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INCOME TAX (INTERNATIONAL AGREEMENTS) AMENDMENT ACT 1992 No. 139 of 1992 - SCHEDULE
SCHEDULE Section 7
"SCHEDULE 37 Section 3
AGREEMENT
BETWEEN
THE GOVERNMENT OF AUSTRALIA
AND
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
FOR
THE AVOIDANCE OF DOUBLE TAXATION
AND
THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The Government of Australia and the Government of the Republic of Indonesia,
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 Indonesia:
the income tax imposed under the Undang-undang Pajak Penghasilan 1984 (Law No.
7 of 1983);
(b) 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. 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 Indonesia 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 exploitation of any of the natural resources of the
seabed and subsoil of the continental shelf;
(b) the term "Indonesia" means the territory under the sovereignty of the
Republic of Indonesia and such parts of the continental shelf and the
adjacent seas over which the Republic of Indonesia has sovereignty,
sovereign rights as well as other rights in accordance with the 1982
United Nations Convention on the Law of the Sea;
(c) the terms "Contracting State", one of the "Contracting States" and
"other Contracting State" mean, as the context requires, Australia or
Indonesia, the Governments of which have concluded this Agreement;
(d) the term "person" includes an individual, a company and any other body
of persons;
(e) the term "company" means 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 Indonesia, as the context requires;
(g) the term "tax" means Australian tax or Indonesian 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 "Indonesian tax" means tax imposed by Indonesia, 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 Indonesia, the Minister of Finance or
an authorised representative of the Minister. 2 The references in
paragraph 4 of Article 10, paragraph 4 of Article 11, paragraph 4 of
Article 12 and paragraph 3 of Article 22 to a permanent establishment
or fixed base situated in one of the Contracting States include
references to an enterprise's sales and other business activities
referred to in subparagraphs 1(b) and (c) of Article 7 and to an
individual's activities referred to in subparagraph 1(b) of Article
14. 3 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 relating to the taxes to which this Agreement
applies in force at the time of the application.
ARTICLE 4
Residence 1 For the purposes of this Agreement, a person is a resident of one
of the Contracting States if the person is a resident of that Contracting
State under the law of that State relating to its 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 in
neither of them, the person shall be deemed to be a resident solely of
the Contracting State with which the person's economic and personal
relations are 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 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", 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" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction
of natural resources or a place of exploration for natural resources;
(g) a farm, plantation or other place where agricultural, pastoral,
forestry or plantation activities are carried on;
(h) an installation, drilling rig or ship used for exploration for or
exploitation of natural resources, where that use continues for more
than 120 days;
(i) a building site or construction, installation or assembly project or
supervisory activities in connection with that site or project, where
that site, project or activities exist for more than 120 days;
(j) the furnishing of services, including consultancy services, by an
enterprise within one of the Contracting States through employees or
other personnel engaged by the enterprise for that purpose, if those
services are furnished, for the same or a connected project, within
that State for a period or periods aggregating more than 120 days
within any 12 month period. 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 or display of
goods or merchandise belonging to the enterprise; or
(b) the maintenance of a stock of goods or mechandise belonging to the
enterprise solely for the purpose of storage or display; 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 preparatory or auxiliary character for the
enterprise, such as advertising or scientific research. 4 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 5 applies - shall be deemed to be a permanent
establishment of that enterprise in the firstmentioned State if:
(a) in so acting, the person manufactures or processes in that State for
the enterprise goods or merchandise belonging to the enterprise; or
(b) 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
(c) the person has no such authority, but habitually maintains in the
firstmentioned State a stock of goods or merchandise from which the
person regularly delivers goods or merchandise on behalf of the
enterprise. 5 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. However,
when the activities of such a broker or agent are carried on wholly or
principally on behalf of that enterprise itself or on behalf of that
enterprise and other enterprises controlling, or controlled by or
subject to the same common control as, that enterprise, the person
will not be considered a broker or agent of an independent status
within the meaning of this paragraph. 6 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. 7 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 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, 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. Ships, boats 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 paragraph 1 shall also apply to income
derived from the direct use, letting or use in any other form of real
property. 5 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 in that other State. If the enterprise carries on business in that
manner, the profits of the enterprise may be taxed in the other State but only
so much of them as it attributable to:
(a) that permanent establishment; or
(b) sales in that other State of goods or merchandise of the same or a
similar kind as those sold through that permanent establishment; or
(c) other business activities carried on in that other State of the same
or a similar kind as those carried on through that permanent
establishment. 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. However, no such deduction
shall be allowed in respect of amounts, if any, paid (otherwise than
towards reimbursement of actual expenses) by the permanent
establishment to the head office of the enterprise or any of its other
offices, by way of royalties, fees or other similar payments in return
for the use of patents or other rights, or by way of commission, for
specific services performed or for management, or, except in the case
of a banking enterprise, by way of interest on money lent to the
permanent establishment. Likewise, no account shall be taken, in the
determination of the profits of a permanent establishment, of amounts
charged, (otherwise than towards reimbursement of actual expenses), by
the permanent establishment to the head office of the enterprise or
any of its other offices, by way of royalties, fees or other similar
payments in return for the use of patents or other rights, or by way
of commission for specific services performed or for management, or,
except in the case of a banking enterprise, by way of interest on
money lent to the head office of the enterprise or any of its other
offices. 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 affects the operation of any law of one of the
Contracting States relating to tax imposed on profits derived by
nonresidents on insurance premiums collected, or from insurance
relating to risks arising or to property, in that State, whether or
not that law deems the existence of a permanent establishment in
relation to the relevant activity. 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 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 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 ships or aircraft 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 or aircraft 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 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. 4
For the purposes of this Article, profits derived from the carriage by ships
or aircraft of passengers, livestock, mail, goods or merchandise shipped in
one of the Contracting States for discharge at another place in that State
shall be treated as profits from operations 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 two 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 the 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 under the law of that State relating to 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 firstmentioned Contracting State 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. The competent authorities of the Contracting States shall by mutual
agreement settle the mode of application of this limitation. 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
under that law. 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 under the law of Australia
relating to its tax and which is also a resident of Indonesia under the law of
Indonesia relating to its tax. 6 Notwithstanding any other provisions of this
Agreement, where a company which is a resident of one of the Contracting
States has a permanent establishment in the other Contracting State, the
profits of the permanent establishment may be subjected to an additional tax
in that other State in accordance with its law, but the additional tax so
charged shall not exceed 15 per cent of the amount of such profits after
deducting from those profits the tax imposed on them in that other State. 7
The provisions of paragraph 6 of this Article shall not affect the rate of any
such additional tax payable under any production sharing contracts and
contracts of work (or any other similar contracts) relating to oil and gas or
other mineral products negotiated by the Government of Indonesia, its
instrumentality, its relevant State oil company or any other entity thereof
with a person who is a resident of Australia.
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. The competent authorities of the Contracting States shall by mutual
agreement settle the mode of application of this limitation. 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 under the
law of that State relating to its tax. Where, however, the person paying the
interest, whether the person is a resident of one of the 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
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. 7 Interest derived from the investment of official foreign exchange
reserve assets by the Government of one of the Contracting States, its
monetary institutions or a bank performing central banking functions in that
State shall be exempt from tax in the other Contracting State.
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:
(a) in the case of royalties described in subparagraphs 3(b) and (c) and,
to the extent to which they relate to those royalties, in
subparagraphs 3(d) and (f) - 10 per cent; and
(b) in all other cases - 15 per cent. The competent authorities of the
Contracting States shall by mutual agreement settle the mode of
application of these limitations. 3 The term "royalties" in this
Article means payments, 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 initial application 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 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 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 under the law of that State relating to 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, having regard to what they are paid 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 Agreement shall apply only to the lastmentioned
amount. In that case, the excess part of the amount of the royalties
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 In this Article, the term "payments" includes credits and
the terms "paid", "payer" and "person paying" have the corresponding
meanings.
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(a) In this Article, the term "real property" has the same meaning as it has
in Article 6.
(b) 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; in that case, so much of the income as is attributable to
activities exercised from that fixed base may also be taxed in the
other State; or
(b) the individual is present in that other State for a period or periods
exceeding 120 days in any period of 12 months; in that case, so much
of the income as is derived from the individual's activities in that
other State may also be taxed in that other State. 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, lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services 1 Subject to the provisions of Articles 16, 18, 19
and 20, 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 120 days in any period of 12 months;
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 or any other similar
organ 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. 3 Notwithstanding the provisions of paragraphs 1 and 2, income
derived from activities referred to in paragraph 1 performed under a cultural
agreement or arrangement between the Contracting States shall be exempt from
tax in the Contracting State in which the activities are exercised if the
visit to that State is wholly or substantially supported by funds of the other
Contracting State, a local authority or public institution of that other
State.
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 Notwithstanding the provisions of paragraph 1, a pension
(including a government pension) or an annuity paid to a resident of one of
the Contracting States from sources in the other Contracting State may be
taxed in that other State but the tax so charged may not exceed 15 per cent of
the gross amount of the pension or annuity. 3 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. 4 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 to it 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 or national of that State; or
(b) did not become a resident of the 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
Professors and Teachers 1 Where a professor or teacher who is a resident of
one of the Contracting States visits the other Contracting State for a period
not exceeding 2 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 firstmentioned 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
Where a student, who is a resident of one 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 education, receives payments from sources outside that other
State for the purpose of the student's maintenance or education, 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 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 23
Source of Income
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 22, may
be taxed in the other Contracting State shall, for the purposes of Article 24
and the law of each Contracting State relating to its tax, be deemed to be
income from sources in that other State.
ARTICLE 24
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), Indonesian tax
paid under the law of Indonesia 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 Indonesia shall be allowed as a credit
against Australian tax payable in respect of that income. 2 Where a company
which is a resident of Indonesia and is not a resident of Australia under the
law of Australia relating to its 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 Indonesian tax paid by that
firstmentioned company in respect of that portion of its profits out of which
the dividend is paid. 3 Where a resident of Indonesia derives income from
Australia which may be taxed in Australia in accordance with the provisions of
this Agreement, the amount of Australian tax payable in respect of that income
shall be allowed as a credit against the Indonesian tax imposed on that
resident in respect of the income. The amount of credit, however, shall not
exceed that part of the Indonesian tax which is appropriate to that income. 4
The amount of Australian tax payable on income derived by a resident of
Indonesia to whom paragraph 3 applies shall be increased, before the
application of that paragraph in that case, by an amount equal to any amount
paid by that resident under the Fringe Benefits Tax Act 1986 of Australia.
ARTICLE 25
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 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 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 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 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 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 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
Miscellaneous
Nothing in this Agreement shall affect the operation of the Treaty between
Australia and the Republic of Indonesia on the Zone of Cooperation in an Area
between The Indonesian Province of East Timor and Northern Australia, done
over the Zone of Cooperation on 11 December 1989.
ARTICLE 29
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 Indonesia, 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
in the calendar year next following that in 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 in the calendar year next following that in which the
Agreement enters into force;
(b) in Indonesia:
(i) in respect of tax withheld at source, on or after 1 July in the
calendar year next following that in which the Agreement enters
into force; and
(ii) in respect of other Indonesian tax, for taxable years beginning
on or after 1 July in the calendar year next following that in
which the Agreement enters into force.
ARTICLE 30
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
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 income,
profits 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 Indonesia:
(i) in respect of tax withheld at source, 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 Indonesian tax, for taxable years beginning
on or after 1 July 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 Jakarta this Twentysecond day of April One thousand nine
hundred and ninety two in the English language. FOR THE GOVERNMENT OF
AUSTRALIA FOR THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
ALI ALATAS
"SCHEDULE 38 Section 3
AGREEMENT
BETWEEN
THE GOVERNMENT OF AUSTRALIA
AND
THE GOVERNMENT OF THE SOCIALIST REPUBLIC
OF VIETNAM
FOR
THE AVOIDANCE OF DOUBLE TAXATION
AND
THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The Government of Australia and the Government of the Socialist Republic of
Vietnam,
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 Vietnam:
(i) the income tax;
(ii) the profit tax; and
(iii) the withholding tax. 2. This Agreement shall also apply to any
identical or substantially similar taxes on income, profits or gains
which are imposed under the federal law of Australia or the law of
Vietnam 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 "Vietnam" means the Socialist Republic of Vietnam, and, when
used in a geographical sense, includes national territory and any area
adjacent to the territorial waters of Vietnam and beyond the
territorial limit of Vietnam which in accordance with international
law has been designated an area within which the rights of the
Socialist Republic of Vietnam with respect to the exploration and the
exploitation of any natural resources of the seabed and subsoil and
water surface may be exercised;
(c) the term "Contracting State" means Australia or Vietnam, as the
context requires, the Governments of which have concluded this
Agreement;
(d) the term "person" includes an individual, a company and any other body
of persons;
(e) the term "company" means any entity which is treated as a company or
body corporate for tax purposes;
(f) the terms "enterprise of a Contracting State" 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 Vietnam, as
the context requires;
(g) the term "tax" means Australian tax or Vietnamese 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 ofArticle 2;
(i) the term "Vietnamese tax" means tax imposed by Vietnam, being tax to
which this Agreement applies by virtue ofArticle 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 Vietnam, 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 a
Contracting State:
(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 Vietnam, if the person is liable, under the law of
Vietnam, to tax therein by reason of the person's domicile, residence,
place of management of 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 person's
economic and personal relations are 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 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", 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 183 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 a
Contracting State and to carry on business through that permanent
establishment if:
(a) it carries on supervisory activities in that State for more than 183
days 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 by, for or under
contract with the enterprise. 5. A person acting in a Contracting
State 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 concluded contracts on behalf of the enterprise, unless the
person's activities are limited to the purchasing of goods or
merchandise for the enterprise; or
(b) in so acting, the person manufactures or processes in that State for
the enterprise goods or merchandise belonging to that enterprise. 6.
An enterprise of a Contracting State shall not be deemed to have a
permanent establishment in the other Contracting State merely because
it carries on business in that other State through a 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 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 a Contracting State, has a permanent establishment in
a Contracting State.
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":
(a) in the case of Australia, has the meaning which it has under the laws
of Australia and includes:
(i) 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
(ii) 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;
(b) in the case of Vietnam, means property which according to the laws of
Vietnam is immovable property, and includes:
(i) property accessory to immovable property;
(ii) rights to which the provisions of general law in respect of
landed property apply; and
(iii) usufruct of immovable property and rights to variable or fixed
payments as consideration for the working of, or the right to
work mineral deposits, sources, and other natural resources;
(c) does not include ships and aircraft. 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 paragraph 1 apply to income derived from the direct
use, letting or use in any other form, of real property. 5. The
provisions of paragraphs 1, 3 and 4 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 in that
other State. If the enterprise carries on business in that manner, 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 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 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 or gains 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 a Contracting State 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 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 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 ships or aircraft derived
by a resident of a Contracting State 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 or
aircraft 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 or aircraft derived by a resident of a Contracting
State 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 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 operations of ships or aircraft confined solely to places in that State.
ARTICLE 9
Associated Enterprises 1. Where:
(a) an enterprise of a Contracting State 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 a Contracting State and an
enterprise of the other Contracting State, and in either case
conditions operate between the two 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 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, 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 of which an
enterprise of a Contracting State 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 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. 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,
in Australia, 15 per cent, and, in Vietnam, 10 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 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 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 a Contracting State, 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 Vietnam for the purposes of Vietnamese
tax.
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. 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 a Contracting
State, 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 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 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 a Contracting State, 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 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 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 a Contracting State, 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 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 a Contracting State 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 a
Contracting State 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 a Contracting State 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 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 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
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 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 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, 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 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 firstmentioned 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; 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 a Contracting State may be
taxed in that State.
ARTICLE 16
Directors' Fees
Directors' fees and similar payments derived by a resident of a Contracting
State 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 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. 3. Any alimony or other maintenance
payment arising in a Contracting State 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 a
Contracting State 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 recipient 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 a Contracting State 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
Where a student, 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
the student's education, receives payments from sources outside that other
State for the purpose of the student's maintenance or education, 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 a
Contracting State 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 a Contracting State 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, other than income from real property as
defined in paragraph 2 of Article 6, derived by a resident of a Contracting
State where that income is effectively connected with a permanent
establishment or fixed based situated in the other Contracting State. In that
case, the provision 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 a
Contracting State 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 a Contracting State 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), Vietnamese tax
paid under the law of Vietnam 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 Vietnam shall be allowed as a credit
against Australian tax payable in respect of that income. 2. Where a company
which is a resident of Vietnam 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 Vietnamese tax paid by that firstmentioned
company in respect of that portion of its profits out of which the dividend is
paid. 3. For the purposes of paragraphs 1 and 2, Vietnamese tax paid shall
include an amount equivalent to the amount of any Vietnamese tax forgone. 4.
In paragraph 3, the term "Vietnamese tax forgone" means an amount which, under
the law of Vietnam relating to Vietnamese tax and in accordance with this
Agreement, would have been payable as Vietnamese tax on income but for an
exemption from, or a reduction of, Vietnamese tax on that income resulting
from the operation of those provisions of the laws of Vietnam which the
Treasurer of Australia and the Minister of Finance of Vietnam determine from
time to time in letters exchanged for this purpose to be provisions to which
this paragraph applies. Subject to its terms, such a determination of
applicable provisions shall be valid for as long as those provisions are not
modified after the date of that determination or have been modified only in
minor respects so as not to affect their general character. 5. Paragraphs 3
and 4 shall apply only in relation to those years that may be determined by
the Treasurer of Australia and the Minister of Finance of Vietnam in letters
exchanged for this purpose. 6. Where a resident of Vietnam derives income,
profits or gains which under the law of Australia and in accordance with this
agreement may be taxed in Australia, Vietnam shall allow as a credit against
its tax on the income, profits or gains an amount equal to the tax paid in
Australia.
ARTICLE 24
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 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 a Contracting State 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 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 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 Vietnam, 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
in the calendar year next following that in 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 in the calendar year next following that in which the
Agreement enters into force;
(b) in Vietnam:
(i) in respect of taxes withheld at source, in relation to taxable
amounts paid on or after 1 January following the calendar year
in which the Agreement enters into force;
(ii) in respect of other Vietnamese tax, in relation to income,
profits or gains arising in the calendar year following the
calendar year in which the Agreement enters into force, and in
subsequent calendar years.
ARTICLE 28
Termination
The 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
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 income,
profits 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 Vietnam:
(i) in respect of taxes withheld at source, in relation to taxable
amounts paid on or after 1 January following the calendar year
in which the notice of termination is given;
(ii) in respect of other Vietnamese tax, in relation to income,
profits or gains arising in the calendar year following the
calendar year in which the notice of termination is given, and
in subsequent calendar years.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this
Agreement.
DONE in duplicate at Hanoi, this thirteenth day of April, One thousand nine
hundred and ninety-two in the English and Vietnamese languages, both texts
being equally authentic. FOR THE GOVERNMENT OF AUSTRALIA: JOHN SYDNEY DAWKINS
Minister of State for the Treasury
FOR THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF VIETNAM: HOANG QUY Minister of
Ministry of Finance
"SCHEDULE 39 Section 3
AGREEMENT BETWEEN
AUSTRALIA
AND
THE KINGDOM OF SPAIN
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME Australia and the Kingdom of Spain, 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 the case of 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
the Commonwealth of Australia;
(b) in the case of Spain:
(i) the Income Tax on Individuals (el Impuesto sobre la renta de
las Personas Fisicas); and
(ii) the Corporation Tax (el Impuesto sobre sociedades). (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 Spain 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 the respective
States relating to the taxes to which this Agreement applies within a
reasonable time after such 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 subparagraphs (i) to (vi) inclusive)
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 and superjacent
waters;
(b) the term "Spain" means the Spanish State and, when used
geographically, means the territory of the Spanish State including any
area outside the territorial sea in which, in accordance with
international law and domestic legislation, the Spanish State may
exercise jurisdiction or sovereign rights with respect to the seabed,
its subsoil and superjacent waters and their natural resources;
(c) the terms "Contracting State", "one of the Contracting States" and
"other Contracting State" means Australia or Spain, 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" means an enterprise
carried on by a resident of Australia or an enterprise carried on by a
resident of Spain, as the context requires;
(g) the term "tax" means Australian tax or Spanish 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 "Spanish tax" means tax imposed by Spain, being tax to which
this Agreement applies by virtue of Article 2;
(j) the term "competent authority" means:
(i) in the case of Australia, the Commissioner of Taxation or an
authorised representative of the Commissioner; and
(ii) in the case of Spain, the Minister of Economy and Finance or an
authorised representative of the Minister. (2) In this Agreement, the
terms "Australian tax" and "Spanish 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 by virtue of Article 2. (3)
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
in force relating to the taxes to which this Agreement applies, at the
time of the application.
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 Spain, if the person is a resident of Spain for the
purposes of the law of Spain relating to Spanish taxes. (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 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 if in neither of them, the person shall be deemed to be a
resident solely of the Contracting State with which the person's
economic and personal relations are the closer. For the purposes of
the preceding subparagraphs, an individual's citizenship or
nationality of one of the Contracting States shall be a factor in
determining the degree of the individual's personal and economic
relations with that Contracting State. (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", 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;
(h) a building site or construction, installation or assembly project
which exists for more than twelve 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;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for
the enterprise;
(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
twelve months in connection with a building site, or a construction,
installation or assembly project which is being undertaken in that
State; or
(b) a structure, installation, drilling rig, ship or other like
substantial equipment is used:
(i) for the exploration for, or exploitation of, natural resources;
or
(ii) in activities connected with that exploration or exploitation,
in either case if used continuously or those activities
continue for a period of more than twelve months. (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 binding the enterprise, unless the activities of
that person are limited to those mentioned in paragraph (3) and are
such that, if exercised through a fixed place of business, would not
make that fixed place of business a permanent establishment under the
provisions of that paragraph; or
(b) in so acting, the person manufactures or processes in that State for
the enterprise goods or merchandise belonging to the enterprise,
provided that this provision shall apply only in relation to the goods
or merchandise so manufactured or processed. (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 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 paragraphs (5) of Article 11 and paragraph (5) of
Article 12 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":
(a) in the case of Australia, has the meaning which it has under the laws
of Australia, and shall also include:
(i) a lease of land and any other interest in or over land, whether
improved or not;
(ii) a right to receive variable or fixed payments as consideration
for the exploitation of or the right to explore for or exploit,
or in respect of the proceeds from the exploitation of, mineral
deposits, oil or gas wells, quarries or other places of
extraction or exploitation of natural resources; and
(b) in the case of Spain, means immovable property according to the laws
of Spain, and shall also include:
(i) property accessory to immovable property;
(ii) rights to which the provisions of the general law respecting
landed property apply;
(iii) usufruct of immovable property; and
(iv) a right to receive variable or fixed payments as consideration
for the exploitation of or the right to explore for or exploit,
or in respect of the proceeds from the exploitation of, mineral
deposits, oil or gas wells, quarries or other places of
extraction or exploitation of natural resources. (3) A lease of
land, any other interest in or over land and any right referred
to in any of the subparagraphs of paragraph (2) shall be
regarded as situated where the land, mineral deposits, oil or
gas wells, quarries or natural resources, as the case may be,
are situated, or where the exploration may take place. (4) The
provisions of paragraph (1) shall apply to income derived from
the direct use, letting or use in any other form of real
property. (5) The provisions of paragraphs (1), (3) and (4)
shall also apply to the income from real property of an
enterprise and to income from real property used for the
performance of independent personal services. (6) Where the
ownership of shares or other rights in a company or other
entity entitles the owner of such shares or rights to the
enjoyment in any manner, direct use, letting or use in any
other form of real property held by the company or other
entity, the income from such enjoyment, direct use, letting, or
use in any other form of such rights may be taxed in the
Contracting State in which the real property is situated.
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 that permanent establishment. (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 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) 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 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 trusts, 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 has, in accordance with
the principles of Article 5, a permanent establishment in that other
State, the enterprise carried on by the trustee shall be deemed to be
a business carried on in that other State by that resident through a
permanent establishment situated therein and the resident's share of
business profits shall be attributed to that permanent establishment.
ARTICLE 8
Ships and Aircraft (1) Profits from the operation of ships or aircraft derived
by a resident of one of the Contracting States shall be taxable only in that
State. (2) Notwithstanding the provisions of paragraph (1), profits of the
kind referred to in that paragraph from operations of ships or aircraft
confined solely to places in the other Contracting State may be taxed 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 or aircraft
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 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 operations 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 two 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 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, 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, 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, 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" 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. (4) In the case of Spain, paragraph (2) of this Article shall not
apply to income which under the provisions of the Spanish taxation law
relating to transparent companies (Regimen de Transparencia Fiscal) is
attributable to shareholders of such companies, whether or not distributed to
such shareholders. Such income may be taxed by Spain in accordance with its
domestic law as long as its is not subject to the Spanish corporation tax
(Impuesto Sobre Sociedades). (5) 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 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. (6)
Where a company which is a resident of a Contracting State derives profits or
income from the other Contracting State, that other State may not impose any
tax on the dividends paid by the company, except insofar as such dividends are
paid to a resident of that other State or insofar 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 a tax on the company's undistributed
profits, even if the dividends paid or the undistributed profits consist
wholly or partly or profits or income arising in such other State.
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) 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 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, and
interest from any other form of indebtedness as well as 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 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. 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 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) A person is a resident of one of the Contracting States
for the purpose of paragraph (5) if the person is a resident of that State
within the operation of the law of that State relating to its tax,
irrespective of the manner in which paragraph (3) or paragraph (4), as the
case may be, of Article 4 operates in relation to that person. (7) 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
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) 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;
(b) the use of, or the right to use, any industrial, commerical or
scientific equipment;
(c) the supply of scientific, technical, industrial or commercial
knowledge or information;
(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);
(e) the use of, or the right to use:
(i) motion picture films;
(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 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. 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 deemd to arise in the State in which the permanent
establishment or fixed base is situated. (6) A person is a resident of
one of the Contracting States for the purposes of paragraph (5) if the
person is a resident of that State within the operation of the law of
that State relating to its tax, irrespective of the manner in which
paragraph (3) or paragraph (4), as the case may be, of Article 4
operates in relation to that person. (7) 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 or gains derived by a resident of one of the
Contracting States 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
one of the Contracting States has in the other Contracting State or pertains
to a fixed base available to a resident of the firstmentioned 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 or aircraft operated in international traffic, or of property other than
real property referred to in Article 6 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 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 in the other Contracting State
of a kind referred to in Article 6, may be taxed in that other State. (5)
Income or gains from the alienation of shares, or comparable interests in a
company other than those mentioned in paragraph (4) of this Article which is a
resident of one of the Contracting States may be taxed in that Contracting
State if the recipient of the income or gains, during a 12 month period
preceding such alienation, had a participation, directly or indirectly, of at
least 10 per cent in the capital of that company. (6) 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 the preceding paragraphs of this
Article apply.
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 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, 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 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 deductible in determining taxable profits of 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 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 person who
is a resident of one of the Contracting States in the person's capacity 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. (3) Notwithstanding the provisions of paragraphs (1) and (2),
income derived by a resident of one of the Contracting States as an
entertainer, from activities as an entertainer exercised in the other
Contracting State, shall be exempt from tax in the other Contracting State if
the visit to that other State is substantially supported by public funds of
the firstmentioned State or a political subdivision or local authority
thereof, in connection with the performance of such activities.
ARTICLE 18
Pensions and Annuities (1) Subject to the provisions of paragraph (2) of
Article 19, 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 recipient 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) (a) Any pension paid by, or out of funds created by, a Contracting State
or a political subdivision or local authority of that Contracting State to an
individual in respect of services rendered to that State or subdivision or
authority shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other Contracting
State if the individual is a resident of, and a citizen or national
of, that State. (3) Notwithstanding the provisions of paragraphs (1)
and (2), the provisions of Articles 15, 16 and 18 shall apply to
remuneration and pensions in respect of services rendered in
connection with a business carried on by a Contracting State or a
political subdivision or a local authority thereof.
ARTICLE 20
Students Where a student, 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 education of the student, receives payments from
sources outside that other State for the purpose of maintenance or education
of the student, 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 such a case, the provisions of Article 7 or Article 14, as the case
may be, shall apply.
ARTICLE 22
Source of Income 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 17
and 21, may be taxed in the other Contracting State shall, for the purposes of
Article 23 and of the income tax laws of the respective Contracting States, be
deemed to be income from sources in that other 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 or other relief against Australian tax of tax paid in a country outside
Australia (which shall not affect the general principle hereof), Spanish tax
paid under the law of Spain 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 Spain shall be allowed as a credit or be
relieved against Australian tax payable in respect of that income. (2) Where a
company which is a resident of Spain 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 Spanish tax paid by that
firstmentioned company in respect of that portion of its profits out of which
the dividend is paid. (3) In the case of Spain, double taxation will be
avoided in the following manner:
(a) where a resident of Spain derives income or gains which, in accordance
with the provisions of this Agreement, may be taxed in Australia,
Spain shall allow:
(i) as a deduction from the tax on the income of that resident, an
amount equal to the tax on income or gains paid in Australia;
and
(ii) in the case of a dividend paid by a company which is a resident
of Australia to a company which is a resident of Spain and
which holds directly at least 25 per cent of the capital of the
company paying the dividend, the deduction allowable shall
include, in addition to the amount deductible under
subparagraph (i) of this paragraph, that part of the tax
effectively paid by the firstmentioned company on the profits
out of which the dividend is paid, which relates to such
dividends, provided that such amount of tax is included, for
this purpose, in the taxable base of the receiving company;
such deduction in either case shall not, however, exceed that
part of the tax on income or gains, as computed before the
deduction is given, which is attributable, as the case may be,
to the income or gains which may be taxed in Australia; and
(b) where in accordance with any provision of this Agreement income or
gains derived by a resident of Spain is exempt from tax in Spain,
Spain may nevertheless, in calculating the amount of tax on the
remaining income or gains of such resident, take into account the
exempted income or gains.
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 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 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 domestic laws of the Contracting States concerning
the taxes to which this Agreement applies insofar 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. (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;
(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;
(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 Spain, as the case may be,
and thereupon this Agreement shall have effect:
(a) in both Contracting States, 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;
(b) in Australia, in respect of other tax, in relation to income 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;
(c) in Spain, in respect of other taxes on income, in relation to taxes
chargeable for the taxable year beginning on or after 1 January in the
calendar year next following that in 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 3 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 both Contracting States, 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;
(b) in Australia, in respect of other Australian tax, in relation to
income 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;
(c) in Spain, in respect of other taxes on income, in relation to taxes
chargeable for any taxable year beginning on or after 1 January in the
calendar year next following that in which the notice is given. IN
WITNESS WHEREOF the undersigned, duly authorised thereto, have signed
this Agreement. DONE in duplicate at Canberra this TWENTY FOURTH day
of MARCH One thousand nine hundred and ninety-two in the English and
Spanish languages, both texts being equally authentic. FOR
AUSTRALIA:FOR THE KINGDOM OF SPAIN: JOHN DAWKINSJOSE LUIS PARDOS
PROTOCOL TO THE AGREEMENT
BETWEEN
AUSTRALIA
AND
THE KINGDOM OF SPAIN
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME Australia and the Kingdom of Spain, Having
regard to the Agreement between Australia and the Kingdom of Spain for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income signed today at Canberra (in this Protocol called "the
Agreement"), Have agreed as follows: If, in an agreement for the avoidance of
double taxation that may subsequently be made between Australia and a third
State, there is included a Non-discrimination Article, Australia shall
immediately inform the Kingdom of Spain in writing through the diplomatic
channel and shall enter into negotiations with the Kingdom of Spain in order
to provide the same treatment for the Kingdom of Spain as may be provided for
the third State. This protocol shall form an integral part of the Agreement.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this
Protocol. DONE in duplicate at Canberra this TWENTY-FOURTH day of MARCH One
thousand nine hundred and ninety-two in the English and Spanish languages,
both texts being equally authentic. FOR AUSTRALIA: FOR THE KINGDOM OF SPAIN:
JOHN DAWKINS JOSE LUIS PARDOS.".
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