38A. Agreement for avoidance of
double taxation and prevention of fiscal evasion with
Whereas the annexed Convention between the
Government of the Republic of India and the Government of the Portuguese
Republic for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income has come into force, on the 30th April,
2000, thirty days after the date of exchange of diplomatic notes indicating the
completion of internal legal procedures necessary in each Contracting State for
the entry into force of this Convention in accordance with Article 29 of the
said Convention;
Now, therefore, in exercise of the powers
conferred under section 90 of the Income-tax Act, 1961 (43 of 1961), the
Central Government hereby directs that all the provisions of the said
Convention shall be given effect to in the Union of
Notification
: No. GSR 542(E), dated 16-6-2000, as corrected
by Notification No. SO 673(E), dated 25-8-2000 and GSR 597(E), dated 20-9-2005.
Annexure
Convention between the Government of the
Republic of India and the Government of the
The Government
of the Republic of India and the Government of the Portuguese Republic,
desiring to conclude a Convention 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 a
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
amounts of wages or salaries paid by enterprises.
3. The existing taxes to which this Convention
shall apply are in particular :
(a) In the case of the
(i) Personal income-tax (Imposto
sobre o Rendimento das Pessoas Singulares
- IRS);
(ii) Corporate Income-tax (Imposto
sobre o Rendimento das Pessoas Colectivas
- IRC);
(iii) Local surtax on corporate income-tax (Derrama); (hereinafter referred to as “Portuguese tax”);
(b) In the case of the
The income-tax including
any surcharge thereon; (hereinafter referred to as “Indian tax”).
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.
The competent authorities of the Contracting States shall notify each other of
any substantial 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 “Portugal” means the territory of the Portuguese Republic
situated in the European Continent, the archipelagoes of Azores and Madeira,
the respective territorial sea and any other zone in which, in accordance with
the laws of Portugal and international law, the Portuguese Republic has its
jurisdiction or sovereign rights with respect to the exploration and
exploitation of the natural resources of the sea bed and sub-soil, and of the
superjacent waters;
(b) the term “India” means the territory of India and includes the
territorial sea and airspace above it, as well as any other maritime zone in
which India has sovereign rights, other rights and jurisdictions, according to
the Indian law and in accordance with International law, including the U.N.
Convention on the Law of the Sea, 1982;
(c) the terms “a
(d) the term “tax” means Portuguese tax or Indian tax, as the context
requires;
(e) the term “person” includes an individual, a company, a body of
persons and any other entity which is treated as a taxable unit under the
taxation laws in force in a
(f) the term “company” means any body corporate or any entity which is
treated as a body corporate for tax purposes;
(g) 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;
(h) the term “International traffic” means any transport by a ship or
aircraft operated by an enterprise of a
(i) the term “competent authority” means :
(i) in
(ii) in
(j) the term “national” means :
(i) any individual possessing the nationality of a
(ii) any legal person, partnership or association
deriving its status as such from the laws in force in a
(k) The term “fiscal year” means :
(i) in the case of
(ii) in the case of
2. As regards the application of the Convention
at any time by a Contracting State, any term not defined therein shall unless
the context otherwise requires, have the meaning which it has at that time
under the law of that State for the purposes of the taxes to which the
Convention applies, any meaning under the applicable tax laws of that State
prevailing over a meaning given to the term under other laws of that State.
Article 4 : Resident
- 1. For the purposes of this Convention, the term “resident of a
Contracting State” means any person who, under the laws of that State, is
liable to tax therein by reason of his domicile, residence, place of management
or any other criterion of a similar nature. This term, however, does not
include any person who is liable to tax in that State in respect only of income
from sources in that State.
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 only 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 only 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 only 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 only 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 only of the State in which its place
of effective management is situated. If the State in which its place of
effective management is situated cannot be determined, then the competent
authorities of the Contracting States shall settle the question by mutual
agreement.
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;
(f) a sales outlet; and
(g) a mine, an oil or gas well, a quarry or any other place of extraction
of natural resources, including an installation or structure used for the
exploration or exploitation of natural resources only if so used for a period
of more than 120 days in a fiscal year.
3. A building site, construction, installation or
assembly project or supervisory activities in connection therewith constitutes
a permanent establishment only if it lasts more than nine months.
4. Notwithstanding the preceding provisions of
this Article, the term “permanent establishment” shall be deemed not 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 of 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;
(f) the maintenance of a fixed place of business solely for any
combination of activities mentioned in sub-paragraphs (a) to (e),
provided that the overall activity of the fixed place of business resulting
from this combination is of a preparatory or auxiliary character.
15. Notwithstanding the provisions of paragraphs 1 and 2, where a person
—other than an agent of an independent status to whom paragraph 6 applies—is
acting in a Contracting State on behalf of an enterprise of the other
Contracting State, that enterprise shall be deemed to have a permanent
establishment in the first-mentioned State, if—
(a) he has and habitually exercises in that State an authority to
conclude contracts on behalf of the enterprise, unless his activities are
limited wholly to the activities described in paragraph 4;
(b) he has no such authority, but habitually maintains in the
first-mentioned State a stock of goods or merchandise from which he regularly
delivers goods or merchandise on behalf of the enterprise and some additional
activities conducted in that State on behalf of the enterprise have contributed
to the sale of the goods or merchandise.
6. An enterprise shall not be deemed to have a
permanent establishment in a
7. 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 6 applies.
8. The fact that a company which is a resident of
a Contracting State controls or is controlled by a company which is 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.
Chapter III
Taxation of Income
Article 6 : Income from
immovable property - 1. Income derived by a resident of a
2. The term “immovable property” shall have the
meaning which it has under the law of the
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.
5. The foregoing provisions shall also apply to
income from movable property, or income derived from services connected with
the use or the right to use the immovable property, either of which, under the
taxation law of the
Article 7 : Business
profits - 1. The profits of an enterprise of a
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 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, subject to the provisions of
the domestic laws of the Contracting State in which the permanent establishment
is situated.
4. No 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.
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 reasons 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.
Article 8 : Shipping
and air transport - 1. Profits from the operation of ships or
aircraft in international traffic shall be taxable only in the
2. The provisions of paragraph 1 shall also
supply to profits from the participation in a pool, a joint business or an
international operating agency.
3. Whenever companies from different countries
have agreed to carry on an air transportation business together in the form of
a consortium; the provisions of paragraph 1 shall apply to such part of the
profits of the consortium as corresponds to the participation held in that
consortium by a company that is a resident of a Contracting State.
4. For the purposes of this Article, profits from
the operation of ships or aircraft in international traffic shall mean profits
derived from the transportation by sea or air of passengers, mail, livestock or
goods carried on by the owner or lessees or charterers
of the ships or aircraft, including profits from :
(i) the sale of tickets for such transportation on
behalf of other enterprises;
(ii) the incidental lease of ships or aircraft used
in such transportation; and
(iii) the use, maintenance or rental of containers
(including trailers and related equipment for the transport of containers) by
the enterprise engaged in international traffic in connection with such
transportation.
5. Interest on funds generated by the operation
of ships or aircraft and arising directly to a permanent establishment of an enterprise
of one
Article 9 : Associated
enterprises - 1. Where:
(a) an enterprise of a
(b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a
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 accrued to one of the enterprises, but, by reason of 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 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
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
2. However, such dividends may also be taxed in
the
(a) Where the dividends are paid by a company which is a resident of
(i) 15 per cent of the gross amount of the
dividends; or
(ii) 10 per cent of the gross amount of the
dividends if the beneficial owner is a company that, for an uninterrupted
period of two years prior to the payment of the dividend, owns directly at
least 25 per cent of the capital stock (capital social) of the company paying
the dividends.
(b) Where the dividends are paid by a company which is a resident of
(i) 15 per cent of the gross amount of the
dividends; or
(ii) 10 per cent of the gross amount of the
dividends if the beneficial owner is a company that, for an uninterrupted
period of two fiscal years prior to the payment of the dividend, owns directly
at least 25 per cent of the capital stock of the company paying 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, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or
other rights, not being debt-claims, participating in profits, as well as
income 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. The term also includes profits attributed under an arrangement for
participation in profits (associacao em participacao).
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 Article 14, as the case may be, shall apply.
5. Where a company which is a 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 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 or profits or income arising in
such other State.
Article 11 : Interest
- 1. Interest arising in a
2. However, such interest may also be taxed in
the
3. Notwithstanding the provisions of paragraph 2,
interest arising in a
(a) if the debtor of such interest is that State, a political or
administrative sub-division or a local authority thereof; or
(b) if interest is paid to the other
4. 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, including premiums and prizes attaching to such securities, bonds
or debentures. Penalty charges for late payment shall not be regarded as
interest for the purpose of this Article.
5. 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 such permanent establishment or fixed base. In
such case, the provisions of Article 7 or Article 14, as the case may be, shall
apply.
6. Interest shall be deemed to arise in a
7. 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
Article 12 : Royalties
and fees for included services - 1. Royalties and fees for included
services arising in a
2. However, such royalties and fees for included services
may also be taxed in the Contracting State in which they arise and according to
the laws of that State, but if the beneficial owner of the royalties and fees
for included services is a resident of the other Contracting State, the tax so
charged shall not exceed 10 per cent of the gross amount. The competent
authorities of the Contracting States shall by mutual agreement settle the mode
of 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 tapes or any other means of reproduction for use in
connection with 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. For the purposes of this Article, “fees for
included services” means payments of any kind, other than those mentioned in
Articles 14 and 15 of this Convention, to any person in consideration of the
rendering of any technical or consultancy services (including through the provisions
of services of technical or other personnel) if such services :
(a) are ancillary and subsidiary to the application or enjoyment of the
right, property or information for which a payment described in paragraph 3 is
received, or
(b) make available technical knowledge, experience, skill, know-how or
processes or consist of the development and transfer of a technical plan or
technical design which enables the person acquiring the services to apply the
technology contained therein.
5. Notwithstanding paragraph 4, “fees for
included services” does not include payments :
(a) for services that are ancillary and subsidiary, as well as
inextricably and essentially linked, to the sale of property;
(b) for services that are ancillary and subsidiary to the rental of
ships, aircraft, containers or other equipment used in connection with the
operation of ships or aircraft in international craft;
(c) for teaching in or by educational institutions;
(d) for services for the personal use of the individual or individuals
making the payment;
(e) to an employee of the person making the payments or to any
individual or firm of individuals (other than a company) for professional
services as defined in Article 14;
(f) for services rendered in connection with an installation or
structure used for the exploration or exploitation of natural resources
referred to in paragraph 2(g) of Article 5;
(g) for services referred to in paragraph 3 of Article 5.
6. The provisions of paragraphs 1 and 2 shall not
apply if the beneficial owner of the royalties and fees for included services,
being a resident of a Contracting State, carries on business in the other
Contracting State, in which the royalties and fees for included services arise,
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 royalties and fees for included
services 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.
7. Royalties and fees for included services shall
be deemed to arise in a
8. 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 and fees for included services,
having regard to the use, right or information for 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
Article 13 : Capital
gains - 1. Gains derived by a resident of a
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 or movable property pertaining to the
operation of such ships or aircraft, shall be taxable only in the
4. Gains from the alienation of shares in the
capital stock of a company the property of which consists directly or
indirectly principally of immovable property situated in a
5. Gains from the alienation of any property
other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only
in the
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 State; or
(b) if his stay in the other State is for a period or periods exceeding
in the aggregate 183 days in any twelve-month period commencing or ending in
the fiscal year concerned; in that case, only so much of the income as is
derived from his activities performed in the other State may be taxed in that
other State.
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
2. Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a
(a) the recipient is present in the other State for a period or periods
not exceeding in the aggregate 183 days in any twelve-months period commencing
or ending 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 aboard
a ship or aircraft operated in international traffic may be taxed in the
Article 16 : Directors’
fees - 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 or supervisory board (in Portugal, conselho
fiscal) or of another similar organ of a company which is a resident of the
other Contracting State may be taxed in that other State.
Article 17 : Artistes
and sportsmen - 1. Notwithstanding the provisions of Articles 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
a sportsman, 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 a sportsman in his capacity as such accrues not
to the entertainer or sportsman 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 sportsman are
exercised.
3. However, such income shall not be taxed in the
State mentioned in paragraph 1 if the said activities are exercised during a
visit to that State by a resident of the other
Article 18 : Pensions
- 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 shall be taxable only in that State.
Article 19 : Government
Service - 1. (a) Salaries, wages and other similar
remuneration, other than a pension, paid by a Contracting State or a political
or administrative sub-division or a local authority thereof to an individual in
respect of services rendered to that State or sub-division or authority shall
be taxable only in that State;
(b)
However, such salaries, wages and other similar remuneration shall be taxable
only in the other Contracting State if the services are rendered in that 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 or administrative
sub-division or a local authority thereof to an individual in respect of
services rendered to that State or sub-division or authority shall be taxable
only in that State;
(b)
However, such pension shall be taxable only in the other
3. The provisions of Articles 15, 16, 17 and 18
shall apply to salaries, wages and other similar remuneration, and to pensions,
in respect of services rendered in connection with a business carried on by a
Article 20 : Professors,
Teachers and Research Scholars - 1. A professor, teacher or
research scholar who is or was a resident of the Contracting State immediately
before visiting the other Contracting State for the purpose of teaching or
engaging in research, or both, at a university, college, school or other
approved institution in that other Contracting State shall be exempt from tax in
that other State on any remuneration for such teaching or research for a period
not exceeding two years from the date of his arrival in that other State.
2. This article shall not apply to income from
research, if such research is undertaken primarily for the private benefit of a
specific person or persons.
3. For the purposes of this Article and Article
21, an individual shall be deemed to be a resident of a
4. For the purposes of paragraph 1, “approved
institution” means an institution which has been approved in this regard by the
competent authority of the concerned State.
Article 21 : Students
and trainees - Payments which a student, a business apprentice or trainee
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, provided
that such payments :
(a) arise from sources outside that State;
(b) are remuneration from employment in that other State in an amount
not exceeding US $ 3,000 per annum during a period not exceeding two years from
the day of his first arrival in that other
Article 22 : Other
Income - 1. Items of income of a resident of a
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 paragraph 1,
if a resident of a Contracting State derives income from sources within the
other Contracting State in the form of lotteries, crossword puzzles, races
including horse races, card games and other games of any sort or gambling or
betting of any form or nature whatsoever, such income may be taxed in the other
Contracting State.
Chapter IV
Methods for elimination of double taxation
Article 23 : Elimination
of double taxation - 1. The
laws in force in either of the
2. In the case of
Where a
resident of
3. In the case of
Where a
resident of
4. Where in accordance with any provisions of
this Convention, income derived by a resident of a
5. The tax paid in a Contracting State mentioned
in paragraphs 1[2 and 3] and of this Article shall be deemed to
include the tax on dividends, interest, royalties and fees for included
services and business profits which would have been payable as laid down in
this Convention but for the legal provisions concerning tax reduction or
exemption of the Contracting States for the encouragement of genuine investment
or economic development. The provisions of this paragraph shall apply for the
first seven years during which this Convention is applicable. This period may
be extended by mutual agreement between the competent authorities.
Chapter V
Special Provisions
Article 24 : Non-discrimination
- 1. Nationals of a
2. The taxation on a permanent establishment
which an enterprise of a
3. Except where the provisions of paragraph 1 of
Article 9, paragraph 6 of Article 11, or paragraph 4 of Article 12, apply,
interest, royalties, technical fees 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 they had been paid to a resident
of the first-mentioned State.
4. 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.
5. 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 Article 24, to that
of the Contracting State of which he is a national. The case 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 objection 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
3. The competent authorities of the Contracting
States shall endeavour to resolve by mutual agreement
any difficulties or doubts arising as to the interpretation or application of
this 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
States may communicate with each other directly, including through a joint
commission consisting of themselves or their representatives, for the purpose of
reaching an agreement in the sense of the preceding paragraphs.
Article 26 : Exchange
of information - 1. The competent authorities of the Contracting
States shall exchange such information, including authenticated copies of the
documents, 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 thereunder is
not contrary to the Convention. 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 and shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment or collection
of, the enforcement or prosecution in respect of, or the determination of
appeals in relation to, the taxes covered by the Convention. Such persons or
authorities shall use the information only for such purposes. They may disclose
the information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1
be construed so as to impose on a
(a) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other
(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
(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 contrary to public policy (ordre
public).
Article 27 : Collection
assistance - 1. The Contracting States agree to provide mutual
assistance and support for recovering, in accordance to the respective
provisions and rules of their legislations or regulations, the taxes covered by
this Convention, when these amounts are definitely due under the laws and
regulations of the
2. The competent authorities of the Contracting
States shall consult each other to decide the mode of application of this
Article in case they consider the rendering of assistance for collection of
taxes feasible.
Article 28 : Members
of diplomatic missions and consular posts - Nothing in this Convention
shall affect the fiscal privileges of members of diplomatic missions and
consular posts under the general rules of international law or under the
provisions of special agreements.
Article 29 : Entry
into force - 1. This Convention shall enter into force on the
thirtieth day after the date on which diplomatic notes indicating the
completion of internal legal procedures necessary in each
2. This Convention shall apply :
(a) in
(i) in respect of taxes withheld at source, the
fact giving rise to them appearing on or after the first day of January in the
year next following the year in which this Convention enters into force;
(ii) in respect of other taxes as to income arising
in the fiscal year beginning on or after the first day of January in the year next
following the year in which this Convention enters into force;
(b) in
in respect of income
arising in any fiscal year beginning on or after the first day of April next
following the calendar year in which the Convention enters into force.
Article 30 : Termination
- This Convention shall remain in force indefinitely but either of the
Contracting States may, on or before the thirtieth day of June in any calendar
year from the fifth year following that in which the notifications have been
given, terminate the Convention through diplomatic channels. In such event, the
Convention shall cease to have effect :
(a) in
(i) in respect of taxes withheld at source, the
fact giving rise to them appearing on or after the first day of January of the
year next following the date on which the period specified in the said notice
of termination expires;
(ii) in respect of other taxes, as to income
arising in the fiscal year beginning on or after the first day of January next
following the date on which the period specified in the said notice of
termination expires;
(b) in
in respect of income
arising in any fiscal beginning on or after the first day of April next
following the date on which the period specified in the said notice of termination
expires.
In witness
whereof the undersigned, duly authorised thereto,
have signed this Convention.
Done in
duplicate, at
Protocol
At the moment
of signing the Convention between the
Ad Article
3
For the
purposes of paragraph 3, the reference to the time of application of the
Convention shall mean the time when the income which is the subject-matter of
this Convention arises.
Ad Articles
3 and 23
For the
purposes of paragraph 1(d) of Article 3 and Article 23, the expression
“tax” shall not include any amount which is payable in respect of any default
or omission in relation to the taxes to which the Convention applies or which
represents a penalty imposed relating to those taxes.
Ad Article
5
For the
purposes of paragraph 2, a warehouse in relation to a person providing storage
facilities for others will be considered as constituting a permanent
establishment.
Ad Article
6
For the
purposes of paragraph 1, it is agreed that the
Ad Article
7
For the
purposes of paragraph 3, it is agreed that the provisions of the domestic tax
laws referred to therein relate, in the case of
Ad Article
13
For the
purposes of paragraphs 1 and 4, it is agreed that the
Ad Article
23
It is
understood that the term “economic development” used in paragraph 5 of Article
23 would mean industrial development or development of infrastructural
facilities.
Ad Article
24
1. The provisions of Article 24 do not preclude
the application of any provision of the tax law of the Contracting States
dealing with in capitalisation problems.
2. The provisions of Article 24 shall be
construed in the sense that insofar as the deductibility of the incurred
disbursements is concerned, each
3. The provisions of paragraph 2 shall not be
construed as preventing a Contracting State from charging the profits of a permanent
establishment which a company of the other Contracting State has in the
first-mentioned State at a rate of tax which is higher than that imposed on the
profits of a similar company of the first-mentioned Contracting State subject
to the difference between the two rates not being more than 10%.
In witness
whereof, the undersigned, duly authorised thereto,
have signed this Protocol.
Done in
duplicate, at