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INCOME TAX (INTERNATIONAL AGREEMENTS) AMENDMENT ACT 1991 No. 96 of 1991 - SCHEDULE
SCHEDULE Section 5
SCHEDULES TO BE ADDED AT THE END OF THE PRINCIPAL ACT
"SCHEDULE 33 Section 3
AGREEMENT BETWEEN AUSTRALIA AND THE REPUBLIC OF HUNGARY
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION
OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
Australia and the Republic of Hungary,
DESIRING to conclude an Agreement for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income, and to further
develop and facilitate their economic relations,
HAVE AGREED as follows:
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of the
Contracting States.
ARTICLE 2
Taxes Covered (1) The existing taxes to which this Agreement shall apply are:
(a) in Australia - the income tax, and the petroleum resource rent tax in
respect of offshore projects, imposed under the federal law of the
Commonwealth of Australia;
(b) in Hungary - the income tax on individuals and the profit taxes,
imposed under the law of the Republic of Hungary. (2) This Agreement
shall also apply to any identical or substantially similar taxes which
are imposed under the federal law of the Commonwealth of Australia or
the law of the Republic of Hungary after the date of signature of this
Agreement in addition to, or in place of, the existing taxes. The
competent authorities of the Contracting States shall notify each
other of any substantial changes which have been made in the laws of
their respective States relating to the taxes to which this Agreement
applies within a reasonable period of time after such changes. (3) In
this Agreement, the terms "Australian tax" and "Hungarian tax" do not
include any penalty or interest imposed under the law of either
Contracting State relating to the taxes to which this Agreement
applies.
ARTICLE 3
General Definitions (1) In this Agreement, unless the context otherwise
requires:
(a) the term "Australia", when used in a geographical sense, excludes all
external territories other than:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Territory of Heard Island and McDonald Islands; and
(vi) the Coral Sea Islands Territory,
and includes any area adjacent to the territorial limits of Australia
(including the Territories specified in this subparagraph) in respect of which
there is for the time being in force, consistently with international law, a
law of Australia dealing with the exploitation of any of the natural resources
of the seabed and subsoil of the continental shelf;
(b) the term "Hungary" when used in a geographical sense means the
territory of the Republic of Hungary;
(c) the terms "a Contracting State", "one of the Contracting States" and
"other Contracting State" mean Australia or the Republic of Hungary,
as the context requires;
(d) the term "person" includes an individual, a company and any other body
of persons;
(e) the term "company" means any body corporate or any entity which is
treated as a company or body corporate for tax purposes;
(f) the terms "enterprise of a Contracting State", "enterprise of one of
the Contracting States" and "enterprise of the other Contracting
State" mean an enterprise carried on by a resident of Australia or an
enterprise carried on by a resident of the Republic of Hungary, as the
context requires;
(g) the term "tax" means Australian tax or Hungarian tax, as the context
requires;
(h) the term "Australian tax" means tax imposed by Australia, being tax to
which this Agreement applies by virtue of Article 2;
(i) the term "Hungarian tax" means tax imposed by the Republic of Hungary,
being tax to which this Agreement applies by virtue of Article 2;
(j) the term "competent authority" means, in the case of Australia, the
Commissioner of Taxation or an authorised representative of the
Commissioner and, in the case of the Republic of Hungary, the Minister
of Finance, or an authorised representative of the Minister. (2) In
the application of this Agreement by a Contracting State, any term not
defined in this Agreement shall, unless the context otherwise
requires, have the meaning which it has under the laws of that State
from time to time in force relating to the taxes to which this
Agreement applies.
ARTICLE 4
Residence (1) For the purposes of this Agreement, a person is a resident of
one of the Contracting States:
(a) in the case of Australia, if the person is a resident of Australia for
the purposes of Australian tax; and
(b) in the case of the Republic of Hungary, if the person is liable to tax
therein by reason of domicile, residence, place of management or any
other criterion of a similar nature. (2) A person is not a resident of
a Contracting State for the purposes of this Agreement if the person
is liable to tax in that State in respect only of income from sources
in that State. (3) Where by reason of the preceding provisions of this
Article a person, being an individual, is a resident of both
Contracting States, then the status of the person shall be determined
in accordance with the following rules:
(a) the person shall be deemed to be a resident solely of the Contracting
State in which a permanent home is available to the person;
(b) if a permanent home is available to the person in both Contracting
States, or in neither of them, the person shall be deemed to be a
resident solely of the Contracting State with which the personal and
economic relations of the person are the closer (centre of vital
interests). (4) Where by reason of the provisions of paragraph (1), a
person other than an individual is a resident of both Contracting
States, then it shall be deemed to be a resident solely of the
Contracting State in which its place of effective management is
situated.
ARTICLE 5
Permanent Establishment (1) For the purposes of this Agreement, the term
"permanent establishment" means a fixed place of business or production
through which the activities of an enterprise are wholly or partly carried on.
(2) The term "permanent establishment" shall include 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;
(g) a farm or forest;
(h) a building site or construction, installation or assembly project
which exists for more than 12 months. (3) An enterprise shall not be
deemed to have a permanent establishment merely by reason of:
(a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise; or
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery; or
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
or
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for
the enterprise; or
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise; or
(f) the maintenance of a fixed place of business solely for any
combination of activities mentioned in subparagraphs (a) to (e),
provided that the overall activity of the fixed place of business
resulting from this combination is of a preparatory or auxiliary
character. (4) An enterprise shall be deemed to have a permanent
establishment in one of the Contracting States and to carry on
business through that permanent establishment if:
(a) it carries on supervisory activities in that State for more than 12
months in connection with a building site, or a construction,
installation or assembly project which is being undertaken in that
State; or
(b) substantial equipment is being used in that State for more than 12
months by, for or under contract with the enterprise in, or in respect
of, the exploration for or the exploitation of natural resources, or
in respect of activities connected with such exploration or
exploitation. (5) A person acting in one of the Contracting States on
behalf of an enterprise of the other Contracting State - other than an
agent of an independent status to whom paragraph (6) applies - shall
be deemed to be a permanent establishment of that enterprise in the
first mentioned State if the person has, and habitually exercises in
that State, an authority to conclude contracts on behalf of the
enterprise, unless the person's activities are limited to the purchase
of goods or merchandise for the enterprise. (6) An enterprise of one
of the Contracting States 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 person who is a broker,
general commission agent or any other agent of an independent status
and is acting in the ordinary course of the person's business as such
a broker or agent. (7) 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 make either company a permanent
establishment of the other. (8) The principles set forth in the
preceding paragraphs of this Article shall be applied in determining
for the purposes of this Agreement whether there is a permanent
establishment outside both Contracting States, and whether an
enterprise, not being an enterprise of one of the Contracting States,
has a permanent establishment in one of the Contracting States.
ARTICLE 6
Income from Real Property (1) Income from real property may be taxed in the
Contracting State in which the real property is situated. (2) In this Article,
the term "real property", in relation to one of the Contracting States, has
the meaning which it has under the laws of that State and includes:
(a) a lease of land and any other interest in or over land, including a
right to explore for mineral, oil or gas deposits or other natural
resources, and a right to mine such deposits or resources; and
(b) a right to receive variable or fixed payments either as consideration
for the exploitation of or the right to explore for or exploit, or in
respect of the exploitation of, mineral, oil or gas deposits, quarries
or other places of extraction or exploitation of natural resources.
Ships and aircraft shall not be regarded as real property. (3) Any
interest or right referred to in paragraph (2) shall be regarded as
situated where the land, mineral, oil or gas deposits, quarries or
natural resources, as the case may be, are situated or where the
exploration may take place. (4) The provisions of paragraphs (1) and
(3) shall also apply to income from real property of an enterprise and
to income from real property used for the performance of independent
personal services.
ARTICLE 7
Business Profits (1) The profits of an enterprise of a Contracting State shall
be taxable only in that State unless the enterprise carries on business in the
other Contracting 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) Subject to the provisions of paragraph (3),
where an enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated therein, there
shall in each Contracting 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 or with other enterprises with which it
deals. (3) In the determination of the profits of a permanent establishment,
there shall be allowed as deductions expenses of the enterprise, being
expenses which are incurred for the purposes of the permanent establishment
(including executive and general administrative expenses so incurred) and
which would be deductible if the permanent establishment were an independent
entity which paid those expenses, whether incurred in the Contracting State in
which the permanent establishment is situated or elsewhere. (4) 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
enterprise. (5) Nothing in this Article shall affect the application of any
law of a Contracting State relating to the determination of the tax liability
of a person in cases where the information available to the competent
authority of that State is inadequate to determine the profits to be
attributed to a permanent establishment, provided that that law shall be
applied, so far as the information available to the competent authority
permits, consistently with the principles of this Article. (6) Where profits
include items of income which are dealt with separately in other Articles of
this Agreement, then the provisions of those Articles shall not be affected by
the provisions of this Article. (7) For the purposes of the preceding
paragraphs, the profit 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. (8) Nothing in this Article shall affect
the operation of any law of a Contracting State relating to tax imposed on
profits from insurance with non-residents, provided that if the relevant law
in force in either Contracting State at the date of signature of this
Agreement is varied (otherwise than in minor respects so as not to affect its
general character) the Contracting States shall consult with a view to
agreeing to any amendment of this paragraph that may be appropriate. (9)
Where:
(a) a resident of a Contracting State is beneficially entitled, whether
directly or through one or more interposed trust estates, to a share
of the business profits of an enterprise carried on in the other
Contracting State by the trustee of a trust estate other than a trust
estate which is treated as a company for tax purposes; and
(b) in relation to that enterprise, that trustee would, in accordance with
the principles of Article 5, have a permanent establishment in the
other Contracting State, the enterprise carried on by the trustee
shall be deemed to be a business carried on in the other State by that
resident through a permanent establishment situated therein and that
share of business profits shall be attributed to that permanent
establishment.
ARTICLE 8
Ships, Aircraft and Road Transport Vehicles (1) Profits from the operation of
ships, aircraft or road transport vehicles derived by a resident of one of the
Contracting States shall be taxable only in that State. (2) Notwithstanding
the provisions of paragraph (1), such profits may be taxed in the other
Contracting State where they are profits from operations of ships, aircraft or
road transport vehicles confined solely to places in that other State. (3) The
provisions of paragraphs (1) and (2) shall apply in relation to the share of
the profits from the operation of ships, aircraft or road transport vehicles
derived by a resident of one of the Contracting States through participation
in a pool service, in a joint transport operating organization or in an
international operating agency. (4) For the purposes of this Article, profits
derived from the carriage by ships, aircraft or road transport vehicles of
passengers, livestock, mail, goods or merchandise shipped in a Contracting
State for discharge at another place in that State shall be treated as profits
from operations of ships, aircraft or road transport vehicles confined solely
to places in that State.
ARTICLE 9
Associated Enterprises (1) Where:
(a) an enterprise of one of the Contracting States participates directly
or indirectly in the management, control or capital of an enterprise
of the other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States
and an enterprise of the other Contracting State; or
(c) a person, acting in a Contracting State on behalf of an enterprise of
the other Contracting State, manufactures or processes in the first
mentioned State for the enterprise, goods or merchandise belonging to
the enterprise, and in any case conditions operate between the two
enterprises, or between an enterprise and the person, in their
commercial or financial relations which differ from those which might
be expected to operate between independent enterprises, or between an
independent enterprise and a person, dealing wholly independently with
one another, then any profits which, but for those conditions, might
have been expected to accrue to one of the enterprises or to the
person but, by reason of those conditions, have not so accrued, may be
included in the profits of that enterprise or of the person and taxed
accordingly. (2) Nothing in this Article shall affect the application
of any law of a Contracting State relating to the determination of the
tax liability of a person, including determinations in cases where the
information available to the competent authority of that State is
inadequate to determine the income to be attributed to an enterprise
or a person, provided that that law shall be applied, so far as it is
practicable to do so, consistently with the principles of this
Article. (3) Where profits on which an enterprise of one of the
Contracting States has been charged to tax in that State are also
included, by virtue of paragraph (1) or (2), in the profits of an
enterprise or of a person of the other Contracting State and charged
to tax in that other State, and the profits so included are profits
which might have been expected to have accrued to that enterprise or
to that person of the other State if the conditions operative between
the enterprises or between an enterprise and the person had been those
which might have been expected to have operated between independent
enterprises or between an independent enterprise and a person dealing
wholly independently with one another, then the first mentioned State
shall make an appropriate adjustment to the amount of tax charged on
those profits in the first mentioned State. In determining such an
adjustment, due regard shall be had to the other provisions of this
Agreement and for this purpose the competent authorities of the
Contracting States shall if necessary consult each other.
ARTICLE 10
Dividends (1) Dividends paid by a company which is a resident of a Contracting
State for the purposes of its tax, being dividends to which a resident of the
other Contracting State is beneficially entitled, may be taxed in that other
State. (2) Such dividends may be taxed in the Contracting State of which the
company paying the dividends is a resident for the purposes of its tax, and
according to the law of that State, but the tax so charged shall not exceed 15
per cent of the gross amount of the dividends. (3) The term "dividends" as
used in this Article means income from shares or other rights to participate
in profits and not relating to debt claims, as well as other income which is
subjected to the same taxation treatment as income from shares by the laws of
the State of which the company making the distribution is a resident. (4) The
provisions of paragraph (2) shall not apply if the person beneficially
entitled to the dividends, being a resident of a Contracting State, carries on
business in the other Contracting State of which the company paying the
dividends is a resident, through a permanent establishment situated therein,
or performs in that other State independent personal services from a fixed
base situated therein, and the holding in respect of which the dividends are
paid is effectively connected with such permanent establishment or fixed base.
In any such case the provisions of Article 7 or Article 14, as the case may
be, shall apply. (5) Where a company which is a resident of a Contracting
State derives profits or income from the other Contracting State, that other
Contracting State may not impose any tax on the dividends paid by the company,
except in so far as such dividends are beneficially owned by a resident of
that other State or in so far as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or a fixed
base situated in that other State, nor subject the company's undistributed
profits to tax even if the dividends paid or the undistributed profits consist
wholly or partly of profits or income arising in that other State.
ARTICLE 11
Interest (1) Interest arising in a Contracting State, being interest to which
a resident of the other Contracting State is beneficially entitled, may be
taxed in that other State. (2) Such interest may be taxed in the Contracting
State in which it arises, and according to the law of that State, but the tax
so charged shall not exceed 10 per cent of the gross amount of the interest.
(3) The term "interest" in this Article means interest from indebtedness 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 or from bonds or debentures, and all other income that
is, by the law relating to tax of the Contracting State in which the income
arises, assimilated to income from money lent. (4) The provisions of paragraph
(2) shall not apply if the person beneficially entitled to 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 independent
personal services from a fixed base situated therein, and the indebtedness 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
Article 7 or Article 14, as the case may be, shall apply. (5) Interest shall
be deemed to arise in a Contracting State when the payer is that State itself
or a political subdivision or local authority of that State or a person who is
a resident of that State for the purposes of its tax. Where, however, the
person paying the interest, whether the person is a resident of a Contracting
State or not, has in a Contracting State or outside both Contracting States a
permanent establishment or 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 State in which the permanent establishment or fixed
base is situated. (6) Where, owing to a special relationship between the payer
and the person beneficially entitled to the interest, or between both of them
and some other person, the amount of the interest paid, having regard to the
indebtedness for which it is paid, exceeds the amount which might have been
expected to have been agreed upon by the payer and the person so entitled 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 amount
of the interest paid shall remain taxable according to the law, relating to
tax, of each Contracting State, but subject to the other provisions of this
Agreement. (7) Interest derived from the investment of official reserves by
the Government of a Contracting State or by a bank performing central banking
functions in a Contracting State shall be exempt from tax in the other
Contracting State.
ARTICLE 12
Royalties (1) Royalties arising in a Contracting State to which a resident of
the other Contracting State is beneficially entitled may be taxed in that
other State. (2) Such royalties may be taxed in the Contracting State in which
they arise, and according to the law of that State, but the tax so charged
shall not exceed 10 per cent of the gross amount of the royalties. (3) The
term "royalties" in this Article means payments or credits, whether periodical
or not, and however described or computed, to the extent to which they are
made as consideration for:
(a) the use of, or the right to use, any copyright, patent, design or
model, plan, secret formula or process, trademark, or other like
property or right; or
(b) the use of, or the right to use, any industrial, commercial or
scientific equipment; or
(c) the supply of scientific, technical, industrial or commercial
knowledge or information; or
(d) the supply of assistance ancillary and subsidiary to and furnished to
enable the application or enjoyment of or the use of, or the right to
use or the supply of the items referred to in subparagraphs (a), (b)
and (c); or
(e) the use of, or the right to use:
(i) motion picture films; or
(ii) films or video tapes for use in connection with television; or
(iii) tapes for use in connection with radio broadcasting; or
(f) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph. (4) The provisions of
paragraph (2) shall not apply if the person beneficially entitled to
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 property or right in respect of which the
royalties are paid or credited is effectively connected with such
permanent establishment or fixed base. In such a case, 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 or a political subdivision or local
authority of that State or a person who is a resident of that State
for the purposes of its tax. Where, however, the person paying the
royalties, whether the person is a resident of a Contracting State or
not, has in one of the Contracting States or outside both Contracting
States a permanent establishment or fixed base in connection with
which the liability to pay the royalties was incurred, and the
royalties are borne by the permanent establishment or fixed base, then
the royalties shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated. (6) Where, owing to
a special relationship between the payer and the person beneficially
entitled to the royalties, or between both of them and some other
person, the amount of the royalties paid or credited, having regard to
what they are paid or credited for, exceeds the amount which might
have been expected to have been agreed upon by the payer and the
person so entitled 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 amount of the royalties paid or credited
shall remain taxable according to the law, relating to tax, of each
Contracting State, but subject to the other provisions of this
Agreement.
ARTICLE 13
Alienation of Property (1) Income or gains derived by a resident of a
Contracting State from the alienation of real property referred to in Article
6 and, as provided in that Article, situated in the other Contracting State
may be taxed in that other State. (2) Income or gains from the alienation of
property, other than real property referred to in Article 6, that forms part
of the business property of a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State or pertains to a fixed
base available to a resident of the first mentioned State in that other State
for the purpose of performing independent personal services, including income
or 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. (3) Income or gains from the alienation of ships, aircraft or road
transport vehicles operated in international traffic, or of property other
than real property referred to in Article 6 pertaining to the operation of
those ships, aircraft or road transport vehicles, shall be taxable only in the
Contracting State of which the enterprise which operated those ships, aircraft
or road transport vehicles is a resident. (4) Income or gains derived by a
resident of a Contracting State from the alienation of shares or comparable
interests in a company, the assets of which consist wholly or principally of
real property in the other Contracting State of a kind referred to in Article
6, may be taxed in that other State. (5) Nothing in this Agreement affects the
application of a law of a Contracting State relating to the taxation of gains
of a capital nature derived from the alienation of property other than that to
which any of paragraphs (1), (2), (3) and (4) apply.
ARTICLE 14
Independent Personal Services (1) Income derived by an individual who is 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 a fixed base is regularly available to the individual in the
other Contracting State for the purpose of performing the individual's
activities. If such a fixed base is available to the individual, the income
may be taxed in the other State but only so much of it as is attributable to
activities exercised from that fixed base. (2) The term "professional
services" includes services performed in the exercise of independent
scientific, literary, artistic, educational or teaching activities as well as
in the exercise of 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,
19, 20 and 21, salaries, wages and other similar remuneration derived by an
individual who is 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 from that exercise may be taxed in that other
State. (2) Notwithstanding the provisions of paragraph (1), remuneration
derived by an individual who is 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 that other State for a period or periods
not exceeding in the aggregate 183 days in the year of income of that
other State;
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not borne by a permanent establishment or a fixed
base which the employer has in that other State. (3) Notwithstanding
the preceding provisions of this Article, remuneration in respect of
an employment exercised aboard a ship, aircraft or road transport
vehicle operated in international traffic by a resident of one of the
Contracting States may be taxed in that State.
ARTICLE l6
Directors' Fees
Directors' fees and similar payments derived by a person who is a resident of
one of the Contracting States in the person's capacity as a member of the
board of directors or any similar organ of a company which is a resident of
the other Contracting State may be taxed in that other State.
ARTICLE 17
Entertainers and Athletes (1) Notwithstanding the provisions of Articles l4
and 15, income derived by entertainers (such as theatrical, motion picture,
radio or television artistes and musicians and athletes) from their personal
activities as such may be taxed in the Contracting State in which these
activities are exercised. (2) Where income in respect of the personal
activities of an entertainer as such accrues not to that entertainer but to
another person, that income may, notwithstanding the provisions of Articles 7,
14 and 15, be taxed in the Contracting State in which the activities of the
entertainer are exercised. (3) The provisions of paragraphs (1) and (2) of
this Article shall not apply to income derived from activities performed in a
Contracting State by a non-profit organisation or by entertainers or athletes
if the visit to that Contracting State is substantially supported by public
funds and the activities are not performed for the purposes of profit.
ARTICLE 18
Pensions and Annuities (1) Pensions (including government pensions) and
annuities paid to a resident of a Contracting State shall be taxable only in
that State. (2) The term "annuity" means a stated sum payable periodically at
stated times during life or during a specified or ascertainable period of time
under an obligation to make the payments in return for adequate and full
consideration in money or money's worth.
ARTICLE 19
Government Service (1) Remuneration, other than a pension or annuity, paid by
a Contracting State or a political subdivision or local authority of that
State to any individual in respect of services rendered to it or to one or
more of them shall be taxable only in that State. However, such remuneration
shall be taxable only in the other Contracting State if the services are
rendered in that other State and the recipient is a resident of that other
State who:
(a) is a citizen of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services. (2) The provisions of paragraph (1) shall not
apply to remuneration in respect of services rendered in connection
with any trade or business carried on by one of the Contracting States
or a political subdivision or local authority of that State. In such a
case, the provisions of Article 15 or Article 16, as the case may be,
shall apply.
ARTICLE 20
Professors and Teachers (1) Where a professor or teacher who is a resident of
a Contracting State visits the other Contracting State for a period not
exceeding two years for the purpose of teaching or carrying out advanced study
or research at a university, college, school or other educational institution
in that other State, any remuneration the person receives for such teaching,
advanced study or research shall be exempt from tax in that other State to the
extent to which that remuneration is, or upon the application of this Article
will be, subject to tax in the first mentioned State. (2) This Article shall
not apply to remuneration which a professor or teacher receives for conducting
research if the research is undertaken primarily for the private benefit of a
specific person or persons.
ARTICLE 21
Students and Trainees
Where a student or trainee, who is a resident of a Contracting State or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in that other State solely for the
purpose of education or training, receives payments from sources outside that
other State for the purpose of maintenance, education, or training, those
payments shall be exempt from tax in that other State.
ARTICLE 22
Income Not Expressly Mentioned (1) Items of income of a resident of a
Contracting State, wherever arising, not dealt with in the foregoing Articles
of this Agreement shall be taxable only in that State. (2) The provisions of
paragraph (1) shall not apply to income if the beneficial owner of such
income, being a resident of a Contracting State, carries on business in the
other Contracting State 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 income is
paid is effectively connected with such permanent establishment or fixed base.
In such a case, the provisions of Article 7 or Article 14, as the case may be,
shall apply. (3) Notwithstanding the provisions of paragraphs (1) and (2),
items of income of a resident of a Contracting State not dealt with in the
foregoing articles of this Agreement and arising in the other Contracting
State may be taxed in that other State.
ARTICLE 23
Source of Income
Income, profits or gains derived by a resident of a Contracting State which,
under any one or more of Articles 6 to 8, 10 to 17, 19 and 22, may be taxed in
the other Contracting State shall, for the purposes of Article 24 and of the
income tax laws of the respective States be deemed to be income from sources
in that other State.
ARTICLE 24
Methods of Elimination of Double Taxation (1) In the Republic of Hungary
double taxation shall be eliminated as follows:
(a) where a resident of the Republic of Hungary derives income or gains
which, in accordance with the provisions of this Agreement may be
taxed in Australia, the Republic of Hungary shall, subject to the
provisions of subparagraph (b), exempt such income or gains from tax;
(b) where a resident of the Republic of Hungary derives items of income
which, in accordance with the provisions of Article 10, may be taxed
in Australia, the Republic of Hungary shall allow as a deduction from
the tax on the income of that resident an amount equal to the tax paid
in Australia. Such deduction shall not, however, exceed that part of
the tax, as computed before the deduction is given which is
attributable to such items of income derived from Australia. (2) In
Australia, double taxation shall be eliminated as follows:
(a) subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax
of tax paid in a country outside Australia (which shall not affect the
general principle hereof), Hungarian tax paid under the law of the
Republic of Hungary and in accordance with this Agreement, whether
directly or by deduction, in respect of income derived by a person who
is a resident of Australia from sources in Hungary shall be allowed as
a credit against Australian tax payable in respect of that income;
(b) where a company which is a resident of the Republic of Hungary and is
not a resident of Australia for the purposes of Australian tax pays a
dividend to a company which is a resident of Australia and which
controls directly or indirectly not less than 10 per cent of the
voting power of the first mentioned company, the credit referred to in
subparagraph (a) shall include the tax paid by that first mentioned
company in respect of that portion of its profits out of which the
dividend is paid.
ARTICLE 25
Mutual Agreement Procedure (1) Where a person who is a resident of a
Contracting State considers that the actions of the competent authority of one
or both of the Contracting States result or will result for the person in
taxation not in accordance with this Agreement, the person may,
notwithstanding the remedies provided by the national laws of those States,
present a case to the competent authority of the Contracting State of which
the person is a resident. The case must be presented within three years from
the first notification of the action giving rise to taxation not in accordance
with this Agreement. (2) The competent authority shall endeavour, if the claim
appears to it to be justified and if it is not itself able to arrive at an
appropriate solution, to resolve the case with the competent authority of the
other Contracting State, with a view to the avoidance of taxation not in
accordance with this Agreement. The solution so reached shall be implemented
notwithstanding any time limits in the national laws of the Contracting
States. (3) The competent authorities of the Contracting States shall jointly
endeavour to resolve any difficulties or doubts arising as to the
interpretation of this Agreement. In cases which are not provided for, the
competent authorities may also consult to identify appropriate ways by which
double taxation may be eliminated through amendment of this Agreement. (4) The
competent authorities of the Contracting States may communicate with each
other directly for the purpose of giving effect to the provisions of this
Agreement.
ARTICLE 26
Exchange of Information (1) The competent authorities of the Contracting
States shall exchange such information as is necessary for the carrying out of
this Agreement or of the domestic laws of the Contracting States concerning
the taxes to which this Agreement applies in so far as the taxation thereunder
is not contrary to this Agreement. The exchange of information is not
restricted by Article 1. Any information received by the competent authority
of a Contracting State shall be treated as secret in the same manner as
information obtained under the domestic laws of that State and shall be
disclosed only to persons or authorities (including courts and administrative
bodies) concerned with the assessment or collection of, enforcement or
prosecution in respect of, or the determination of appeals in relation to, the
taxes to which this Agreement applies and shall be used only for such
purposes. Any information received will be treated as secret on request of the
Contracting State giving the information. (2) In no case shall the provisions
of paragraph (1) be construed so as to impose on the competent authority of a
Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State; or
(b) to supply particulars which are not obtainable under the laws or in
the normal course of the administration of that or of the other
Contracting State; or
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 27
Diplomatic and Consular Officials
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the
provisions of special international agreements.
ARTICLE 28
Entry into Force
This Agreement shall enter into force on the date on which the Contracting
States exchange notes through the diplomatic channel notifying each other that
the last of such things has been done as is necessary to give this Agreement
the force of law in Australia and in the Republic of Hungary, as the case may
be, and thereupon this Agreement shall have effect:
(a) in Australia:
(i) in respect of withholding tax on income that is derived by a
non-resident, in relation to income derived on or after 1 July in the
calendar year next following that in which the Agreement enters into
force;
(ii) in respect of other Australian tax, in relation to profits, income or
gains of any year of income beginning on or after 1 July in the
calendar year next following that in which the Agreement enters into
force;
(b) in the Republic of Hungary:
(i) in respect of withholding tax on income that is derived by a
non-resident, in relation to income derived on or after 1 January in
the calendar year next following that in which the Agreement enters
into force;
(ii) in respect of other Hungarian tax, in relation to profits, income or
gains of any year of income beginning on or after 1 January in the
calendar year next following that in which the Agreement enters into
force.
ARTICLE 29
Termination
This Agreement shall continue in effect indefinitely, but either of the
Contracting States may, on or before 30 June in any calendar year beginning
after the expiration of 5 years from the date of its entry into force, give to
the other Contracting State through the diplomatic channel written notice of
termination and, in that event, this Agreement shall cease to be effective:
(a) in Australia:
(i) in respect of withholding tax on income that is derived by a
non-resident, in relation to income derived on or after 1 July in the
calendar year next following that in which the notice of termination
is given;
(ii) in respect of other Australian tax, in relation to profits, income or
gains of any year of income beginning on or after 1 July in the
calendar year next following that in which the notice of termination
is given;
(b) in the Republic of Hungary:
(i) in respect of withholding tax on income that is derived by a
non-resident, in relation to income derived on or after 1 January in
the calendar year next following that in which the notice of
termination is given;
(ii) in respect of other Hungarian tax, in relation to profits, income or
gains of any year of income beginning on or after 1 January in the
calendar year next following that in which the notice of termination
is given.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this
Agreement.
DONE in duplicate at CANBERRA this TWENTY-NINTH day of NOVEMBER One thousand
nine hundred and ninety in the English and Hungarian languages, both texts
being equally authentic.
PAUL KEATING GEZA JESZENSZKY
FOR AUSTRALIA FOR THE REPUBLIC OF HUNGARY
"SCHEDULE 34 Section 3
AGREEMENT BETWEEN AUSTRALIA AND THE REPUBLIC OF KIRIBATI
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION
OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
Australia and the Republic of Kiribati,
Affirming their desire to maintain and strengthen trade, investment and
private sector cooperation between the two countries, and
Desiring to conclude an Agreement 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 Agreement shall apply to persons who are residents of one or both of the
Contracting States.
ARTICLE 2
Taxes Covered 1 The existing taxes to which this Agreement shall apply are:
(a) in Australia: the income tax, and the resource rent tax in respect of
offshore projects relating to exploration for or exploitation of
petroleum resources, imposed under the federal law of Australia;
(b) in Kiribati, the income tax imposed under the law of Kiribati. 2 This
Agreement shall also apply to any identical or substantially similar
taxes which are imposed under the federal law of Australia or the law
of Kiribati after the date of signature of this Agreement in addition
to, or in place of, the existing taxes. The competent authorities of
the Contracting States shall notify each other of any substantial
changes which have been made in the laws of their respective States
relating to the taxes to which this Agreement applies within a
reasonable period of time after those changes.
ARTICLE 3
General Definitions 1 In this Agreement, unless the context otherwise
requires:
(a) the term "Australia", when used in a geographical sense, excludes all
external territories other than:
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Territory of Heard Island and McDonald Islands; and
(vi) the Coral Sea Islands Territory, and includes any area adjacent to the
territorial limits of Australia (including the Territories specified
in this subparagraph) in respect of which there is for the time being
in force, consistently with international law, a law of Australia
dealing with the exploration for or exploitation of any of the natural
resources of the seabed and subsoil of the continental shelf;
(b) the term "Kiribati" means the Republic of Kiribati and includes all
adjacent areas which, consistently with international law, have been,
or may after the date of this Agreement be, designated under the laws
of Kiribati as areas over which Kiribati has sovereignty, sovereign
rights or jurisdiction in relation to the exploration for and
exploitation of the resources of the sea, the seabed and its subsoil;
(c) the terms "Contracting State", "one of the Contracting States" and
"other Contracting State" mean Australia or Kiribati, as the context
requires;
(d) the term "person" includes an individual, a company and any other body
of persons;
(e) the term "company" means any body corporate or any entity which is
treated as a company or body corporate for tax purposes;
(f) the terms "enterprise of one of the Contracting States" and
"enterprise of the other Contracting State" mean an enterprise carried
on by a resident of Australia or an enterprise carried on by a
resident of Kiribati, as the context requires;
(g) the term "tax" means Australian tax or Kiribati tax, as the context
requires, but does not include any penalty or interest imposed under
the law of either Contracting State relating to its tax;
(h) the term "Australian tax" means tax imposed by Australia, being tax to
which this Agreement applies by virtue of Article 2;
(i) the term "Kiribati tax" means tax imposed by the Republic of Kiribati,
being tax to which this Agreement applies by virtue of Article 2;
(j) the term "competent authority" means, in the case of Australia, the
Commissioner of Taxation or an authorised representative of the
Commissioner and, in the case of Kiribati, the Internal Revenue Board
or an authorised representative of the Board. 2 In the application of
this Agreement by one of the Contracting States, any term not defined
in this Agreement shall, unless the context otherwise requires, have
the meaning which it has under the laws of that State from time to
time in force relating to the taxes to which this Agreement applies.
ARTICLE 4
Residence 1 For the purposes of this Agreement, a person is a resident of one
of the Contracting States:
(a) in the case of Australia, if the person is a resident of Australia for
the purposes of Australian tax; and
(b) in the case of Kiribati, if the person is a resident of Kiribati for
the purposes of Kiribati tax. 2 A person is not a resident of one of
the Contracting States for the purposes of this Agreement if the
person is liable to tax in that State in respect only of income from
sources in that State. 3 Where by reason of the preceding provisions
of this Article a person, being an individual, is a resident of both
Contracting States, then the status of the person shall be determined
in accordance with the following rules:
(a) the person shall be deemed to be a resident solely of the Contracting
State in which a permanent home is available to the person;
(b) if a permanent home is available to the person in both Contracting
States, or in neither of them, the person shall be deemed to be a
resident solely of the Contracting State in which the person has an
habitual abode;
(c) if the person has an habitual abode in both Contracting States, or if
the person does not have an habitual abode in either of them, the
person shall be deemed to be a resident solely of the Contracting
State with which the person's personal and economic relations are the
closer. 4 Where by reason of the provisions of paragraph 1 a person
other than an individual is a resident of both Contracting States,
then the person's status shall be determined as follows:
(a) it shall be deemed to be a resident of the Contracting State in which
it is incorporated or otherwise constituted;
(b) if it is not incorporated or otherwise constituted in either of the
Contracting States, it shall be deemed to be a resident of the
Contracting State in which its place of effective management is
situated.
ARTICLE 5
Permanent Establishment 1 For the purposes of this Agreement, the term
"permanent establishment", in relation to an enterprise, means a fixed place
of business through which the business of the enterprise is wholly or partly
carried on. 2 The term "permanent establishment" shall include 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;
(g) an agricultural, pastoral or forestry property; and
(h) a building site or construction, installation or assembly project
which exists for more than 90 days. 3 An enterprise shall not be
deemed to have a permanent establishment merely by reason of:
(a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise; or
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery; or
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
or
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for
the enterprise; or
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research. 4 An
enterprise shall be deemed to have a permanent establishment in one of
the Contracting States and to carry on business through that permanent
establishment if:
(a) it carries on supervisory activities in that State for more than 90
days in connection with a building site, or a construction,
installation or assembly project, which is being undertaken in that
State; or
(b) services are furnished in that State, including consultancy,
management or administrative services through employees or other
personnel engaged by the enterprise or an associated enterprise for
such purposes, and those activities continue for the same or a
connected project within that State for a period or periods
aggregating more than 90 days in any year of income or tax year, as
the case may be; or
(c) substantial equipment is being used in that State by, for or under
contract with the enterprise. 5 A person acting in one of the
Contracting States on behalf of an enterprise of the other Contracting
State - other than an agent of an independent status to whom paragraph
6 applies - shall be deemed to be a permanent establishment of that
enterprise in the firstmentioned State if:
(a) the person has, and habitually exercises in that State, an authority
to conclude contracts on behalf of the enterprise, unless the person's
activities are limited to the purchase of goods or merchandise for the
enterprise; or
(b) notwithstanding the provisions of subparagraphs 3 (a) and 3 (b), the
person has no such authority but habitually maintains in that State a
stock of goods or merchandise from which the person regularly delivers
in that State goods or merchandise on behalf of the enterprise; or
(c) in so acting, the person manufactures or processes in that State for
the enterprise goods or merchandise belonging to the enterprise. 6 An
enterprise of one of the Contracting States 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 person
who is a broker, general commission agent or any other agent of an
independent status and is acting in the ordinary course of the
person's business as such a broker or agent. 7 The fact that a company
which is a resident of one of the Contracting States 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
make either company a permanent establishment of the other. 8 The
principles set forth in the preceding paragraphs of this Article shall
be applied in determining for the purposes of paragraph 5 of Article
11 and paragraph 5 of Article 12 whether there is a permanent
establishment outside both Contracting States, and whether an
enterprise, not being an enterprise of one of the Contracting States,
has a permanent establishment in one of the Contracting States.
ARTICLE 6
Income from Real Property 1 Income from real property may be taxed in the
Contracting State in which the real property is situated. 2 In this Article,
the term "real property", in relation to one of the Contracting States, has
the meaning which it has under the laws of that State and includes:
(a) a lease of land and any other interest in or over land, whether
improved or not, including a right to explore for mineral, oil or gas
deposits or other natural resources, and a right to mine those
deposits or resources; and
(b) a right to receive variable or fixed payments either as consideration
for or in respect of the exploitation of, or the right to explore for
or exploit, mineral, oil or gas deposits, quarries or other places of
extraction or exploitation of natural resources. 3 Any interest or
right referred to in paragraph 2 shall be regarded as situated where
the land, mineral, oil or gas deposits, quarries or natural resources,
as the case may be, are situated or where the exploration may take
place. 4 The provisions of paragraphs 1 and 3 shall also apply to
income from real property of an enterprise and to income from real
property used for the performance of independent personal services.
ARTICLE 7
Business Profits 1 The profits of an enterprise of one of the Contracting
States shall be taxable only in that State unless the enterprise carries on
business in the other Contracting 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:
(a) that permanent establishment; or
(b) sales within that other Contracting State of goods or merchandise of
the same or a similar kind as those sold, or other business activities
within that other State of the same or a similar kind as those carried
on, through that permanent establishment, if, on the basis of the
information available to the competent authority of that other State,
it may reasonably be concluded that those sales or business activities
would not have been made or carried on but for the existence of that
permanent establishment or the continued provision by it of goods or
services. 2 Subject to the provisions of paragraph 3, where an
enterprise of one of the Contracting States carries on business in the
other Contracting State through a permanent establishment situated in
that other State, there shall in each Contracting 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 or with other enterprises with which it deals.
3 In the determination of the profits of a permanent establishment,
there shall be allowed as deductions expenses of the enterprise, being
expenses which are incurred for the purposes of the permanent
establishment (including executive and general administrative expenses
so incurred) and which would be deductible if the permanent
establishment were an independent entity which paid those expenses,
whether incurred in the Contracting State in which the permanent
establishment is situated or elsewhere. 4 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
enterprise. 5 Nothing in this Article shall affect the application of
any law of one of the Contracting States relating to the determination
of the tax liability of a person in cases where the information
available to the competent authority of that State is inadequate to
determine the profits to be attributed to a permanent establishment,
provided that that law shall be applied, so far as the information
available to the competent authority permits, consistently with the
principles of this Article. 6 Where profits include items of income
which are dealt with separately in other Articles of this Agreement,
then the provisions of those Articles shall not be affected by the
provisions of this Article. 7 Nothing in this Article shall affect the
operation of any law of one of the Contracting States relating to tax
imposed on profits from insurance with nonresidents provided that if
the relevant law in force in either Contracting State at the date of
signature of this Agreement is varied (otherwise than in minor
respects so as not to affect its general character) the Contracting
States shall consult with each other with a view to agreeing to any
amendment of this paragraph that may be appropriate. 8 Where:
(a) a resident of one of the Contracting States is beneficially entitled,
whether directly or through one or more interposed trust estates, to a
share of the business profits of an enterprise carried on in the other
Contracting State by the trustee of a trust estate other than a trust
estate which is treated as a company for tax purposes; and
(b) in relation to that enterprise, that trustee would, in accordance with
the principles of Article 5, have a permanent establishment in that
other State, the enterprise carried on by the trustee shall be deemed
to be a business carried on in the other State by that resident
through a permanent establishment situated in that other State and
that share of business profits shall be attributed to that permanent
establishment.
ARTICLE 8
Ships and Aircraft 1 Profits from the operation of aircraft derived by a
resident of one of the Contracting States shall be taxable only in that State.
2 Profits from the operation of ships derived by a resident of one of the
Contracting States may be taxed in that Contracting State and may also be
taxed in the other State, but the tax so charged in the other State shall be
reduced by an amount equal to one half of the amount which would be payable in
respect of those profits but for this paragraph. 3 Notwithstanding the
provisions of paragraph 1, such profits may be taxed in the other Contracting
State, where they are profits from the operation of aircraft confined solely
to places in that other State; and notwithstanding the provisions of paragraph
2, such profits may be taxed in the other Contracting State without reduction,
where they are profits from the operation of ships confined solely to places
in that other State. 4 The provisions of paragraphs 1, 2 and 3 shall apply in
relation to the share of profits from the operation of ships or aircraft
derived by a resident of one of the Contracting States through participation
in a pool service, in a joint transport operating organisation or in an
international operating agency. 5 For the purposes of this Article, profits
derived from the carriage by ships or aircraft of passengers, livestock, mail,
goods or merchandise shipped in a Contracting State for discharge at another
place in that State shall be treated as profits from the operation of ships or
aircraft confined solely to places in that State.
ARTICLE 9
Associated Enterprises 1 Where:
(a) an enterprise of one of the Contracting States participates directly
or indirectly in the management, control or capital of an enterprise
of the other Contracting State; or
(b) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of one of the Contracting States
and an enterprise of the other Contracting State, and in either case
conditions operate between the 2 enterprises in their commercial or
financial relations which differ from those which might be expected to
operate between independent enterprises dealing wholly independently
with one another, then any profits which, but for those conditions,
might have been expected to accrue 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. 2 Nothing in
this Article shall affect the application of any law of one of the
Contracting States relating to the determination of the tax liability
of a person, including determinations in cases where the information
available to the competent authority of that State is inadequate to
determine the income to be attributed to an enterprise, provided that
that law shall be applied, so far as it is practicable to do so,
consistently with the principles of this Article. 3 Where profits on
which an enterprise of one of the Contracting States has been charged
to tax in that State are also included, by virtue of paragraph 1 or 2,
in the profits of an enterprise of the other Contracting State and
charged to tax in that other State, and the profits so included are
profits which might have been expected to have accrued to that
enterprise of the other State if the conditions operative between the
enterprises had been those which might have been expected to have
operated between independent enterprises dealing wholly independently
with one another, then the firstmentioned State shall make an
appropriate adjustment to the amount of tax charged on those profits
in the firstmentioned State. In determining such an adjustment, due
regard shall be had to the other provisions of this Agreement and for
this purpose the competent authorities of the Contracting States shall
if necessary consult each other.
ARTICLE 10
Dividends 1 Dividends paid by a company which is a resident of one of the
Contracting States for the purposes of its tax, being dividends to which a
resident of the other Contracting State is beneficially entitled, may be taxed
in that other State. 2 Those dividends may be taxed in the Contracting State
of which the company paying the dividends is a resident for the purposes of
its tax, and according to the law of that State, but the tax so charged shall
not exceed 20 per cent of the gross amount of the dividends. 3 The term
"dividends" in this Article means income from shares and other income
assimilated to income from shares by the law, relating to tax, of the
Contracting State of which the company making the distribution is a resident
for the purposes of its tax. 4 The provisions of paragraph 2 shall not apply
if the person beneficially entitled to the dividends, being a resident of one
of the Contracting States, carries on business in the other Contracting State
of which the company paying the dividends is a resident, through a permanent
establishment situated in that other State, or performs in that other State
independent personal services from a fixed base situated in that other State,
and the holding in respect of which the dividends are paid is effectively
connected with that permanent establishment or fixed base. In that case the
provisions of Article 7 or 14, as the case may be, shall apply. 5 Dividends
paid by a company which is a resident of one of the Contracting States, being
dividends to which a person who is not a resident of the other Contracting
State is beneficially entitled, shall be exempt from tax in that other State
except in so far as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or fixed base situated in
that other State. This paragraph shall not apply in relation to dividends paid
by any company which is a resident of Australia for the purposes of Australian
tax and which is also a resident of Kiribati for the purposes of Kiribati tax.
ARTICLE 11
Interest 1 Interest arising in one of the Contracting States, being interest
to which a resident of the other Contracting State is beneficially entitled,
may be taxed in that other State. 2 That interest may be taxed in the
Contracting State in which it arises, and according to the law of that State,
but the tax so charged shall not exceed 10 per cent of the gross amount of the
interest. 3 The term "interest" in this Article includes interest from
Government securities or from bonds or debentures, whether or not secured by
mortgage and whether or not carrying a right to participate in profits,
interest from any other form of indebtedness and all other income assimilated
to income from money lent by the law, relating to tax, of the Contracting
State in which the income arises. 4 The provisions of paragraph 2 shall not
apply if the person beneficially entitled to the interest, being a resident of
one of the Contracting States, carries on business in the other Contracting
State, in which the interest arises, through a permanent establishment
situated in that other State, or performs in that other State independent
personal services from a fixed base situated in that other State, and the
indebtedness in respect of which the interest is paid is effectively connected
with that permanent establishment or fixed base. In that case, the provisions
of Article 7 or 14, as the case may be, shall apply. 5 Interest shall be
deemed to arise in one of the Contracting States when the payer is that State
itself or a political subdivision or local authority of that State or a person
who is a resident of that State for the purposes of its tax. Where, however,
the person paying the interest, whether the person is a resident of one of the
Contracting States or not, has in one of the Contracting States or outside
both Contracting States a permanent establishment or fixed base in connection
with which the indebtedness on which the interest is paid was incurred, and
that interest is borne by that permanent establishment or fixed base, then the
interest shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated. 6 Where, owing to a special
relationship between the payer and the person beneficially entitled to the
interest, or between both of them and some other person, the amount of the
interest paid, having regard to the indebtedness for which it is paid, exceeds
the amount which might have been expected to have been agreed upon by the
payer and the person so entitled in the absence of that relationship, the
provisions of this Article shall apply only to the lastmentioned amount. In
that case, the excess part of the amount of the interest paid shall remain
taxable according to the law, relating to tax, of each Contracting State, but
subject to the other provisions of this Agreement.
ARTICLE 12
Royalties 1 Royalties arising in one of the Contracting States, being
royalties to which a resident of the other Contracting State is beneficially
entitled, may be taxed in that other State. 2 Those royalties may be taxed in
the Contracting State in which they arise, and according to the law of that
State, but the tax so charged shall not exceed 15 per cent of the gross amount
of the royalties. 3 The term "royalties" in this Article means payments or
credits, whether periodical or not, and however described or computed, to the
extent to which they are made as consideration for:
(a) the use of, or the right to use, any copyright, patent, design or
model, plan, secret formula or process, trademark or other like
property or right; or
(b) the use of, or the right to use, any industrial, commercial or
scientific equipment; or
(c) the supply of scientific, technical, industrial or commercial
knowledge or information; or
(d) the supply of any assistance that is ancillary and subsidiary to, and
is furnished as a means of enabling the application or enjoyment of,
any such property or right as is mentioned in subparagraph (a), any
such equipment as is mentioned in subparagraph (b) or any such
knowledge or information as is mentioned in subparagraph (c); or
(e) the use of, or the right to use:
(i) motion picture films; or
(ii) films or video tapes for use in connection with television; or
(iii) tapes for use in connection with radio broadcasting; or
(f) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph. 4 The provisions of
paragraph 2 shall not apply if the person beneficially entitled to the
royalties, being a resident of one of the Contracting States, carries
on business in the other Contracting State, in which the royalties
arise, through a permanent establishment situated in that other State,
or performs in that other State independent personal services from a
fixed base situated in that other State, and the property or right in
respect of which the royalties are paid or credited is effectively
connected with that permanent establishment or fixed base. In that
case, the provisions of Article 7 or 14, as the case may be, shall
apply. 5 Royalties shall be deemed to arise in one of the Contracting
States when the payer is that State itself or a political subdivision
or local authority of that State or a person who is a resident of that
State for the purposes of its tax. Where, however, the person paying
the royalties, whether the person is a resident of one of the
Contracting States or not, has in one of the Contracting States or
outside both Contracting States a permanent establishment or fixed
base in connection with which the liability to pay the royalties was
incurred, and the royalties are borne by the permanent establishment
or fixed base, then the royalties shall be deemed to arise in the
State in which the permanent establishment or fixed base is situated.
6 Where, owing to a special relationship between the payer and the
person beneficially entitled to the royalties, or between both of them
and some other person, the amount of the royalties paid or credited,
having regard to what they are paid or credited for, exceeds the
amount which might have been expected to have been agreed upon by the
payer and the person so entitled in the absence of such relationship,
the provisions of this Article shall apply only to the lastmentioned
amount. In that case, the excess part of the amount of the royalties
paid or credited shall remain taxable according to the law, relating
to tax, of each Contracting State, but subject to the other provisions
of this Agreement.
ARTICLE 13
Alienation of Property 1 Income, profits or gains derived by a resident of one
of the Contracting States from the alienation of real property situated in the
other Contracting State may be taxed in that other State. 2 Income, profits or
gains from the alienation of property, other than real property, that forms
part of the business property of a permanent establishment which an enterprise
of one of the Contracting States has in the other Contracting State or
pertains to a fixed base available in that other State to a resident of the
firstmentioned State for the purpose of performing independent personal
services, including income, profits or gains from the alienation of that
permanent establishment (alone or with the whole enterprise) or of that fixed
base, may be taxed in that other State. 3 Income, profits or gains from the
alienation of ships or aircraft operated in international traffic, or of
property (other than real property) pertaining to the operation of those ships
or aircraft, shall be taxable only in the Contracting State of which the
enterprise which operated those ships or aircraft is a resident. 4 Income,
profits or gains derived by a resident of one of the Contracting States from
the alienation of shares or comparable interests in a company, the assets of
which consist wholly or principally of real property situated in the other
Contracting State, may be taxed in that other State. 5 Nothing in this
Agreement affects the application of a law of one of the Contracting States
relating to the taxation of gains of a capital nature derived from the
alienation of property other than that to which any of the preceding
paragraphs of this Article apply. 6 In this Article, the term "real property"
has the same meaning as it has in Article 6. 7 The situation of real property
shall be determined for the purposes of this Article in accordance with
paragraph 3 of Article 6.
ARTICLE 14
Independent Personal Services 1 Income derived by an individual who is a
resident of one of the Contracting States in respect of professional services
or other independent activities of a similar character shall be taxable only
in that State unless:
(a) a fixed base is regularly available to the individual in the other
Contracting State for the purpose of performing the individual's
activities. If such a fixed base is available to the individual, the
income may be taxed in the other State but only so much of it as is
attributable to activities exercised from that fixed base; or
(b) the income is derived from a resident of that other Contracting State
or a permanent establishment in that other Contracting State and
exceeds an amount of $A8,000 or its equivalent in any other currency
in any one 12 month period. In that case so much of the income as is
derived from that individual's activities in that other Contracting
State may be taxed in that State; or
(c) that individual's stay in that other Contracting State exceeds an
aggregate of 90 days in any year of income or tax year, as the case
may be, of that other State. In that case so much of the income as is
derived from that individual's activities in that other Contracting
State may be taxed in that State. 2 The Treasurer of Australia and the
Minister of Finance and Economic Planning of Kiribati may mutually
determine in letters exchanged for the purpose variations in the
amount specified in subparagraph 1 (b) and any variations so
determined shall have effect according to the tenor of the letters. 3
The term "professional services" includes services performed in the
exercise of independent scientific, literary, artistic, educational or
teaching activities as well as in the exercise of 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 an individual
who is a resident of one of the Contracting States 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 from that exercise may be taxed in that other State. 2
Notwithstanding the provisions of paragraph 1, remuneration derived by an
individual who is a resident of one of the Contracting States in respect of an
employment exercised in the other Contracting State shall be taxable only in
the firstmentioned State if:
(a) the recipient is present in that other State for a period or periods
not exceeding in the aggregate 90 days in the year of income or tax
year, as the case may be, of that other State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment or a fixed base which the employer has in that
other State; and
(d) the remuneration is, or upon the application of this Article will be,
subject to tax in the firstmentioned 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 a resident of one of the Contracting States
may be taxed in that State.
ARTICLE 16
Directors' Fees
Directors' fees and similar payments derived by a resident of one of the
Contracting States as a member of the board of directors of a company which is
a resident of the other Contracting State may be taxed in that other State.
ARTICLE 17
Entertainers 1 Notwithstanding the provisions of Articles 14 and 15, income
derived by entertainers (such as theatrical, motion picture, radio or
television artistes, and musicians and athletes) from their personal
activities as such may be taxed in the Contracting State in which these
activities are exercised. 2 Where income in respect of the personal activities
of an entertainer as such accrues not to that entertainer but to another
person, that income may, notwithstanding the provisions of Articles 7, 14 and
15, be taxed in the Contracting State in which the activities of the
entertainer are exercised.
ARTICLE 18
Pensions and Annuities 1 Pensions (including government pensions) and
annuities paid to a resident of one of the Contracting States shall be taxable
only in that State. 2 The term "annuity" means a stated sum payable
periodically at stated times during life or during a specified or
ascertainable period of time under an obligation to make the payments in
return for adequate and full consideration in money or money's worth. 3 Any
alimony or other maintenance payment arising in one of the Contracting States
and paid to a resident of the other Contracting State shall be taxable only in
the firstmentioned State.
ARTICLE 19
Government Service 1 Remuneration, other than a pension or annuity, paid by
one of the Contracting States or a political subdivision or local authority of
that State to any individual in respect of services rendered in the discharge
of governmental functions shall be taxable only in that State. However, such
remuneration shall be taxable only in the other Contracting State if the
services are rendered in that other State and the receipient is a resident of
that other State who:
(a) is a citizen or national of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services. 2 The provisions of paragraph 1 shall not
apply to remuneration in respect of services rendered in connection
with any trade or business carried on by one of the Contracting States
or a political subdivision or local authority of that State. In that
case, the provisions of Article 15 or 16, as the case may be, shall
apply.
ARTICLE 20
Students and Trainees
Where a student or trainee, who is a resident of one of the Contracting States
or who was a resident of that State immediately before visiting the other
Contracting State and who is temporarily present in that other State solely
for the purpose of the student's or trainee's education or training, receives
payments from sources outside that other State for the purpose of the
student's or trainee's maintenance, education, or training, those payments
shall be exempt from tax in that other State.
ARTICLE 21
Income Not Expressly Mentioned 1 Items of income of a resident of one of the
Contracting States which are not expressly mentioned in the foregoing Articles
of this Agreement shall be taxable only in that State. 2 However, any such
income derived by a resident of one of the Contracting States from sources in
the other Contracting State may also be taxed in that other State. 3 The
provisions of paragraph 1 shall not apply to income derived by a resident of
one of the Contracting States where that income is effectively connected with
a permanent establishment or fixed base situated in the other Contracting
State. In that case, the provisions of Article 7 or 14, as the case may be,
shall apply.
ARTICLE 22
Source of Income 1 Income, profits or gains derived by a resident of one of
the Contracting States which, under any one or more of Articles 6 to 8, 10 to
19 and 21, may be taxed in the other Contracting State shall for the purposes
of the law of that other Contracting State relating to its tax be deemed to be
income from sources in that other Contracting State. 2 Income, profits or
gains derived by a resident of one of the Contracting States which, under any
one or more of Articles 6 to 8, 10 to 19 and 21, may be taxed in the other
Contracting State shall for the purposes of Article 23 and of the law of the
firstmentioned Contracting State relating to its tax be deemed to be income
from sources in the other Contracting State.
ARTICLE 23
Methods of Elimination of Double Taxation 1 Subject to the provisions of the
law of Australia from time to time in force which relate to the allowance of a
credit against Australian tax of tax paid in a country outside Australia
(which shall not affect the general principle of this Article), Kiribati tax
paid under the law of Kiribati and in accordance with this Agreement, whether
directly or by deduction, in respect of income derived by a person who is a
resident of Australia from sources in Kiribati shall be allowed as a credit
against Australian tax payable in respect of that income. 2 Where a company
which is a resident of Kiribati and is not a resident of Australia for the
purposes of Australian tax pays a dividend to a company which is a resident of
Australia and which controls directly or indirectly not less than 10 per cent
of the voting power of the firstmentioned company, the credit referred to in
paragraph 1 shall include the Kiribati tax paid by that firstmentioned company
in respect of that portion of its profits out of which the dividend is paid. 3
For the purpose of paragraphs 1 and 2, Kiribati tax paid shall include an
amount equivalent to any Kiribati tax forgone. 4 In paragraph 3, the term
"Kiribati tax forgone" means the amount which, under the law of Kiribati
relating to Kiribati tax and in accordance with this Agreement, would have
been payable as Kiribati tax on income or a payment but for an exemption from,
or reduction of, Kiribati tax on that income or payment resulting from the
operation of:
(a) section 82 and Schedule 8 or section 90 (4) of the Income Tax Act 1990
in so far as those provisions were in force on, and have not been
modified since, the date of signature of this Agreement or have been
modified only in minor respects so as not to affect their general
character; or
(b) any other provision which may subsequently be made granting an
exemption from or reduction of tax which the authorised
representatives of the Government of Australia and of the Government
of Kiribati mutually determine in writing to be of a substantially
similar character, provided that such provisions are not modified
thereafter or are modified only in minor respects so as not to affect
their general character. 5 The provisions of paragraphs 3 and 4 shall
not apply in respect of income or a payment attributable to the
provision of services provided directly or indirectly to a person who
is a resident of Australia, except where the services are in the
nature of tourism or communication services or services provided to
manufacturing, mining, construction, fishing or agricultural
activities carried on in Kiribati. 6 The provisions of paragraphs 3, 4
and 5 shall apply only in relation to income or a payment derived in
any of the first 10 years of income in relation to which this
Agreement has effect by virtue of subparagraph (a) (ii) of Article 27
and in any later year of income that may be mutually determined in an
exchange of letters for this purpose by the authorised representatives
of the Government of Australia and of the Government of Kiribati. 7 In
the case of Kiribati, subject to the provisions of the law of Kiribati
from time to time in force which relate to the allowance of a credit
against Kiribati tax of tax paid in a country outside Kiribati (which
shall not affect the general principle of this Article), Australian
tax paid under the law of Australia and in accordance with this
Agreement, whether directly or by deduction, in respect of income
derived by a person who is a resident of Kiribati from sources in
Australia shall be allowed as a credit against Kiribati tax payable in
respect of that income.
ARTICLE 24
Mutual Agreement Procedure 1 Where a person who is a resident of one of the
Contracting States considers that the actions of the competent authority of
one or both of the Contacting States result or will result for the person in
taxation not in accordance with this Agreement, the person may,
notwithstanding the remedies provided by the national laws of those States,
present a case to the competent authority of the Contracting State of which
the person is a resident. The case must be presented within 3 years from the
first notification of the action giving rise to taxation not in accordance
with this Agreement. 2 The competent authority shall endeavour, if the claim
appears to it to be justified and if it is not itself able to arrive at an
appropriate solution, to resolve the case with the competent authority of the
other Contracting State, with a view to the avoidance of taxation not in
accordance with this Agreement. The solution so reached shall be implemented
notwithstanding any time limits in the national laws of the Contracting
States. 3 The competent authorities of the Contracting States shall jointly
endeavour to resolve any difficulties or doubts arising as to the application
of this Agreement. 4 The competent authorities of the Contracting States may
communicate with each other directly for the purpose of giving effect to the
provisions of this Agreement.
ARTICLE 25
Exchange of Information 1 The competent authorities of the Contracting States
shall exchange such information as is necessary for the carrying out of this
Agreement or of the national laws of the Contracting States concerning the
taxes to which this Agreement applies in so far as the taxation under those
laws is not contrary to this Agreement. The exchange of information is not
restricted by Article 1. Any information received by the competent authority
of one of the Contracting States shall be treated as secret in the same manner
as information obtained under the national laws of that State and shall be
disclosed only to persons or authorities (including courts and administrative
bodies) concerned with the assessment or collection of, enforcement or
prosecution in respect of, or the determination of appeals in relation to, the
taxes to which this Agreement applies and shall be used only for such
purposes. 2 In no case shall the provisions of paragraph 1 be construed so as
to impose on the competent authority of one of the Contracting States the
obligation:
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State; or
(b) to supply particulars which are not obtainable under the laws or in
the normal course of the administration of that or of the other
Contracting State; or
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 26
Diplomatic and Consular Officials
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the
provisions of special international agreements.
ARTICLE 27
Entry into Force
This Agreement shall enter into force on the date on which the Contracting
States exchange notes through the diplomatic channel notifying each other that
the last of such things has been done as is necessary to give this Agreement
the force of law in Australia and in Kiribati, as the case may be, and, in
that event, this Agreement shall have effect:
(a) in Australia:
(i) in respect of withholding tax on income that is derived by a
nonresident, in relation to income derived on or after 1 July next
following the date on which the Agreement enters into force;
(ii) in respect of other Australian tax, in relation to income, profits or
gains of any year of income beginning on or after 1 July next
following the date on which the Agreement enters into force;
(b) in Kiribati: in respect of Kiribati tax, in relation to income,
profits or gains of any tax year beginning on or after 1 January next
following the date on which the Agreement enters into force.
ARTICLE 28
Termination
This Agreement shall continue in effect indefinitely, but either of the
Contracting States may, on or before 30 June in any calendar year beginning
after the expiration of 5 years from the date of its entry into force, give to
the other Contracting State through the diplomatic channel written notice of
termination and, in that event, this Agreement shall cease to be effective:
(a) in Australia:
(i) in respect of withholding tax on income that is derived by a
nonresident, in relation to income derived on or after 1 July next
following the date on which the notice of termination is given;
(ii) in respect of other Australian tax, in relation to income, profits or
gains of any year of income beginning on or after 1 July next
following the date on which the notice of termination is given;
(b) in Kiribati: in respect of Kiribati tax, in relation to income,
profits or gains of any tax year beginning on or after 1 January next
following the date on which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this
Agreement.
DONE in duplicate at CANBERRA this TWENTY-FIFTH day of MARCH One thousand nine
hundred and ninety-one in the English language.
FOR AUSTRALIA FOR THE REPUBLIC OF KIRIBATI
PAUL KEATING TEATAO TEANNAKI".
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