Article 11

INCOME FROM DEBT-CLAIMS

1.         Income from debt-claims 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 income from debt-claims may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the income from debt-claims is a resident of the other Contracting State, the tax so charged shall not exceed :

            (a)        10 per cent of the gross amount of the income from debt-claims if it
                          is received by any financial institution (including an insurance company) ;

            (b)        15 per cent of the gross amount of the income from debt-claims in other cases.

3.         Notwithstanding the provisions of paragraphs 1 and 2, income from debt-claims arising in a Contracting State and paid to the Government of the other Contracting State shall be exempt from tax in the first-mentioned Contracting State.

            For the purposes of this paragraph, the term "Government"

            (a)        in the case of Thailand, means the Government of the Kingdom of Thailand
                         and shall include :

                         (i)            the Bank of Thailand ;
                         (ii)           the Export-Import Bank of Thailand;
                         (iii)          the Government Saving Bank;
                         (iv)           the Government Housing Bank;
                         (v)            the Bank for Agriculture and Agricultural Cooperatives;
                         (vi)           any Ministry or Department thereof;
                         (vii)          any local authority or statutory body;
                         (viii)         any body of corporate controlled or wholly owned by the
                                         Government of the Kingdom of Thailand; and
                         (ix)           any institutions as may be agreed from time to time
                                          between the Contracting States;

            (b)        in the case of Bahrain means the Government of the State of Bahrain and
                         shall include:

                         (i)            the Bahrain Monetary Agency; ("BMA")
                         (ii)           the Bahrain Development Bank;
                         (iii)          the Housing Bank;
                         (iv)           the General Organisation for Social Insurance ("GOSI");
                         (v)            any Ministry or Department thereof;
                         (vi)           any local authority or Statutory body thereof;
                         (vii)           any body corporate controlled or wholly owned by the
                                          Government of the State of Bahrain; and
                         (viii)          any institutions as may be agreed from time to time between
                                          the Contracting States.

4.         The term "income from debt-claims" as used in this Article means 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, as well as income assimilated to income from money lent by the taxation laws of the Contracting State in which the income arises.

5.         The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the income from debt-claims, being a resident of a Contracting State, carries on business in the other Contracting State in which the income from debt-claims 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 income from debt-claims 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.         Income from debt-claims shall be deemed to arise in a Contracting State when the payer is that State itself, a local authority or a resident of that State. Where, however, the person paying the income from debt-claims, 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 income from debt-claims is paid was incurred, and such income from debt-claims is borne by such permanent establishment or fixed base, then such income from debt-claims shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

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 income from debt-claims, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

Article 12

ROYALTIES

1.         Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2.         However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 15 per cent of the gross amount of the royalties.

3.         The term "royalties" as used in this Article means payments of any kind received as a consideration for the alienation of or the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.

4.         The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of 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 effectively connected with such permanent establishment or fixed base. In such cases the provisions of Article 7 or Article 14, as the case may be, shall apply.

5.         Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base 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 the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

Article 13

CAPITAL GAINS

1.         Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2.         Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a

3.         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 a fixed base, may be taxed in that other State.

4.         Gains derived by an enterprise of a Contracting State 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 that State.

5.         Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 of this Article and paragraph 3 of Article 12, shall be taxable only in the Contracting State of which the alienator is a resident. Nothing in this paragraph shall prevent either Contracting State from taxing the gains or income from the sale or transfer of shares or other securities.

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 available to him in the other Contracting State
                        for the purpose of performing his activities, for a period or periods
                        amounting to or exceeding in the aggregate 183 days within any
                        twelve-month period; in the 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 Contracting State is for a period or periods
                        amounting to or exceeding in the aggregate 183 days within any
                        twelve-month period; in that case, only so much of the income as is
                        derived from his activities performed in that other State may be taxed
                        in that other State; or

           (c)        if the remuneration for his activities in the other Contracting State is
                        paid by a resident of that Contracting State or is borne by a permanent
                        establishment or a fixed base situated in that Contracting State; in that
                        case, only so much of the remuneration as is derived there from 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, dentists, lawyers, engineers, architects and accountants.

Article 15

DEPENDENT PERSONAL SERVICES

1.         Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2.         Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if :

           (a)        the recipient is present in the other State for a period or periods
                        not exceeding in the aggregate 183 days within any twelve-month
                        period, 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, by an enterprise of a Contracting State shall be taxable only in that State.

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