Updated: Monday July 07, 2014/AlEthnien
Ramadan 10, 1435/Somavara
Asadha 16, 1936, at 04:19:37 PM
(TO BE
PUBLISHED IN THE GAZETTE OF
GOVERNMENT
OF
REVENUE
DIVISION
CENTRAL
BOARD OF REVENUE
----
(Income
Tax)
S.R.O.
49(I)/2006.- WHEREAS the Government of
the Islamic Republic of Pakistan and the Government of the Republic of Yemen
have executed an Agreement for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income on the 2nd
March, 2004, as set out in the Annexure to this Notification;
NOW, THEREFORE, in exercise of the powers conferred by sub-section (1) of section 107 of the Income Tax Ordinance, 2001 (XLIX of 2001), the Federal Government is pleased to direct that the Agreement shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect:-
(a) as regards taxes withheld at source, it shall apply to the amounts that are paid or entered into the accounts on or after the first day of January of the Gregorian year following the year in which the Agreement comes into force; and
(b) as regards other taxes imposed on income, to the tax years that begin on or after the first day of January of Gregorian year that follows the year in which the Agreement comes into force.
Annexure
“AGREEMENT
BETWEEN THE GOVERNMENT
OF THE ISLAMIC
AND THE GOVERNMENT OF THE
FOR THE AVOIDANCE OF DOUBLE TAXATION AND
RESPECT TO TAXES ON INCOME
The Government of the Islamic Republic of Pakistan and the Government of the Republic of Yemen desiring to conclude an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and to promote and strengthen the economic relations between the two countries,
Have agreed as follows:
CHAPTER I
SCOPE OF THE AGREEMENT
Article 1
This
Agreement shall apply to persons who are residents of one or both of the Contracting
States.
1.
This Agreement shall apply to
taxes on income imposed on behalf of a
2.
There shall be regarded as taxes
on income, all taxes imposed on
total income, or on elements of income including
taxes on gains from the alienation of movable or immovable property, taxes on
the total amounts of wages or salaries paid by enterprises.
3.
The
existing taxes to which the Agreement shall apply are in particular:
(a)
in the case of
(hereinafter referred to as “
(b)
in
the case of
1.
Real
estate tax and it includes tax on real estate yield and tax on real estate
sales.
2.
The
commercial and industrial profits tax imposed on natural person.
3.
The
commercial and industrial tax imposed on body corporate (companies).
4.
Tax
on free and other non-commercial professions.
5.
Tax
on salaries and wages and the like.
(hereinafter referred to as “Yemeni tax”)
4.
The Agreement shall apply also to
any identical or substantially similar taxes which are imposed after the date
of signature of the Agreement in addition to, or in place of, the existing
taxes. The competent authorities of the Contracting States shall notify each
other of significant changes made to their tax law.
DEFINITIONS
Article 3
1.
For the purposes of this
Agreement, unless the context otherwise requires:
(a) The
term “Pakistan” when used in a geographical sense means Pakistan as defined in
the constitution of the Islamic Republic of Pakistan and includes any area
outside the territorial waters of Pakistan which under the laws of Pakistan and
international law is an area within which Pakistan exercises sovereign rights
and exclusive jurisdiction with respect to the natural resources of the seabed
and subsoil and superjacent waters;
(b) The
term “
(c) The
term "company" means any body corporate or any entity that is treated
as a body corporate for tax purposes;
(d) The
term "competent authority" means:
(i) In
case of
(ii) In
case of
(e) The
term “
(f) The
terms "enterprise of a Contracting State" and "enterprise of the
other Contracting State" mean respectively an enterprise carried on by a
resident of a Contracting State and an enterprise carried on by a resident of
the other Contracting State;
(g) The
term "international traffic" means any transport by a ship or
aircraft operated by an enterprise which has its place of effective management
in a
(h) The
term "national" means:
(i) Any
individual possessing the nationality of a
(ii) Any
legal person, partnership or association deriving its status as such from the
laws in force in a
(i) The
term "person" includes an individual, a company and any other body of
persons;
(j) The term
“tax” means
2.
As regards the application of the
Agreement at any time by a Contracting State, any term not defined therein
shall, unless the context otherwise requires, have the meaning which it has at
that time under the laws of that State concerning taxes to which the Agreement
applies.
Article 4
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State situated therein.
2. Where by reason of the provisions of paragraph 1 of this Article an individual is a resident of both Contracting States, then his status shall be determined as follows:
(a) He
shall be deemed to be a resident only of the State in which he has a permanent
home available to him; if he has a permanent home available to him in both
States, he shall be deemed to be a resident only of the State with which his
personal and economic relations are closer (centre of vital interests);
(b) If
the State in which he has his centre of vital interests cannot be determined,
or if he has not a permanent home available to him in either State, he shall be
deemed to be a resident only of the State in which he has an habitual abode;
(c) If
he has an habitual abode in both States or in neither of them, he shall be
deemed to be a resident only of the State of which he is a national;
(d) If
he is a national of both States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement.
3.
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 only of the State in which its
place of effective management is situated.
Article 5
1.
For the purposes of this
Agreement, the term "permanent establishment" means a fixed place of
business through which the business of an 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
warehouse;
(g) A
permanent sales exhibition or sales outlet;
(h) A
mine, an oil or gas well, a quarry or any other place of exploration and/or
extraction of natural resources.
3.
The term "permanent
establishment" also encompasses a building site, a construction, assembly
or installation project or supervisory activities in connection therewith, but
only if such site, project or activities last more than 183 days during a
period of twelve months.
4.
Notwithstanding the preceding
provisions of this Article, the term "permanent establishment" shall
be deemed not to include:
(a) The
use of facilities solely for the purpose of storage or display 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 or display;
(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 of collecting information, for the enterprise;
(e) The
maintenance of a fixed place of business solely for the purpose of carrying on,
for the enterprise, any other activity of a preparatory or auxiliary character.
(f) A
fixed place where goods are held for the pursuit of the set of activities
referred to in the preceding sub-paragraphs (a) to (e), provided that the
overall activity of the fixed place resulting from such set of activities is of
a preliminary or supporting character.
5.
Notwithstanding the provisions of
paragraphs 1 and 2, where a person - other than an agent of an independent
status to whom paragraph 7 applies - is acting in a Contracting State on behalf
of an enterprise of the other Contracting State, that enterprise shall be
deemed to have a permanent establishment in the first-mentioned Contracting
State in respect of any activities which that person undertakes for the
enterprise, if such a person:
(a) Has
and habitually exercises in that State an authority to conclude contracts in
the name of the enterprise, unless the activities of such person are limited to
those mentioned in paragraph 4 which, if exercised through a fixed place of
business, would not make this fixed place of business a permanent establishment
under the provisions of that paragraph; or
(b) Has
no such authority, but habitually maintains in the first-mentioned State a
stock of goods or merchandise from which he regularly delivers goods or merchandise
on behalf of the enterprise.
6.
Notwithstanding the preceding
provisions of this Article, an insurance enterprise of a Contracting State
shall, except in regard to re-insurance, be deemed to have a permanent
establishment in the other Contracting State if it collects premiums in the
territory of that other State or insures risks situated therein through a
person other than an agent of an independent status to whom paragraph 7
applies.
7.
An enterprise of a
8.
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 constitute either company a permanent establishment of the other.
CHAPTER III
TAXATION OF INCOME
Article 6
INCOME
FROM IMMOVABLE PROPERTY
1.
Income derived by a resident of a
2.
The term "immovable
property" shall have the meaning which it has under the law of the
3.
The provisions of paragraph 1
shall also apply to income derived from the direct use, letting or use in any
other form of immovable property.
4.
The provisions of paragraphs 1 and
3 shall also apply to the income from immovable property of an enterprise and
to income from immovable property used for the performance of independent
personal services.
Article 7
1.
The profits of an enterprise of a
(a) that
permanent establishment;
(b) sales
in that other State of goods or merchandise of the same or similar kind as
those sold through that permanent establishment; or
(c) other
business activities carried on in that other State of the same or similar kind
as those effected through that permanent establishment.
2.
Subject to the provisions of
paragraph 3, where an enterprise of a Contracting State carries on business in
the other Contracting State through a permanent establishment situated therein,
there shall in each Contracting State be attributed to that permanent
establishment the profits which it might be expected to make if it were a
distinct and separate enterprise engaged in the same or similar activities
under the same or similar conditions and dealing wholly independently with the
enterprise of which it is a permanent establishment.
3.
(a)
In the determination of the profits
of a permanent establishment, there shall be allowed as deductions expenses
which are incurred for the purposes of the business of the permanent
establishment including only those executive and general administrative
expenses so incurred, whether in the State in which the permanent establishment
is situated or elsewhere which are allowed under the provisions of the domestic
law of the Contracting State in which the permanent establishment is situated.
(b) 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 moneys lent to the permanent establishment. Likewise, no
account shall be taken, in the determination of the profits of a permanent
establishment, for 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 moneys lent to the head
office of the enterprise or any of its other offices.
4. No profit 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.
In so far as it has been customary
in a Contracting State to determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits of the
enterprise to its various parts, nothing in paragraph 2 shall preclude that
Contracting State from determining the profits to be taxed by such an
apportionment as may be customary; the method of apportionment adopted shall,
however, be such that the result shall be in accordance with the principles contained
in this Article.
6.
For the purposes of the preceding
paragraphs, the profits to be attributed to the permanent establishment shall
be determined by the same method year by year unless there is good and
sufficient reason to the contrary.
7.
Where profits include items of
income which are dealt with separately in other Articles of this Agreement,
then the provisions of those Articles shall not be affected by the provisions
of this Article.
Article 8
1. Profits from the operation of aircraft
ships, boats, road vehicles and railways in international traffic shall be taxable only
in the
2. Profits form the operation of ships in international
traffic may be taxed in the
3.
If the place of effective
management of a shipping enterprise or of an inland waterways transport
enterprise is aboard a ship or boat, then it shall be deemed to be situated in
the Contracting State in which the home harbour of the ship or boat is
situated, or if there is no such home harbour, in the Contracting State of
which the operator of the ship or boat is a resident.
4.
The provisions of paragraphs 1 and
2 shall also apply to profits from the participation in a pool, a joint
business or an international operating agency.
Article 9
1.
Where:
(a) an
enterprise of a
(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 are made or imposed between
the two enterprises in their commercial or financial relations which differ
from those which would be made between independent enterprises, then any
profits which would, but for those conditions, have accrued to one of the
enterprises, but, by reason of those conditions, have not so accrued, may be
included in the profits of that enterprise and taxed accordingly.
2.
Where a Contracting State includes
in the profits of an enterprise of that State - and taxes accordingly - profits
on which an enterprise of the other Contracting State has been charged to tax
in that other State and the profits so included are profits which would have
accrued to the enterprise of the first-mentioned State if the conditions made
between the two enterprises had been those which would have been made between
independent enterprises, then that other State shall make an appropriate
adjustment to the amount of the tax charged therein on those profits. In
determining such adjustment, due regard shall be had to the other provisions of
the Agreement and the competent authorities of the Contracting States shall, if
necessary, consult each other.
Article 10
1. Dividends paid by a company, which is
a resident of a
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends.
This
paragraph shall not affect the taxation of the company in respect of the
profits out of which the dividends are paid.
3.
The term "dividends" as
used in this Article means income from shares, shares rights, mining shares,
founders’ shares or other rights, not being debt-claims, participating in
profits, as well as income from other corporate rights which is subjected to
the same taxation treatment as income from shares by the laws of the State of
which the company making the distribution is a resident.
4.
The provisions of paragraphs 1 and
2 shall not apply if the beneficial owner of the dividends, being a resident of
a Contracting State, carries on business in the other Contracting State of
which the company paying the dividends is a resident, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Article 7
or Article 15, as the case may be, shall apply.
5.
Where a company which is a
resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends
paid by the company, except in so far as such dividends are paid to a resident
of that other State or in so far as the holding in respect of which the
dividends are paid is effectively connected with a permanent establishment or a
fixed base situated in that other State, nor subject the company’s
undistributed profits to a tax on the company’s undistributed profits, even if
the dividends paid or the undistributed profits consist wholly or partly of
profits or income arising in such other State.
Article 11
1. Interest arising in a
2.
However, such interest may also be
taxed in the
3. Notwithstanding the provisions of
paragraph 2, interest arising from a
4.
The term "interest" as
used in this Article means income from debt-claims of every kind, whether or
not secured by mortgage and whether or not carrying a right to participate in
the debtor’s profits, and in particular, income from government securities and
income from bonds or debentures, including premiums and prizes attaching to
such securities, bonds or debentures. Penalty charges for the late payment
shall not be regarded as interest for the purpose of this Article.
5.
The provisions of paragraphs 1 and
2 shall not apply if the beneficial owner of the interest, being a resident of
a Contracting State, carries on business in the other Contracting State in
which the interest arises, through a permanent establishment situated therein,
or performs in that other State independent personal services from a fixed base
situated therein, and the debt-claim in respect of which the interest is paid
is effectively connected with (a) such permanent establishment or fixed base,
or with (b) business activities referred to in sub-paragraph (c) of paragraph 1
of Article 7. In such cases the provisions of Article 7 or Article 15, as the
case may be, shall apply.
6.
Interest shall be deemed to arise
in a
7.
Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the interest, having regard to the debt-claim
for which it is paid, exceeds the amount which would have been agreed upon by
the payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In
such case, the excess part of the payments shall remain taxable according to
the laws of each
1. Royalties arising in a
2.
However, such royalties may also
be taxed in the
3.
The term "royalties" as
used in this Article means payments of any kind received as a consideration
for:
(a) the use of, or right to use any patent,
invention, design or model, secret formula or process, trademark or other like
property or right;
(b) the use of, or right to use any
copyright of a literary, artistic or scientific work, including films or video
tapes for use in connection with television or tapes in connection with radio
broadcasting, but shall not include consideration for the sale, distribution or
exhibition of cinematograph films;
(c) the receipt of, or right to receive,
any visual, images or sounds, or both, transmitted by satellite, cable, optic
fiber or similar technology in connection with television, radio or internet
broadcasting;
(d) the supply of any technical,
industrial, commercial or scientific knowledge, experience or skill;
(e) the use of or right to use any
industrial, commercial or scientific equipment;
(f) 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 mentioned in clauses
(a) through (e);
(g) the disposal of any property or right
referred to in clauses (a) to (e).
4.
The provisions of paragraphs 1 and
2 shall not apply if the beneficial owner of the royalties being a resident of
a Contracting State, carries on business in the other Contracting State in
which the royalties arise, through a permanent establishment situated therein,
or performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the royalties
are paid is effectively connected with (a) such permanent establishment or
fixed base, or with (b) business activities referred to in sub-paragraph (c) of
paragraph 1 of Article 7. In such cases the provisions of Article 7 or Article
15, as the case may be, shall apply.
5.
Royalties shall be deemed to arise
in a
6.
Where by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the royalties having regard to the use,
right or information for which they are paid, exceeds the amount which would
have been agreed upon by the payer and the beneficial owner in the absence of
such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each
1. Fees for technical services arising in
a
2.
However, such fees for technical
services may also be taxed in the Contracting State in which they arise and
according to the laws of that State, but if the beneficial owner of the fees
for technical services is a resident of the other Contracting State, the tax so
charged shall not exceed 10 per cent of the gross amount of the fees for
technical services.
3.
The term "fees for technical
services" as used in this Article means payments of any kind received as a
consideration for the rendering of any managerial, technical or
consultancy
services including the services of technical or other personnel, but does not
include:
(a) consideration for any construction,
assembly or like project undertaken by the recipient; or
(b) consideration which would be income of
the recipient chargeable under the head “salary”.
4.
The provisions of paragraphs 1 and
2 shall not apply if the beneficial owner of the fees for technical services, being a resident
of a Contracting State, carries on business in the other Contracting State in
which the fees for technical services arise, through a permanent establishment
situated therein, or performs in that other State independent personal services
from a fixed base situated therein, and the right or property in respect of
which the fees for technical services are paid is effectively connected with
(a) such permanent establishment or fixed base, or with (b) business activities
referred to in subparagraph (c) of paragraph 1 of Article 7. In such cases the
provisions of Article 7 or Article 15, as the case may be, shall apply.
5.
Fees for technical services shall
be deemed to arise in a
6.
Where by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the fees for technical services, having
regard to the use, right or information for which they are paid, exceeds the
amount which would have been agreed upon by the payer and the beneficial owner
in the absence of such relationship, the provisions of this Article shall apply
only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each
Article 14
1.
Gains derived by a resident of a
2.
Gains from the alienation of
movable property forming part of the business property of a permanent
establishment which an enterprise of a Contracting State has in the other Contracting
State or of movable property pertaining to a fixed base available to a resident
of a Contracting State in the other Contracting State for the purpose of
performing independent personal services, including such gains from the
alienation of such a permanent establishment (alone or with the whole
enterprise) or of such fixed base, may be taxed in that other State.
3.
Gains from the alienation of ships
or aircraft operated in international traffic, boats engaged in inland
waterways transport or movable property pertaining to the operation of such
ships, aircraft or boats, shall be taxable only in the
4.
Gains from the alienation of any
property other than that referred to in paragraphs 1, 2, 3, 4 and 5 shall be
taxable only in the
Article 15
1.
Income derived by a resident of a
Contracting State in respect of professional services or other activities of an
independent character shall be taxable only in that State except in the
following circumstances, when such income may also be taxed in the other
Contracting State:
(a) If
he has a fixed base regularly available to him in the other Contracting State
for the purpose of performing his activities; in that case, only so much of the
income as is attributable to that fixed base may be taxed in that other
Contracting State; or
(b) If
his stay in the other Contracting State is for a period or periods amounting to
or exceeding in the aggregate 183 days in the fiscal year concerned; in that
case, only so much of the income as is derived from his activities performed in
that other State may be taxed in that other State; or
2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
Article 16
1.
Subject to the provisions of
Articles 17, 19 and 20, salaries, wages and other similar remuneration derived
by a resident of a
2.
Notwithstanding the provisions of
paragraph 1, remuneration derived by a resident of a
(a) The
recipient is present in the other State for a period or periods not exceeding
in the aggregate 183 days in the fiscal year concerned; and
(b) The
remuneration is paid by, or on behalf of, an employer who is not a resident of
the other State; and
(c) The
remuneration is not borne by a permanent establishment or a fixed base which
the employer has in the other State.
3.
Notwithstanding the preceding
provisions of this Article, remuneration derived in respect of an employment
exercised aboard a ship or aircraft operated in international traffic, or
aboard a boat engaged in inland waterways transport, may be taxed in the
Article 17
DIRECTORS' FEES AND REMUNERATION
1.
Directors’ fees and other similar
payments derived by a resident of a
2.
Salaries, wages and other similar
remuneration derived by a resident of a
Article 18
ARTISTES AND SPORTSPERSONS
1.
Notwithstanding the provisions of
Articles 15 and 16, income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or television artiste, or
a musician, or as a sportsperson, from his personal activities as such
exercised in the other Contracting State, may be taxed in that other State.
2.
Where income in respect of
personal activities exercised by an entertainer or a sportsperson in his
capacity as such accrues not to the entertainer or sportsperson himself but to
another person, that income may, notwithstanding the provisions of Articles 7,
15 and 16, be taxed in the Contracting State in which the activities of the
entertainer or sportsperson are exercised.
Article 19
PENSIONS AND SOCIAL SECURITY
PAYMENTS
1.
Subject to the provisions of
paragraph 2 of Article 20, pensions and other similar remuneration paid to a
resident of a
2.
However, such pensions and other
similar remuneration may also be taxed in the other
3.
Notwithstanding the provisions of
paragraphs 1 and 2, pensions paid and other payments made under a public scheme
which is part of the social security system of a Contracting State or a
political subdivision or a local authority thereof shall be taxable only in
that State.
Article 20
GOVERNMENT SERVICE
1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof 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 salaries, wages and other similar remuneration shall be taxable only in
the other Contracting State if the services are rendered in that other State
and the individual is a resident of that State who:
(i) is a
national of that State; or
(ii) did
not become a resident of that State solely for the purpose of rendering the
services.
2. (a) Any pension paid by, or out of funds
created by, a Contracting State or a political subdivision or a local authority
thereof 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
3.
The provisions of Articles 16, 17,
18 and 19 shall apply to salaries, wages and other similar remuneration, and to
pensions, in respect of services rendered in connection with a business carried
on by a
Article 21
1. Payments
which a student or business trainee or apprentice who is or was immediately
before visiting a Contracting State a resident of the other Contracting State
and who is present in the first-mentioned State solely for the purpose of his
education or training receives for the purpose of his maintenance, education or
training shall not be taxed in that State, provided that such payments arise
from sources outside that State.
2. The same rule shall be applied to the
bonuses received by a person against his rendering services in the other
1. If a person resident in one of the two Contracting States is invited by a university, faculty or an institution of higher education or scientific research of the other Contracting State to visit it only for the purpose of teaching or scientific research at such institutions for a period that does not exceed one year, then he shall not be subjected to taxation in that other State in respect of his income from such teaching or research.
2. The provision of paragraph-1 of this Article shall not apply to bonuses received against research not carried out in the public interest, but primarily for the personal benefit of a certain person or persons.
Article 23
1. Items of income of a resident of a
2.
The provisions of paragraph 1
shall not apply to income, other than income from immovable property as defined
in paragraph 2 of Article 6, if the recipient of such income, being a resident
of a Contracting State, carries on business in the other Contracting State
through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the
right or property in respect of which the income is paid is effectively
connected with such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 15, as the case may be, shall apply.
3.
Notwithstanding the provisions of
paragraphs 1 and 2, items of income of a resident of a
[CHAPTER IV
METHODS FOR THE ELIMINATION OF DOUBLE
TAXATION
Article 24
1. Where a
resident of a
2. Where, in
accordance with any provision of this Agreement, income derived by a resident
of a
CHAPTER V
SPECIAL PROVISIONS
Article 25
1. Nationals
of a
2. The
taxation on a permanent establishment which an enterprise of a
3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12 or paragraph 6 of Article 13 apply, interest, royalties, fee for technical services and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.
5. Nothing
contained in this Article shall be construed as obliging a
6. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
Article 26
1.
Where a person considers that the
actions of one or both of the Contracting States result or will result for him
in taxation not in accordance with the provisions of this Agreement, he may,
irrespective of the remedies provided by the domestic law of those States,
present his case to the competent authority of the Contracting State of which
he is a resident or, if his case comes under paragraph 1 of Article 24, to that
of the Contracting State of which he is a national. The case must be presented
within three years from the first notification of the action resulting in
taxation not in accordance with the provisions of the Agreement.
2.
The competent authority shall
endeavour, if the objection appears to it to be justified and if it is not
itself able to arrive at a satisfactory solution, to resolve the case by mutual
agreement with the competent authority of the other
3.
The competent authorities of the
Contracting States shall endeavour to resolve by mutual agreement any
difficulties or doubts arising as to the interpretation or application of the
Agreement. They may also consult together for the elimination of double
taxation in cases not provided for in the Agreement.
4.
The competent authorities of the
Contracting States may communicate with each other directly, including through
a joint commission consisting of themselves or their representatives, for the
purpose of reaching an agreement in the sense of the preceding paragraphs. The
competent authorities, through consultations, shall develop appropriate
bilateral procedures, conditions, methods and techniques for the implementation
of the mutual agreement procedure provided for in this Article. In addition, a
competent authority may devise appropriate unilateral procedures, conditions,
methods and techniques to facilitate the above-mentioned bilateral actions and
the implementation of the mutual agreement procedure.
Article 27
1.
The competent authorities of the
Contracting States shall exchange such information as is necessary for carrying
out the provisions of this Agreement or of the domestic laws of the Contracting
States concerning taxes covered by the Agreement, in so far as the taxation
thereunder is not contrary to the Agreement, in particular for the prevention
of fraud or evasion of such taxes. The exchange of information is not
restricted by Article 1. Any information received by a
2. In no case shall the provisions
of paragraph 1 be construed so as to impose on a
(a) To
carry out administrative measures at variance with the laws and administrative
practice of that or of the other
(b) To
supply information which is not obtainable under the laws or in the normal
course of the administration of that or of the other
(c) To
supply information which would disclose any trade, business, industrial,
commercial or professional secret or trade process, or information, the
disclosure of which would be contrary to public policy (ordre public).
Article 28
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
FINAL PROVISIONS
Article 29
1. This Agreement shall be ratified and the instruments of ratification shall be exchanged as soon as possible.
2. The Agreement shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect:
(a)
As regards taxes withheld at source, it shall apply to
the amounts that are paid or entered into the accounts on or after the first
day of January of the Gregorian year following the year in which the Agreement
came into force;
(b)
As regards other taxes imposed on income, it shall be
applied to the tax years that begin on or after the first day of January of
Gregorian year that follows the year in which the Agreement was came into
force.
Article 30
This Agreement shall remain in force until terminated by a
(a) As
regards taxes withheld at source, its Article shall be suspended in respect of
amount that are paid or entered into account on or after the first day of
January of the Gregorian year that follows the years in which the Agreement was
terminated;
(b). As
regards other taxes imposed on income, its provision shall be suspended on
income realized during the tax year that begin on or after the first day of
January of the Gregorian year following the year in which the Agreement was
terminated.
IN WITNESS WHEREOF the undersigned, being duly authorized thereto, has signed this Agreement.
Done in
duplicate at Saana, this 2nd day of March 2004 in English language.
|
Sd/ FOR THE GOVERNMENT OF THE
ISLAMIC |
Sd/ FOR THE GOVERNMENT OF THE |
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[C.No.2(50)Int.Taxes/70
(Yemen-DTA)]
(Salman Nabi)
Additional Secretary/Member
(Direct Taxes)
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