The provisions of the MLI applicable to the Convention do not take effect on the same dates as the original provisions of the Convention. Each of provisions of the MLI could take effect on different dates, depending on the types of taxes involved (taxes withheld at source or other taxes levied) and on the choices made by the Republic of Kazakhstan and the United Arab Emirates in their MLI positions.
Entry into force and entry into effect of the MLI
The MLI enters into force for the United Arab Emirates on September 1, 2019 and for the Republic of Kazakhstan on October 1, 2020 and has effect as follows:
(a)The provisions of the MLI shall have effect in each Contracting State with respect to the Convention:
(i)with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after January 1, 2021; and
(ii) with respect to all other taxes levied by that Contracting State, for taxes levied with respect to taxable periods beginning on or after April 1, 2021.
(b) Notwithstanding (a), Article 16 (Mutual Agreement Procedure) of the MLI shall have effect with respect to the Convention for a case presented to the competent authority of a Contracting State on or after October 1, 2020, except for cases that were not eligible to be presented as of that date under the Convention prior to its modification by the MLI, without regard to the taxable period to which the case relates.
CONVENTION BETWEEN
THE GOVERNMENT OF THE UNITED ARAB EMIRATES AND
THE GOVERNMENT OF THE REPUBLIC OF KAZAKHSTAN
FOR THE AVOIDANCE OF DOUBLE TAXATION AND
THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The Government of the United Arab Emirates and the Government of the Republic of Kazakhstan
[REPLACED by paragraph 1 of Article 6 of the MLI]desiring to promote and strengthen the economic relations by concluding convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,
| The following preamble text described in paragraph 1 of Article 6 of the MLI replaces the preamble language of this Convention: ARTICLE 6 - PURPOSE OF A COVERED TAX AGREEMENT Intending to eliminate double taxation with respect to the taxes covered by the Convention without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in the Convention for the indirect benefit of residents of third jurisdictions), |
have agreed as follows:
Article 1
Persons Covered
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 Contracting State or its political subdivisions or administrative subdivisions or local authorities, or by local governments irrespective of the manner in which they are 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 alienation of movable or immovable property, taxes on the total amount of wages or salaries paid by enterprises, as well as taxes on capital appreciation.
3.The existing taxes to which this Convention shall apply are in particular:
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| (a) | in the case of the Republic of Kazakhstan: |
| | | (i) | The corporate income tax; | | (ii) | The individual income tax; | (Hereinafter referred to as «Kazakhstan tax»); |
| (b) | in the case of the United Arab Emirates: |
| | | (i) | Income tax; and | | (ii) | Corporate tax; | (Hereinafter referred to as «U.A.E. tax»). |
4.This Convention shall also apply to any identical or substantially similar taxes which are imposed by either of the Contracting State after the date of signature of this Convention in addition to, or in place of, the existing taxes referred to in paragraph 3. The competent authorities of the Contracting States shall notify each other of any substantial changes which are made in their respective taxation lawss.
Article 3
General Definitions
1.For the purpose of this Convention, unless the context otherwise requires:
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| (a) | the terms a «Contracting State» and «the other Contracting State» mean, as the context requires, the Republic of Kazakhstan or the United Arab Emirates. |
| (b) | the term «Kazakhstan» means the Republic of Kazakhstan. For the purpose of use geographical means the term «Kazakhstan» includes the State territory of the Republic of Kazakhstan and zones where the Republic of Kazakhstan exercise its sovereign rights and jurisdiction according to its national legislation and international agreements of which it is a participant; |
| (c) | the term «United Arab Emirates», means the United Arab Emirates and when used in a geographical sense means the area in which the territory is under its sovereignty as well as the territorial sea, airspace and submarine areas over which the United Arab Emirates exercises, in conformity with international laws and the national laws of united Arab Emirates sovereign rights, including the mainland and islands under its jurisdiction in respect of any activity carried on in connection with the exploration for or the exploitation of the natural resources; |
| (d) | the term «person» includes an individual, a company or any other body of persons; |
| (e) | the term «company» means any body corporate or any entity which is treated as a body corporate for tax purposes; |
| (f) | the terms «enterprise of a Contracting State» and «enterprise of the other Contracting State» means 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: in case of either and the Contracting States shall means any individual possessing the nationality of the Contracting State and all legal persons, partnership, associations and any other entity deriving its status as such from the national laws in force in. |
| (h) | the term «international traffic» means any transport by ships or aircraft operated by an enterprise of a contracting State except when the ship or aircraft is operated solely between places in the other Contracting State. |
| (i) | the term «competent authority» means: |
| | | (i) | in the case of Kazakhstan - the Ministry of Finance or its authorized representative; and | | (ii) | in the case of U.A.E. - the Ministry of Finance or its authorized representative. | |
2.In the application of this Convention by either of the Contracting States, any term not defined therein shall - unless the context otherwise requires - have the meaning which it has under the national laws of that contracting State concerning the taxes to which the Convention applies.
Article 4
Resident
1.For the purposes of this Convention the term «resident of a Contracting State» means:
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| (a) | in the case of the Republic of Kazakhstan: The term «resident of the Republic of Kazakhstan» means any person who, under the laws of the Republic of Kazakhstan, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation, or any other criterion of a similar nature. The term shall also include the Republic of Kazakhstan and any political subdivision, or local authorities thereof. This term, however, does not include any person who is liable to tax in the Republic of Kazakhstan in respect only of income from sources in the Republic of Kazakhstan that State. |
| (b) | in the case of the United Arab Emirates: |
| | | (i) | The UAE national, any individual who under the laws of the UAE is considered as a resident thereof and any company and any other legal entity which is constituted or incorporated in the UAE; | | (ii) | The Government of the United Arab Emirates or any political subdivision or local government authority thereof; | | (iii) | Any governmental institutions created under public laws such as the Central Bank, funds, corporations, authorities, foundations, partnership, agencies, or any other similar entities established in the United Arab Emirates; | |
2.Where by reason of the provisions of paragraph 1 of this Article an individual is deemed to be a resident of both Contracting States then his status shall be defined as follows:
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| a) | he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (center of vital interests); |
| b) | if the Contracting State in which he has his center of vital interests cannot be determined, or if he does not have a permanent home available to him in either Contracting States, he shall be deemed to be a resident of the Contracting State in which he has habitual abode; |
| c) | if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national; |
| d) | if his status cannot be determined in accordance with the provisions of subparagraphs (a) to (c) of paragraph 2 of this Article, competent authorities of the Contracting State 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 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 an enterprise is wholly or partly carried on.
2.The term «permanent establishment» shall include especially:
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| (a) | a place of management; |
| (b) | a branch; |
| (c) | an office; |
| (d) | a factory; |
| (e) | a workshop; |
| (f) | a mine, an oil or gas well, a quarry, or any other place of extraction or exploration of natural resources or supervisory service connected therewith; |
3.The term «permanent establishment» likewise encompasses:
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| (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 9 months period; |
| (b) | the furnishing of services, including consultancy services, by an enterprise of a Contracting State through employees or other personnel in the other Contracting State, provided that such activities continue for the same project or a connected project for a period or periods aggregating more than 6 months within any twelve-month period; |
4.Notwithstanding the provisions of paragraphs 1 to 3 of this Article, the term «permanent establishment» shall be deemed not to include:
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| (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 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) of paragraph 4 of this Article provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. |
5.Notwithstanding the provisions of paragraphs 1 and 2 of this Article a person acting in a Contracting State on behalf of an enterprise of the other Contracting State - other than an agent of an independent status to whom paragraph 6 of this Article applies - shall be deemed to be a permanent establishment in the first-mentioned Contracting State if:
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| a) | he has an habitually exercises in the first-mentioned Contracting State a general authority to negotiate and conclude contracts for, or on behalf of, such enterprise, or |
| b) | he maintains in that (first-mentioned) Contracting State a stock of goods or merchandise belonging to the enterprises, from which he regularly sells goods or merchandise for, or on behalf of, such enterprises, or unless the activities of such person are limited to those mentioned in paragraph 4 of this Article 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. |
6.An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that Contracting 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.
7.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 Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
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 Contracting State.
But the tax so charged shall be reduced to 50% if beneficiary owner of the income derived from immovable property is the State itself or local authorities, political subdivision, local governments or local financial institutions are belong to the Contracting State.
2.The term «immovable property» shall have the meaning, which it has under the national laws 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 laws respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right of work, mineral deposits, sources and other natural resources. Ships and aircraft shall not be regarded as immovable property.
3.The provisions of paragraph 1 of this Article shall apply to income derived from the direct use, letting, or use in any other term of immovable property.
4.The provisions of paragraphs 1 and 3 of this Article shall also apply to income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
5.The provisions of paragraphs 3 shall not apply if the beneficial owner of the income is the State itself or local authorities, political subdivision, local Governments or their financial institution.
Article 7
Business Profits
1.The profits of an enterprise of a contracting State shall only be taxable 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:
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| (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 that permanent establishment. |
2.Subject to the provisions of paragraph 3 of this Article 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 Contracting State in which the permanent establishment is situated or elsewhere.
The permanent establishment shall not be allowed a deduction for amounts paid to its head office or any of the other office of the resident by way of royalties, fees or other similar payment in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or by way of interest on moneys lent to the permanent establishment.
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 of this Article shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary, the methods of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5.No profits shall be attributed to a permanent establishment by reason of the mere purchase by the permanent establishment of goods or merchandise for the enterprise.
6.For the purpose 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 a good and sufficient reason to the contrary.
7.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 derived by a resident of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that Contracting State.
2.The provisions of paragraph 1 of this Article shall also apply to profits derived by a resident of a Contracting State from its participation in a pool, a joint business or an international operating agency.
3.In this Article the term «profits» includes:
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| a) | the sale of passage tickets on behalf of other enterprises; |
| b) | the operation of a bus service connecting a town with its airport; |
| c) | advertising and commercial propaganda; |
| d) | transportation of goods by truck connecting a depot with a port or airport. |
Article 9
Associated Enterprises
1.Where:
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| (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 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. [REPLACED by paragraph 1 of Article 17 of the MLI] Where a Contracting State includes in the profits of an enterprise of that contracting State, and taxes accordingly, profits on which an enterprise of the other Contracting State has been charged to tax in that other Contracting State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned Contracting State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Contracting 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.
The following paragraph 1 of Article 17 of the MLI replaces paragraph 2 of Article 9 of this Convention:
ARTICLE 17- CORRESPONDING ADJUSTMENTS
Where a Contracting State includes in the profits of an enterprise of that Contracting State — and taxes accordingly — profits on which an enterprise of the other Contracting State has been charged to tax in that other Contracting State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned Contracting State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Contracting 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 Contracting 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 national laws of that Contracting State, but if the beneficial owner of the dividends is a company (other than a partnership) which holds at least 10 percent of the capital of the company paying dividends the tax so charged shall not exceed 5 percent 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.Notwithstanding the provisions of paragraphs 1 and 2, dividends paid by a company which is a resident of a Contracting State shall be taxable only in the other Contracting State if the beneficial owner of the dividends is:
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| a) | in the case of Kazakhstan: |
| | | (i) | the Government of the Republic of Kazakhstan, a political subdivision or local authorities; | | (ii) | the National Bank of the Republic of Kazakhstan; | | (iii) | JSC «Fund of the National prosperity «Samruk-Kazyna»; and | | (iv) | any other such government financial institution as may be agreed from time to time between the Contracting States; | |
| b) | in the case of UAE: |
| | | (i) | the Government of the UAE or its political subdivision, or local authorities, local Government of their financial institutions; | | (ii) | UAE Central Bank; | | (iii) | Abu Dhabi Investment Authority; | | (iv) | Abu Dhabi Investment Council; | | (v) | Abu Dhabi Fund for Economic Development; | | (vi) | Mubadala; | | (vii) | Dubai Holding; | | (viii) | Dubai World; | | (ix) | Abu Dhabi International petroleum Company; and | | (x) | any other such government financial institution as may be agreed from time to time between the Contracting States. | |
4.The term «dividends» as used in this Article means income from shares, mining shares, founders' 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 Contracting State of which the company making the distribution is a resident.
5.The provisions of paragraphs 1 and 2 of this Article 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 Contracting 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.
6.Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other Contracting 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 Contracting State, or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or fixed base situated in that other Contracting 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 Contracting State.
7.Nothing in this Convention shall be construed as preventing a Contracting State from imposing a special tax on the profits of a company attributable to a permanent establishment in that State, in addition to the tax which would be chargeable on the profits of a company which is a national of that State, provided that any additional tax so charged shall not exceed 5 per cent of the amount of such profits which have not been subjected to such additional tax in previous taxation years. For the purpose of this provision, the profits shall be determined after deducting there from all taxes, other than the additional tax referred to in this paragraph, imposed in the Contracting State in which the permanent establishment exists.
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 Contracting State.
2.However, such interest may also be taxed in the Contracting State in which it arises and according to the national laws of that Contracting State, but if the recipient is the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The competent authorities of the Contracting States 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/state securities and income from bonds or debentures, including the premium and prizes attaching to such securities, bonds or debentures. Penalty charges for late payments shall not be regarded as interest for the purpose of this Article.
4.The provisions of paragraphs 1 and 2 of this Article 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 and Article 14, as the case may be, shall apply.
5.Interest shall be deemed to arise in a Contracting State when the payer is the Government of that State, a political subdivision, local authorities thereof or a resident of that State. Where, however, the person paying the interest, 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 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 payments shall remain taxable according to the national laws of each Contracting State, due regard being had to the other provisions of this Convention.
7. [REPLACED by paragraph 1 of Article 7 of the MLI, reproduced below Article 28 of the Convention] The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt-claim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment.
8.Notwithstanding the provisions of paragraph 2 of this Article, interest arising in a Contracting State shall be exempt from tax in that State if it is received and really hold by:
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| (a) | In the case of Kazakhstan: |
| | | (i) | the Government of the Republic of Kazakhstan, a political subdivision or local authorities; | | (ii) | the National Bank of the Republic of Kazakhstan; | | (iii) | JSC «Fund of the National Prosperity «Samruk-Kazyna»; and | | (iv) | any other such government financial institutions as may be agreed from time to time between the Contracting States; | |
| (b) | in the case of the UAE: |
| | | (i) | the Government of the UAE or its political subdivision, or local authorities, local Government of their financial institutions; | | (ii) | UAE Central Bank; | | (iii) | Abu Dhabi Investment Authority; | | (iv) | Abu Dhabi Investment Council; | | (v) | Abu Dhabi Fund for Economic Development; | | (vi) | Mubadala; | | (vii) | Dubai Holding; | | (viii) | Dubai World; | | (ix) | Abu Dhabi International petroleum Company; and | | (x) | any other such government financial institution as may be agreed from time to time between the Contracting States. | |
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 and according to the national laws of that Contracting State, but if the recipient is the beneficial owner of the royalties is the resident of the other Contracting State then the tax so charged shall not exceed 10 per cent of the gross amount of royalties.
3.The term «royalties» as used in this Article means payments of any kind received as a consideration:
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| (a) | for the use of, or the right to use, any copyright of literary or artistic work (including cinematograph films, and films or tapes for radio or television broadcasting); and |
| (b) | for the use of, or the right to use, any copyright of scientific work, patent, trademark, design or model, plan, secret formula or process, 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 of this Article shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State carries on business in the other Contracting State in which the royalties 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 are paid is directly 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.Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, or administrative subdivisions or local authority thereof or a resident of that Contracting State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State 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 a fixed base then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment or a 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 royalties, having regard to the use, right or information for which they are paid, exceeds for whatever reason, 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 national laws of each Contracting State, due regard being had to the other provisions of this Convention.
7. [REPLACED by paragraph 1 of Article 7 of the MLI, reproduced below Article 28 of the Convention] The provisions of this Article shall not apply if the main purpose or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the royalties are paid to take advantage of this Article by means of that creation or assignment.
Article 13
Capital Gains
1.Gains derived by a resident of a Contracting State from the alienation of immovable property, as defined in Article 6, and situated in the other Contracting State may be taxed in the other Contracting State.
2.Gains derived by a resident of a Contracting State from the alienation of:
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| (a) | shares deriving their value directly or indirectly from immovable property situated in the other Contracting State, or |
| (b) | a contribution in a partnership the assets of which consist principally of immovable property situated in the other Contracting State, or of shares referred to in sub-paragraph (a) above shall be taxable only in that Contracting State. |
