CHAPTER II
TAXATION OF INCOME
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY 1. Income from immovable property may be taxed in the State in which such property is situated. 2. The term "immovable property" shall be defined in accordance with the law of the 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 percents of gereral law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property. 3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting,or use in any other form of immovable property. 4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professional services. ARTICLE 7
BUSINESS PROFITS 1. The profits of an enterprise of one of the States shall be taxable only in that State unless the enterprise carries on business in the other 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 that permanent establishment. 2. Where an enterprise of one of the States carries on business in the other State through a permanent establishment situated therein, there shall in each 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 the determination of 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 State in which the permanent establishment is situated or elsewhere. 4. In so far as it has been customary in one of the States 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 or, in the case of a person who does not claim taxation on the basis of the real net profits of the permanent establishment, on the basis of a certain reasonable percentage of the gross receipts of the permanent establishment, nothing in paragraph 2 shall preclude such State from determining the profits to be taxed by such a method; the method adopted shall, however, be such that the result shall be in accordance with the principles laid down in this Article. 5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprirse. 6. For the purposes 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 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 or income of an enterprise of one of the s from the operation of aircraft in international traffic shall be taxable only in that . 2. If according to Article 7 an enterprise of one of the States operating ships in international traffic may be taxed in the other State, the tax charged in that other State shall be reduced by an amount equal to 50 percent thereof. 3. The provisions of paragraph 1 and 2 shall likewise apply to profits or income arising from participations in shipping or aircraft pools of any kind by such enterprises engaged in shipping or air transport. ARTICLE 9
ASSOCIATED ENTERPRISES Where a) an enterprise of one of the States participates directly or indirectly in the management, control or capital of an enterprise of the other State, or b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the States and an enterprise of the other State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial or financial relations which differ from those which would be made between independent enterpirses, 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. ARTICLE 10
DIVIDENDS 1. Dividends paid by a company which is a resident of one of the States to a resident of the other State may be taxed in that other State. 2. However, such dividends may be taxed in the State of which the company paying the dividends is a resident but the tax so charged shall not exceed 25 percent of the gross amount of the dividends. 3. Notwithstanding the provisions of paragraph 2, A. Netherlands tax on dividends paid by a company which is a resident of the Netherlands to a company the capital of which is wholly or partly divided into shares and which is a resident of Thailand and holds directly at least 25 percent of the capital of the company paying the dividends, shall not exceed 5 percent of the gross amount of the dividends; B. Thai tax on dividends paid by a company which is a resident of Thailand to a company the capital of which is wholly or paretly divided into shares and which is a resident of the Netherlands and holds directly at least 25 percent of the capital of the company paying the dividends, shall not exceed 10 percent: Provided that a) if the maximum Thai tax rate on company profits for the accounting period within which the dividends are distributed is not more than 30 percent, the Thai tax on such dividends shall not exceed (i) 15 percent of the gross amount of the dividends, if the company paying the dividends engages in an industrial undertaking; (ii) 20 percent of the gross amount of the dividends, in all cases; b) if the maximum Thai tax rate on company profits for the accounting period in which the dividends are distributed is more than 30 percent, but not more than 40 percent, the Thai tax on such dividends shall not exceed 15 percent of the gross amount of the dividends, if the company paying the dividends does not engage in an industrial undertaking. 4. The competent authorities of the States shall settle the mode of application of paragrphs 2 and 3 5. The term "dividends" as used in this Article means income from shares, "jouissance" rights founders shares or other rights, not being debt-claims, participating in profits, as well as imcome from other corporate rights assimilated to income from shares by the taxation law of the State of which the company making the distribution is a resident. 6. The term "industrial undertaking" as used in this Article means a) any undertaking engaged in 1. manufacturing, assembling and processing, 2. construction, civil engineering and ship building, 3. mining and exploration for and exploitation of natura resources, 4. production of electricity, hydraulic power, gas or the supply of water, or 5. agriculture, forestry and fishery and the carrying on of a plantation, and b) any other undertaking entitled to the privileges accorded under the laws of Thailand on the promotion of industrial investment, and c) any other undertaking which may be declared to be an "industrial undertaking" for the purpose of this Article by the competent authority of Thailand. 7. The provisions of paragraphs 2 and 3 shall not apply if the recipient of the dividends, being a resident of one of the States, has in the other State, of which the company paying the dividends is a resident, a permanent establishment with which the holding by virtue of which the dividends are paid is effectively connected. In such a case, the provisions of Article 7 shall apply, provided that under the law of that other State the dividends are taxed as part of the profits of that permanent establishment. 8. Where a company which is a resident of one of the States derives, profits or income from the other State, that other State may not impose any tax on the dividends paid by the company to persons who are not residents of that other State, or subject the company's undistributed profits to the tax on undistributed profits, even if the dividends paid or the undistributed profit consist wholly or partly of profits or income arising in such other State. | 
