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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 be taxed in the Contracting State in which it arises, and according to the laws of that Contracting State, but if the recipient is a beneficial owner of the interest 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)

                         which is a resident of the other State;

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

                        interest.

 

3.         Notwithstanding the provisions of paragraph 2:

            (a)        the State Bank of Pakistan shall be exempt from Thai tax with

                         respect to interest from sources within Thailand;

            (b)        the Bank of Thailand shall be exempt from Pakistan tax with

                         respect to interest from sources within Pakistan; and

            (c)        the Government of a Contracting State shall be exempt from

                         the tax of the other Contracting State with respect to interest

                        on loans derived by that Government from sources within that

                        other Contracting State.

 

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 recipient 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 professional 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 a case the provisions of Articles 7 or 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, a political sub--division, 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 in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

 

7.         Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, 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 recipient in the absence of such relationship, the provisions of this Article shall apply only to the last--mentioned amount. In that 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 shall be taxable in the other State.

 

2.             However, such royalties may be taxed in the Contracting State in which they arise, but the tax so charged shall not exceed:

                (a)        10 per cent of the gross amount of royalties if they are

                             made as a consideration for the alienation or the use of, or

                             the right to use any copyright of literary, artistic or scientific

                             work;

                (b)       20 per cent of the gross amount of other royalties.

 

3.             Notwithstanding the provisions of paragraph 2, royalties or other like payments payable to a Contracting State or a State owned company in respect of films or tapes shall be exempt from tax in the other Contracting State.

 

4.         The term “royalties” as used in this Article means payments of any kind received as a consideration for the alienation or the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, 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.

 

5.         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 case the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

6.             Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub--division, 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 with which the right or property giving rise to the royalties is effectively connected and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arises in the Contracting State in which the permanent establishment is situated.

 

7.         Where, owing to a special relationship between the payer and the recipient or 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 recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being has 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 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 independent personal service, 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 Contracting State of which the alienator is a resident.

 

4.         Gains from the alienation of any property other than that referred to in paragraphs 1,2,3 and paragraph 4 of Article 12 shall be taxable only in the Contracting State of which the alienator is a resident.

 

 

ARTICLE 14
Independent Personal Services

1.         Income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State unless such activities were performed in the other Contracting State. Income in respect of professional services or independent activities performed within that other State may be taxed by that other State.

 

2.             Notwithstanding the provisions of paragraph 1, income derived by a resident of a Contracting State in respect of professional services or other independent activities performed in the other Contracting State may be taxed in the other State if:

                (a)        the recipient is present in the other State for a period or

                             periods exceeding in the aggregate 183 days in the tax

                             year concerned, or

                (b)        the recipient maintains a fixed base in the other State, or

                (c)        the income is borne by an enterprise or a permanent

                            establishment in that other State.

 

3.         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 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 in the tax

                             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 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