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CONVENTION
BETWEEN
THE GOVERNMENT OF THE KINGDOM OF THAILAND
AND
THE GOVERNMENT OF THE STATE OF BAHRAIN
FOR
THE AVOIDANCE OF DOUBLE TAXATION
AND
THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME


 

             The Government of the Kingdom of Thailand and the Government of the State of Bahrain,

 

             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 :

 

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 Contracting State or of its local authorities, 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 the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

 

3.         The existing taxes to which the Convention shall apply are in particular :

 

             (a)        In the case of Thailand:

 

                          -           the income tax; and

                          -           the petroleum income tax;

 

                         (hereinafter referred to as "Thai tax");


             (b)        In the case of Bahrain :

 

                          any tax imposed on total income or on elements of income, including taxes on
                          gains from the 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 ;

                         (hereinafter referred to as "Bahraini 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 significant changes which have been made in their respective taxation laws.

 

 

Article 3
GENERAL DEFINITIONS

 

1.         For the purposes of this Convention, unless the context otherwise requires :

 

            (a)         the term " Thailand" means the Kingdom of Thailand and includes
                          the maritime area adjacent to the territorial sea of the Kingdom of
                          Thailand which by Thai legislation, and in accordance with the
                          international law, has been or may hereafter be designated as an
                          area within which the rights of the Kingdom of Thailand with respect
                          to the sea-bed and subsoil and their natural resources may be exercised;  

 

            (b)         the term "Bahrain" means the territory of the State of Bahrain including
                          its islands, the territorial sea, the continental shelf, any exclusive economic
                          zone or zones, and such other territories, airspace and seas over which
                          Bahrain exercises sovereignty or over which it has rights of sovereignty
                          under international law;

 

            (c)         the terms " a Contracting State" and " the other Contracting State" mean
                          Thailand or Bahrain as the context requires;

 

            (d)         the term "person" includes an individual, an undivided estate, a company
                          and any other body of persons as well as any entity treated as a taxable unit
                          under the taxation laws in force in either Contracting State;

 

            (e)         the term "company" means any body corporate or any entity constituted or
                          recognised under the laws of one or other of the Contracting States or 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" mean respectively an enterprise carried on by a resident
                         of a Contracting State and an enterprise carried on by a resident of the other
                         Contracting State;

 

            (g)         the term "tax" means Thai tax or Bahraini tax as the context requires;

 

            (h)         the term "national" means :

 

                         (i)         in the case of Thailand :

                                      (aa) any individual possessing the nationality of Thailand; and

                                      (bb) any legal person, partnership, association and any other entity
                                               deriving its status as such from the laws in force in Thailand;

 

                         (ii)        in the case of Bahrain :

                                      (aa) any individual possessing Bahraini nationality under the laws of
                                               Bahrain; and

                                      (bb) any company, a body of persons or any other entity capable of
                                               legal existence under the laws of Bahrain;

 

             (i)         the term "international traffic" means any transport by a ship 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; and

 

             (j)         the term "competent authority" means, in the case of Thailand, the Minister of
                          Finance or his authorised representative, and, in the case of Bahrain, the
                          Minister of Finance & National Economy or his authorised representative.

 

2.         As regards the application of the Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that 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 any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes that State and any local authority thereof. But this term 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 of the State in which he has a permanent
                          home available to him; if he has a permanent home available to him in both
                          States, he shall be deemed to be a resident of the State with which his personal
                          and economic relations are closer (centre of vital interests) ;

 

             (b)        if the State in which he has his centre of vital interests cannot be determined,
                          or if he has not a permanent home available to him in either State, he shall be
                          deemed to be a resident of the State in which he has an habitual abode;

 

             (c)        if he has an habitual abode in both States or in neither of them, he shall be
                          deemed to be a resident of the State of which he is a national ;

 

             (d)        if he is a national of both States or of neither of them, the competent authorities
                          of the Contracting States shall endeavour to 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 State, it shall be deemed to be a resident of the Contracting State in which it is incorporated. If the person under the foregoing criterion is still 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. 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 mine, an oil or gas well, a quarry or any other place of extraction
                          of natural resources or any other operations of any nature engaged
                          in the exploration or production of crude oil or other natural hydrocarbons
                          from the ground of a Contracting State, or in the refining of crude oil or
                          gas in a Contracting State pursuant to the domestic laws of the Contracting
                          States. In the case of Bahrain, the domestic law referred to herein means
                          Amiri Decree No. 22/1979 and in the case of Thailand means the Petroleum
                          Income Tax Acts;

 

             (g)        a farm or plantation or other place where agricultural, forestry plantation
                          or related activities are carried on;

 

             (h)        a warehouse, in relation to a person providing storage facilities for others;

             (i)        a building site, a construction, installation or assembly project or supervisory
                          activities in connection therewith, where such site, project or activities
                          continue for a period of more than 6 months ;

             (j)        the furnishing of services including consultancy services by a resident of
                          one of the Contracting States through employees or other personnel, where
                          activities of that nature continue for the same or a connected project within
                          the other Contracting State for a period or periods aggregating more than
                          6 months within any twelve-month period.

 

3.         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 or display 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 or display;

 

             (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
                          advertising, for the supply of information, for scientific research or for similar
                          activities which have a preparatory or auxiliary character, for the enterprise.

          

4.         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 the enterprise of the other Contracting State, the enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State, if such a person :

 

             (a)        has and habitually exercises in the first-mentioned State, an authority to
                          conclude contracts on behalf of the enterprise; unless his activities are
                          limited to the purchase of goods or merchandise for the enterprise ;

 

             (b)        has no such authority, but habitually maintains in the first - mentioned State
                          a stock of goods or merchandise belonging to the enterprise from which he
                          regularly fills orders or makes deliveries on behalf of the enterprise ; or

 

             (c)        has no such authority, but habitually secures orders in the first-mentioned
                          State wholly or almost wholly for the enterprise or for the enterprise and
                          other enterprises which are controlled by it or have a controlling interest in it.

 

5.         An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other 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. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise or on behalf of that enterprise and other enterprises, which are controlled by it or have a controlling interest in it, he will not be considered an agent of independent status within the meaning of this paragraph.

 

6.         The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

 

Last updated: 08.12.2011