CONVENTION BETWEEN THE KINGDOM OF THAILAND AND THE ISLAMIC REPUBLIC OF PAKISTAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Royal Government of Thailand and the Government of the Islamic Republic of Pakistan, Desiring to conclude a C\onvention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have agreed as follows: CHAPTER I SCOPE OF THE CONVENTION ARTICLE 1 Personal Scope This Convention shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 Taxes Covered 1. This Convention shall apply to taxes on income imposed on behalf of each Contracting State, irrespective of the manner in which they levied. 2. There shall be regarded as taxes on income, all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property and 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 the Convention shall apply are, in particular: (a) In the case of Thailand: - the income tax; and - the petroleum income tax (hereinafter referred to as Thai tax); (b) In the case of Pakistan: - the income tax; - the super tax; and - surcharge (hereinafter referred to as Pakistan tax). 4. The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of this 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 of significant changes which have been made in their respective taxation laws. CHAPTER II DEFINITIONS ARTICLE 3 General Definitions 1. In this Convention, unless the context otherwise requires: (a) the term Thailand means the Kingdom of Thailand and includes any area adjacent to the territorial waters of the Kingdom of Thailand which by Thai legislation has been or may hereafter be designated as an area within which the rights of the Kingdom of Thailand with respect to the seabed and sub--soil and their natural resources may be exercised; (b) the term Pakistan used in a geographical sense means Pakistan as defined in the Constitution of the Islamic Republic of Pakistan and also includes any area outside the territorial waters of Pakistan which under the laws of Pakistan is an area within which the rights of Pakistan with respect to the seabed and sub--soil and their natural resources may be exercised; (c) the terms a Contracting State and the other Contracting State mean Thailand or Pakistan as the context requires; (d) the term company means any body corporate or any entity which is treated as a body corporate for tax purposes; (e) the term competent authority means: i) in Thailand : the Minister of Finance or his authorised representative; ii) in Pakistan : The Central Board of Revenue; (f) 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 on by a resident of the other Contracting State; (g) the term national means: i) any individual possessing the nationality of a Contracting State; ii) any legal person, partnership and association deriving its status as such from the law in force in a Contracting State; (h) the term person includes an individual, a company, a partnership, a trust and any other entity treated as taxable unit; (i) the term international traffic means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except where such ship or aircraft is operated solely between places in the other Contracting State. 2. As regards the application of the Convention by a Contracting State any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes which are the subject of the Convention. ARTICLE 4 Resident 1. For the purposes of this Convention, the term resident of a Contracting State means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management, place of incorporation, 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 his personal and economic relations are closer (centre of vital interests); (b) if the State in which he has his centre 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 an habitual abode; (c) if he has an 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 its status shall be determined in accordance with the following rules: (a) it shall be deemed to be a resident of the Contracting State of which it is a national; (b) if it is a national of neither of the Contracting States, it shall be deemed to be a resident of the Contracting 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 in which the business of the enterprise is wholly or partly carried on. 2. The term permanent establishment shall include especially: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a warehouse; (g) a farm or plantation; (h) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, (i) a building site or construction or assembly project or supervisory activities in connection therewith, where such site, project or activity continues for a period of more than 183 days; (j) the furnishing of services including consultancy services by a resident of one of the Contracting States through employees or other personel, where activities of that nature continue for the same or connected project within the other Contracting State for a period or periods aggregating more than 183 days; (k) a permanent sales exhibition. 3. The term permanent establishment shall not be deemed to include: (a) the use of facilities solely for the purpose of storage, display or delivery 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, display or delivery; (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 for collecting information, for the enterprise; (e) the mainance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise; (f) the maintenance of an office or like establishment by a news- agency or a newspaper or journal, being an enterprise of one of the Contracting States, exclusively for the collection and transmission to that State of information on behalf of that enterprise. 4. A person acting in a Contracting State on behalf of an enterprise of the other Contracting State other than a broker, general commission agent or any other agent of an independent status to whom paragraph 5 applies shall be deemed to be a permanent establishment in the first-mentioned State, but only if: (a) he has and habitually exercises in the first-mentioned State, an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or (b) he habitually maintains in the first-mentioned State a stock of goods or merchandise belonging to the enterprise from which he regularly fills orders or makes deliveries on behalf of the enterprise; or (c) he habitually secures orders for the sale of goods or merchandise in the first--mentioned State wholly or almost wholly on behalf of the enterprise itself or on behalf of the enterprise and other enterprises controlled by it or which have a controlling interest in it. 5. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carried on business in that other State through a broker, a 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 duties of such a general commission agent or broker are devoted wholly or almost wholly on behalf of that enterprise, or a group of enterprises controlled by that enterprise, he would not be considered an agent of an independent status within the meaning of this paragraph. 6. 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 of itself constitute either company a permanent establishment of the other. |