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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 State.

 

2.         However, such interest may also be taxed in the Contracting State in  which it arises and according to the laws of that State, but if the recipient  is the beneficial owner of the interest and is a company which 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 interest if it is received

                          by any financial institution (including an insurance

                          company);and

            (b)        25 per cent of the gross amount of the interest in all other

                          cases.

 

3.         Notwithstanding the provisions of paragraph 2, interest 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" means-

            (a)        in the case of Sri Lanka, the Government of the Democratic

                         Socialist Republic of Sri LanKa and shall include:

                         (i)         the central bank of ceylon,

                         (ii)        the local authorities,

                         (iii)       any   agency  or  instrumentality  (including  a 

                                      financial  institution) wholly owned by the Government

                                      or local authority thereof, as  may  be  agreed  from 

                                      time to time between the  Governments of the two

                                      Contracting States,

            (b)        in the case of Thailand, the royal Government of Thailand

                         and shall include:

                          (i)         the Bank of Thailand;

                          (ii)        the local authorities; and

                          (iii)       such institutions, the capital of which is wholly owned

                                       by the Royal Government of Thailand or any local

                                       authorities as may be agreed  from  time to time

                                       between the Governmentsof the two  Contracting

                                       States.

 

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 profit, 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. Penalty charges for late payment  shall not be regarded as interest for the purpose of this Article.

 

5.         The  provisions of paragraphs 1,2 and 3 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 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  (a)  such  permanent  establishment  or fixed base, or with (b) business  activities referred to under (c) of paragraph 1 of Article 7. In such cases the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

6.         Interest shall be deemed to arise in a Contracting State when the  payer is that State itself, an administrative subdivision, a local authority 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 Contracting State in which the permanent establishment or fixed base is situated.

 

7.         Where, by reason of a special relationship between the payer and the  benficial 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 law 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  recipient is the beneficial owner of the royalties 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 payment 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 for television or 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 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 effectively connected with (a) such permanent establishment or fixed base,  or with (b) business activities referred to under (c) of paragraph 1 of  Article 7. 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 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 between both of them and some other person, the amount of the  royalties  paid 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 resident of a Contracting State in the other  Contracting  State for the purpose of performing professional services,  including  such  gains  from  the alienation of such a permanent establishment  (alone  or together with the whole enterprise) or of such a fixed base, may be  taxed in that other State.

 

3.         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.

 

4.         Gains from the alienation of any property or assets, other than those referred to in paragraphs 1,2 and 3 of this Article 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.

 

5.         For the purposes of this Article, the term "alienation" shall have  the  meaning which it has under the laws of that Contracting State relating to  the  taxes in question. The meaning of the term shall in any include the sale,  exchange, transfer, or relinquishment of property or the extinguishment of any  rights therein or the compulsory acquisition thereof under any law in force in the respective Contracting State.

 

 

ARICLE 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 for a period or periods

                         amounting to or exceeding in the aggregate 183 days within

                         any twelve  month  period  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 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 the 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, education or teaching activities as well as the independent activities or 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 there from may be taxed in that  other State.

 

2.         Notwithstanding  the  provisions  of  paragraph 1 of this Article,  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.

 

 

 

 

Last updated: 08.12.2011