The provisions of this Article shall, notwithstanding the
provisions of Article 2, apply to taxes of every kind and
description.
Article 25
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both
of the Contracting States result or will result for him in
taxation not in accordance with the provisions of this
Convention, he may, irrespective of the remedies provided by
the domestic law of those States, present his case to the
competent authority of the Contracting State of which he is
a resident or, if his case comes under paragraph 1 of the
Article 24, to that must be presented within three years
from the first notification of the action resulting in
taxation not in accordance with the provisions of the
Convention.
2. The competent authority shall endeavour, if the
projection appears to it to be justified and if it is not
itself able to arrive at a satisfactory solution, to resolve
the case by mutual agreement with the competent authority of
the other Contracting State, with a view to the avoidance of
taxation, which is not in accordance with this Convention.
Any agreement reached shall be implemented notwithstanding
any time limits in the domestic law of the Contracting
States.
3. The competent authorities of the Contracting State may
endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of
the Convention. They may also consult together for the
elimination of double taxation in cases not provided for in
the Convention.
4. The competent authorities of the Contracting State may
communicate with each other directly for the purpose of
reaching an agreement in the sense of the preceding
paragraphs. The competent authorities, through
consultations, methods and techniques for the implementation
of the mutual agreement procedure provided for in this
article. In addition, a competent authority may devise
appropriate unilateral procedures, conditions, methods and
techniques to facilitate the above-mentioned bilateral
action and the implementation of the mutual agreement
procedure.
Article 26
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall
exchange such information as is necessary for carrying out
the provisions of this Convention or of the domestic laws of
the Contracting States concerning taxes covered by the
Convention insofar as the taxation there under is not
contrary to the Convention, in particular for the prevention
of fraud of evasion of such taxes. The exchange of
information is not restricted by Article 1. Any information
received by a Contracting State shall be treated as secret
in the same manner as information obtained under the
domestic laws of that State. However, if the information is
originally regarded as secret in the transmitting state it
shall be disclosed only to persons or authorities (including
courts and administrative bodies) involved in the assessment
or collection of, the enforcement or prosecution in respect
of, or the determination of appeals in relation to, the
taxes which are the subject of the Convention. Such persons
or authorities shall use the information only for such
purposes but may disclose the information in public court
proceedings or in judicial decisions. The competent
authorities shall, through consultation, develop appropriate
conditions, methods and techniques concerning the matters in
respect of which such exchanges of information shall be
made, including, where appropriate, exchanges of information
regarding tax avoidance.
2.In no case shall the provisions of paragraph 1 be
construed so as to impose on a Contracting State the
obligation:
a) To carry out administrative measures at variance with the
laws and administrative practice of that or of the other
Contracting State;
b) To supply information which is not obtainable under the
laws or in the normal course of the administration of that
or of the other Contracting State;
c) To supply information which would disclose any trade,
business, industrial, commercial or professional secret or
trade process, or information, the disclosure of which would
be country to public policy (order public).
Article 27
DIPLOMATIC AGENTS AND CONSULAR OFFICERS
Nothing in this Convention shall affect the fiscal
privileges of diplomatic agents or consular officers under
the general rules of international law or under the
provisions of special agreements.
CHAPTER VII
FINAL PROVISIONS
Article 28
ENTRY INTO FORCE
1. This
Convention shall be ratified and the instruments of
ratification shall be exchanged at ______________as soon as
possible.
2. The Convention shall enter into fore upon the exchange of
instruments of ratification and its provisions shall have
effect:
a) (in State
A)______________________
b) (in State
B)______________________
Article 29
TERMINATION
This Convention shall remain in force until terminated by a
Contracting State. Either Contracting State may terminate
the Convention, through diplomatic channels, by giving
notice of termination at least six months before the end of
any calendar year after the year__________. In such event,
the Convention shall cease to have effect:
a) (in State
A)______________________
b) (in State
B)______________________
TERMINAL CLAUSE
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