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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 rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships or aircraft shall not be regarded as immovable property.

 

3.             The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in 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 income or 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 income or profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that 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 the income or profits 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 determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

 

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 a certain percentage of the gross receipt of the enterprise or of the permanent establishment  or 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.             No income or profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

 

6.             For the purpose of the preceding paragraphs, the income or 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.

 

7.             Where income or 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.

 

 

ARTICLE 8
INTERNATIONAL TRAFFIC

1.             Income or profits derived by an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that Contracting State.

 

2.             Income or profits derived by an enterprise of a Contracting State from the operation of ships in international traffic may be taxed in the other Contracting State, but the tax imposed in that other State shall be reduced by an amount equal to 50% thereof.

 

3.             The provisions of paragraph 1 and 2 shall also apply to income or profits from 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 participates 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 an 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 income or profits

                                which would, but for those conditions,  have  accrued  to 

                                one of the enterprises, but,  by  reason of those

                                conditions,  have  not  so  accrued, may  be   included  

                                in   the  income  or  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 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 accordance with the taxation laws of the other Contracting State. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States 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 beneficial owner of dividends is a resident of the other Contracting State the tax so charged shall not exceed 10 per cent of the gross amount of the dividends.

 

This 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 or other rights, not being debt-claims, participating in profits, as well as income from other corporate 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 and 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 14, as the case may be, shall apply.

 

5.             Where a company which is a resident of a Contracting State derives income or profits from the other Contracting State, that other  State,  may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar  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. Nothing in this paragraph shall be construed as preventing a Contracting State from imposing income tax, according to the laws of that State on the disposal of profits made by a permanent establishment situated therein.

   

 

Last updated: 08.12.2011