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Tax Conventions Implementation Act, 2013 (S.C. 2013, c. 27)

Assented to 2013-06-19

Tax Conventions Implementation Act, 2013

S.C. 2013, c. 27

Assented to 2013-06-19

An Act to implement conventions, protocols, agreements and a supplementary convention, concluded between Canada and Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland, for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes

SUMMARY

This enactment implements four recent tax treaties that Canada has concluded with Namibia, Serbia, Poland and Hong Kong. This enactment also implements amendments to provisions for the exchange of tax information found in the tax treaties that Canada has concluded with Luxembourg and Switzerland.

The tax treaties with Namibia, Serbia, Poland and Hong Kong are generally patterned on the Model Tax Convention on Income and on Capital developed by the Organisation for Economic Co-operation and Development (OECD). The amendments to the treaties with Luxembourg and Switzerland ensure that their provisions for the exchange of tax information reflect the current OECD standard on this matter.

Tax treaties have two main objectives: the avoidance of double taxation and the prevention of fiscal evasion. Since a tax treaty provides relief from taxation rules in the Income Tax Act, it becomes effective only after being given precedence over domestic legislation by an Act of Parliament such as this one. Finally, for each instrument implemented by this Act to become effective, it must be ratified after the enactment of this Act.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Marginal note:Short title

 This Act may be cited as the Tax Conventions Implementation Act, 2013.

PART 1CANADA–NAMIBIA TAX CONVENTION

 The Canada–Namibia Tax Convention Act, 2013, whose text is as follows and whose Schedules 1 and 2 are set out in Schedule 1 to this Act, is enacted:

Marginal note:Short title

1. This Act may be cited as the Canada–Namibia Tax Convention Act, 2013.

Definition of “Convention”

2. In this Act, “Convention” means the Convention between Canada and the Republic of Namibia set out in Schedule 1, as amended by the Protocol set out in Schedule 2.

Marginal note:Convention approved

3. The Convention is approved and has the force of law in Canada during the period that the Convention, by its terms, is in force.

Marginal note:Inconsistent laws — general rule
  • 4. (1) Subject to subsection (2), in the event of any inconsistency between the provisions of this Act or the Convention and the provisions of any other law, the provisions of this Act and the Convention prevail to the extent of the inconsistency.

  • Marginal note:Inconsistent laws — exception

    (2) In the event of any inconsistency between the provisions of the Convention and the provisions of the Income Tax Conventions Interpretation Act, the provisions of that Act prevail to the extent of the inconsistency.

Marginal note:Regulations

5. The Minister of National Revenue may make any regulations that are necessary for carrying out the Convention or for giving effect to any of its provisions.

Marginal note:Notification

6. The Minister of Finance must cause a notice of the day on which the Convention enters into force and of the day on which it ceases to have effect to be published in the Canada Gazette within 60 days after its entry into force or termination.

PART 2CANADA–SERBIA TAX CONVENTION

 The Canada–Serbia Tax Convention Act, 2013, whose text is as follows and whose Schedules 1 and 2 are set out in Schedule 2 to this Act, is enacted:

Marginal note:Short title

1. This Act may be cited as the Canada–Serbia Tax Convention Act, 2013.

Definition of “Convention”

2. In this Act, “Convention” means the Convention between Canada and the Republic of Serbia set out in Schedule 1, as amended by the Protocol set out in Schedule 2.

Marginal note:Convention approved

3. The Convention is approved and has the force of law in Canada during the period that the Convention, by its terms, is in force.

Marginal note:Inconsistent laws — general rule
  • 4. (1) Subject to subsection (2), in the event of any inconsistency between the provisions of this Act or the Convention and the provisions of any other law, the provisions of this Act and the Convention prevail to the extent of the inconsistency.

  • Marginal note:Inconsistent laws — exception

    (2) In the event of any inconsistency between the provisions of the Convention and the provisions of the Income Tax Conventions Interpretation Act, the provisions of that Act prevail to the extent of the inconsistency.

Marginal note:Regulations

5. The Minister of National Revenue may make any regulations that are necessary for carrying out the Convention or for giving effect to any of its provisions.

Marginal note:Notification

6. The Minister of Finance must cause a notice of the day on which the Convention enters into force and of the day on which it ceases to have effect to be published in the Canada Gazette within 60 days after its entry into force or termination.

PART 3CANADA–POLAND TAX CONVENTION

 The Canada–Poland Tax Convention Act, 2013, whose text is as follows and whose Schedules 1 and 2 are set out in Schedule 3 to this Act, is enacted:

Marginal note:Short title

1. This Act may be cited as the Canada–Poland Tax Convention Act, 2013.

Definition of “Convention”

2. In this Act, “Convention” means the Convention between Canada and the Republic of Poland set out in Schedule 1, as amended by the Protocol set out in Schedule 2.

Marginal note:Convention approved

3. The Convention is approved and has the force of law in Canada during the period that the Convention, by its terms, is in force.

Marginal note:Inconsistent laws — general rule
  • 4. (1) Subject to subsection (2), in the event of any inconsistency between the provisions of this Act or the Convention and the provisions of any other law, the provisions of this Act and the Convention prevail to the extent of the inconsistency.

  • Marginal note:Inconsistent laws — exception

    (2) In the event of any inconsistency between the provisions of the Convention and the provisions of the Income Tax Conventions Interpretation Act, the provisions of that Act prevail to the extent of the inconsistency.

Marginal note:Regulations

5. The Minister of National Revenue may make any regulations that are necessary for carrying out the Convention or for giving effect to any of its provisions.

Marginal note:Notification

6. The Minister of Finance must cause a notice of the day on which the Convention enters into force and of the day on which it ceases to have effect to be published in the Canada Gazette within 60 days after its entry into force or termination.

PART 4CANADA–HONG KONG TAX AGREEMENT

 The Canada–Hong Kong Tax Agreement Act, 2013, whose text is as follows and whose Schedules 1 and 2 are set out in Schedule 4 to this Act, is enacted:

Marginal note:Short title

1. This Act may be cited as the Canada–Hong Kong Tax Agreement Act, 2013.

Definition of “Agreement”

2. In this Act, “Agreement” means the Agreement between the Government of Canada and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China set out in Schedule 1, as amended by the Protocol set out in Schedule 2.

Marginal note:Agreement approved

3. The Agreement is approved and has the force of law in Canada during the period that the Agreement, by its terms, is in force.

Marginal note:Inconsistent laws — general rule
  • 4. (1) Subject to subsection (2), in the event of any inconsistency between the provisions of this Act or the Agreement and the provisions of any other law, the provisions of this Act and the Agreement prevail to the extent of the inconsistency.

  • Marginal note:Inconsistent laws — exception

    (2) In the event of any inconsistency between the provisions of the Agreement and the provisions of the Income Tax Conventions Interpretation Act, the provisions of that Act prevail to the extent of the inconsistency.

Marginal note:Regulations

5. The Minister of National Revenue may make any regulations that are necessary for carrying out the Agreement or for giving effect to any of its provisions.

Marginal note:Notification

6. The Minister of Finance must cause a notice of the day on which the Agreement enters into force and of the day on which it ceases to have effect to be published in the Canada Gazette within 60 days after its entry into force or termination.

PART 5CANADA–LUXEMBOURG TAX CONVENTION

2000, c. 11Income Tax Conventions Implementation Act, 1999

 Section 49 of the Income Tax Conventions Implementation Act, 1999 is replaced by the following:

Definition of “Convention”

49. In this part, “Convention” means the Convention between the Government of Canada and the Government of the Grand Duchy of Luxembourg set out in Part 1 of Schedule 9, as amended by the Protocol and the Agreement set out, respectively, in Parts 2 and 3 of that Schedule.

 Schedule 9 to the Act is amended by adding the following before the heading “CONVENTION SIGNED ON SEPTEMBER 10, 1999”:

PART 1

 Schedule 9 to the Act is amended by adding, after Part 1, the Parts 2 and 3 set out in Schedule 5 to this Act.

Canada–Luxembourg 2012 Protocol and Agreement

Marginal note:Instruments approved

 The Protocol and the Agreement set out in Schedule 5 are approved and have the force of law in Canada during the period that, by their terms, they are in force.

Marginal note:Notification

 The Minister of Finance must cause a notice of the day on which the Protocol and the Agreement set out in Schedule 5 enter into force to be published in the Canada Gazette within 60 days after their entry into force.

Marginal note:Coming into force

 Sections 6 to 8 come into force on January 1 of the calendar year following the calendar year in which the Protocol and the Agreement set out in Schedule 5 enter into force.

PART 6CANADA–SWITZERLAND TAX CONVENTION

Marginal note:Supplementary convention approved

 The Supplementary Convention set out in Schedule 6 is approved and has the force of law in Canada during the period that, by its terms, it is in force.

Marginal note:Notification

 The Minister of Finance must cause a notice of the day on which the Supplementary Convention set out in Schedule 6 enters into force to be published in the Canada Gazette within 60 days after its entry into force.

Marginal note:Inconsistent laws

 For greater certainty, subject to the provisions of the Income Tax Conventions Interpretation Act, the provisions of the Convention between the Government of Canada and the Swiss Federal Council for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital, done at Berne on 5 May 1997, as altered by the Protocol done on October 22, 2010 and the Supplementary Convention set out in Schedule 6, prevail over the provisions of any other law to the extent of the inconsistency.

Marginal note:Coordination

 For greater certainty, subject to sections 12 and 13, section 19 of An Act to implement conventions between Canada and Morocco, Canada and Pakistan, Canada and Singapore, Canada and the Philippines, Canada and the Dominican Republic and Canada and Switzerland for the avoidance of double taxation with respect to income tax applies to the Convention between the Government of Canada and the Swiss Federal Council for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital, done at Berne on 5 May 1997, as altered by the Protocol done on October 22, 2010 and the Supplementary Convention set out in Schedule 6.

SCHEDULE 1(Section 2)

SCHEDULE 1(Section 2)CONVENTION BETWEEN CANADA AND THE REPUBLIC OF NAMIBIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

Canada and the Republic of Namibia,

Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital,

Have agreed as follows:

I. SCOPE OF THE CONVENTION

Article 1
Persons Covered

This Convention shall apply to persons who are residents of one or both of the Contracting States.

Article 2
Taxes Covered

  • 1. This Convention shall apply to taxes on income and on capital imposed on behalf of each Contracting State, irrespective of the manner in which they are levied.

  • 2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, as well as taxes on capital appreciation.

  • 3. The existing taxes to which the Convention shall apply are, in particular:

    • (a) in the case of Namibia,

      • (i) the income tax,

      • (ii) the non-resident shareholders’ tax, and

      • (iii) the petroleum income tax,

    (hereinafter referred to as “Namibian Tax”); and

    • (b) in the case of Canada, the taxes imposed by the Government of Canada under the Income Tax Act (hereinafter referred to as “Canadian tax”).

  • 4. The Convention shall apply also to any identical or substantially similar taxes and to taxes on capital which are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.

II. DEFINITIONS

Article 3
General Definitions

  • 1. For the purposes of this Convention, unless the context otherwise requires,

    • (a) the term “Namibia” means the Republic of Namibia as defined under Article 1(4) of the Namibian Constitution, and, when used for the purpose of this Convention in a geographical sense, Namibia means the territory of Namibia, including its territorial sea and airspace over the territory and the territorial sea, as well as the exclusive economic zone and the continental shelf beyond that zone, over which Namibia exercises sovereign rights or jurisdiction in accordance with its national legislation and international law;

    • (b) the term “Canada”, used in a geographical sense, means the territory of Canada, including its territorial sea and air space over the territory and the territorial sea, as well as the exclusive economic zone and the continental shelf beyond that zone, over which Canada exercises, in accordance with its legislation and with international law, sovereign rights or jurisdiction;

    • (c) the terms “a Contracting State” and “the other Contracting State” mean, as the context requires, Namibia or Canada;

    • (d) the term “person” includes an individual, a trust, a company and any other body of persons;

    • (e) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;

    • (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 “competent authority” means

      • (i) in the case of Canada, the Minister of Finance or the Minister’s authorised representative, and

      • (ii) in the case of Namibia, the Minister of Finance or the Minister’s authorised representative;

    • (h) the term “national” means

      • (i) any individual possessing the nationality or citizenship of a Contracting State, and

      • (ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State; and

    • (i) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State except when such transport is principally between places within the other Contracting State.

  • 2. As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under the other laws of that State.

Article 4
Resident

  • 1. For the purposes of this Convention, the term “resident of a Contracting State” means:

    • (a) in the case of Namibia, any individual who is liable to tax by virtue of being ordinarily resident in Namibia and any other person who is liable to tax by virtue of that person having its place of effective management in Namibia;

    • (b) in the case of Canada, any person who, under the laws of Canada, is liable to tax in Canada by reason of the person’s domicile, residence, place of management or any other criterion of a similar nature; and

    • (c) that State or a political subdivision or local authority thereof or any agency or instrumentality of that State, or of a subdivision or authority thereof.

  • 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then the individual’s status shall be determined as follows:

    • (a) the individual shall be deemed to be a resident only of the State in which the individual has a permanent home available and if the individual has a permanent home available in both States, the individual shall be deemed to be a resident only of the State with which the individual’s personal and economic relations are closer (centre of vital interests);

    • (b) if the State in which the individual’s centre of vital interests is situated cannot be determined, or if there is not a permanent home available to the individual in either State, the individual shall be deemed to be a resident only of the State in which the individual has an habitual abode;

    • (c) if the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be a resident only of the State of which the individual is a national; and

    • (d) if the individual 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 company is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavour by mutual agreement to settle the question and to determine the mode of application of the Convention to such person. In endeavouring to settle the question, the competent authorities shall have regard to the corporation’s place of effective management, the place where the corporation is incorporated or otherwise constituted, and any other relevant factors. In the absence of such agreement, such person shall not be entitled to claim any relief or exemption from tax provided by this Convention except to the extent and in such manner as may be agreed upon by the competent authorities of the Contracting States.

  • 4. Where by reason of the provisions of paragraph 1 a person other than an individual or a company is a resident of both Contracting States, the competent authorities of the Contracting States shall by mutual agreement endeavour to settle the question and to determine the mode of application of the Convention to such person. In the absence of such agreement, such person shall not be entitled to claim any relief or exemption from tax provided by the Convention.

Article 5
Permanent Establishment

  • 1. For the purposes of this Convention, 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; and

    • (f) a mine, an oil or gas well, a quarry or any other place relating to the exploration for or the exploitation of natural resources.

  • 3. A building site or construction or installation project constitutes a permanent establishment only if it lasts more than six 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, 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 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; or

    • (f) the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e) provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

  • 5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 6 applies – is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for 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.

  • 6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

  • 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 constitute either company a permanent establishment of the other.

III. TAXATION OF INCOME

Article 6
Income from Immovable Property

  • 1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

  • 2. For the purposes of this Convention, the term “immovable property” shall have the meaning which it has for the purposes of the relevant tax law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships and aircraft shall not be regarded as immovable property.

  • 3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property and to income from the alienation of such 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.

  • 5. Where the ownership of shares or other rights in a company or legal person entitles the owner to the enjoyment of immovable property situated in a Contracting State and held by that company or legal person, income derived by the owner from the direct use, letting or use in any other form of the right of enjoyment may be taxed in that State.

Article 7
Business Profits

  • 1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

  • 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment and with all other persons.

  • 3. In the determination of the profits of a permanent establishment, there shall be allowed those deductible expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses, whether incurred in the 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 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 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. 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.

  • 6. Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8
Shipping and Air Transport

  • 1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

  • 2. Notwithstanding the provisions of paragraph 1 and Article 7, profits derived by an enterprise of a Contracting State from a voyage of a ship or aircraft where the principal purpose of the voyage is to transport passengers or property between places in the other Contracting State may be taxed in that other State.

  • 3. 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.

  • 4. For the purposes of this Article,

    • (a) the term “profits” includes:

      • (i) gross receipts and revenues derived directly from the operation of ships or aircraft in international traffic, and

      • (ii) interest that is incidental to the operation of ships or aircraft in international traffic; and

    • (b) the term “operation of ships or aircraft” by an enterprise, includes:

      • (i) the charter or rental of ships or aircraft, and

      • (ii) the rental of containers and related equipment,

      by that enterprise if that charter or rental is incidental to the operation by that enterprise of ships or aircraft in international traffic.

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 are made or imposed between the two enterprises in their commercial or financial relations that differ from those that would be made between independent enterprises, then any income that would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, has not so accrued, may be included in the income 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 is income that would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those that would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.

  • 3. A Contracting State shall not change the income of an enterprise in the circumstances referred to in paragraph 1 after the expiry of the time limits provided in its domestic laws and, in any case, after seven years from the end of the year in which the income that would be subject to such change would, but for the conditions referred to in paragraph 1, have been attributed to that enterprise.

  • 4. The provisions of paragraphs 2 and 3 shall not apply in the case of fraud, wilful default or neglect.

Article 10
Dividends

  • 1. Dividends paid by a company that is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

  • 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:

    • (a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which:

      • (i) holds directly at least 25 per cent of the share capital of the company paying the dividends where that company is a resident of Namibia,

      • (ii) controls directly or indirectly at least 25 per cent of the voting power in the company paying the dividends where that company is a resident of Canada; and

    • (b) 15 per cent of the gross amount of the dividends, in all other cases.

    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, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

  • 4. The provisions of 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, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

  • 5. Where a company that 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 situated in that other State, nor subject the company’s undistributed profits to a tax on 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
Interest

  • 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

  • 2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

  • 3. Notwithstanding the provisions of paragraph 2:

    • (a) interest arising in a Contracting State and paid to, and beneficially owned, by the Government of the other Contracting State or of a political subdivision or local authority thereof, shall be taxable only in that other State;

    • (b) interest arising in a Contracting State and paid in respect of indebtedness of the government of that State or of a political subdivision or local authority thereof shall, if the interest is beneficially owned by a resident of the other Contracting State, be taxable only in that other State;

    • (c) interest arising in Namibia and paid to a resident of Canada shall be taxable only in Canada if it is paid in respect of a loan made, guaranteed or insured, or a credit extended, guaranteed or insured by the Export Development Canada;

    • (d) interest arising in Canada and paid to a resident of Namibia shall be taxable only in Namibia if it is paid in respect of a loan made, guaranteed or insured, or a credit extended, guaranteed or insured by a financial institution of a public character with the objective of promoting exports as may be agreed to in writing between the competent authorities of the Contracting States; and

    • (e) interest arising in a Contracting State and paid to a resident of the other Contracting State that is operated exclusively to administer or provide benefits under one or more pension, retirement or employee benefits plans shall not be taxable in the first-mentioned State provided that

      • (i) the resident is the beneficial owner of the interest and is generally exempt from tax in the other State, and

      • (ii) the interest is not derived from carrying on a trade or a business or from a related person.

  • 4. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income which is subjected to the same taxation treatment as income from money lent by the laws of the State in which the income arises. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. The term “interest” also does not include income dealt with in Article 8 or Article 10.

  • 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, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

  • 6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether the payer is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.

  • 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 that 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 Contracting State, due regard being had to the other provisions of this Convention.

Article 12
Royalties

  • 1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

  • 2. However, such royalties 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 royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

  • 3. Notwithstanding the provisions of paragraph 2, copyright royalties and other like payments in respect of the production or reproduction of any literary, dramatic, musical or other artistic work (but not including royalties in respect of motion picture films nor royalties in respect of works on film or videotape or other means of reproduction for use in connection with television broadcasting) arising in a Contracting State and paid to a resident of the other Contracting State, who is the beneficial owner of the royalties, shall be taxable only in that other State.

  • 4. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright, patent, trade mark, design or model, plan, secret formula or process or other intangible property, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience, and includes payments of any kind in respect of motion picture films and works on film, videotape or other means of reproduction for use in connection with television.

  • 5. The provisions of paragraphs 1, 2 and 3 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, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

  • 6. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether the payer is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

  • 7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and another person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount that 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 Contracting State, due regard being had to the other provisions of this Convention.

Article 13
Capital Gains

  • 1. Gains derived by a resident of a Contracting State from the alienation of immovable property situated in the other Contracting State may be taxed in that other State.

  • 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment that an enterprise of a Contracting State has or had in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

  • 3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic, or from movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.

  • 4. Gains derived by a resident of a Contracting State from the alienation of

    • (a) shares, the value of which is derived principally from immovable property situated in the other State, or

    • (b) an interest in a trust and, in the case of Canada, an interest in a partnership, the value of which is derived principally from immovable property situated in that other State,

may be taxed in that other State. For the purposes of this paragraph, the term “immovable property” does not include any property, other than rental property, in which the business of the company, partnership or trust is carried on.

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

Article 14
Income from Employment

  • 1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

  • 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the tax year concerned, and the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and such remuneration is not borne by a permanent establishment that 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 by an enterprise of a Contracting State shall be taxable only in that State unless the remuneration is derived by a resident of the other Contracting State.

Article 15
Directors’ Fees

Directors’ fees and other similar payments derived by a resident of a Contracting State in the 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 16
Artistes and Sportspersons

  • 1. Notwithstanding the provisions of Articles 7 and 14, 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 that resident’s 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 that individual’s capacity as such accrues not to the entertainer or a sportsperson personally but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

  • 3. Notwithstanding the provisions of paragraphs 1 and 2 income derived by a resident of a Contracting State, who is an entertainer or sportsperson, from that person’s personal activities as such in the other Contracting State, shall be exempt from tax in the Contracting State in which these activities are exercised if the activities are exercised within the framework of a visit which is substantially supported by the other Contracting State, a political subdivision, a local authority or a public institution thereof.

Article 17
Pensions

Any pension derived from sources within a Contracting State by an individual who is a resident of the other Contracting State and is subject to tax on the whole or a portion thereof in the other State, shall be exempt from tax in the first-mentioned State to the extent that such pension is subjected to tax in the other State.

Article 18
Government Service

  • 1. (a) 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 remuneration shall be taxable only in the other Contracting State if the services are rendered in that 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. The provisions of Articles 14 and 15 shall apply to remuneration 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 19
Students

  • 1. Payments which a student or business 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 that individual’s education or training receives for the purpose of that individual’s maintenance, education or training shall not be taxed in that State, if such payments arise from sources outside that State.

  • 2. In respect of grants or scholarships not covered by paragraph 1, a student or business apprentice referred to in paragraph 1, who is a resident of the first-mentioned State referred to in paragraph 1, shall be entitled to the same exemptions, reliefs or reductions in respect of taxes available to any other residents of that State.

Article 20
Other Income

  • 1. Subject to the provisions of paragraph 2, items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.

  • 2. However, if such income is derived by a resident of a Contracting State from sources in the other Contracting State, such income may also be taxed in the State in which it arises and according to the law of that State. Where such income is income from a trust, other than a trust to which contributions were deductible, the tax so charged shall, if the income is taxable in the Contracting State in which the beneficial owner is a resident, not exceed 15 per cent of the gross amount of the income.

IV. TAXATION OF CAPITAL

Article 21
Capital

  • 1. Capital represented by immovable property owned by a resident of a Contracting State and situated in the other Contracting State may be taxed in that other State.

  • 2. Capital represented by movable property forming part of the business property of a permanent establishment that an enterprise of a Contracting State has in the other Contracting State, may be taxed in that other State.

  • 3. Capital represented by ships and aircraft operated by an enterprise of a Contracting State in international traffic and by movable property pertaining to the operation of such ships and aircraft shall be taxable only in that State.

  • 4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

V. METHODS FOR ELIMINATION OF DOUBLE TAXATION

Article 22
Elimination of Double Taxation

  • 1. In the case of Namibia, double taxation shall be avoided as follows:

    Where a resident of Namibia derives income or capital gains from Canada the amount of tax on that income or gains payable in Canada in accordance with the provisions of this Convention may be credited against the Namibian tax imposed on that resident. The amount of credit, however, shall not exceed the amount of the Namibian tax on that income or gains computed in accordance with the taxation laws and regulations of Namibia.

  • 2. In the case of Canada, double taxation shall be avoided as follows:

    • (a) subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions – which shall not affect the general principle hereof – and unless a greater deduction or relief is provided under the laws of Canada, tax payable in Namibia on profits, income or gains arising in Namibia shall be deducted from any Canadian tax payable in respect of such profits, income or gains; and

    • (b) where, in accordance with any provision of the Convention, income derived or capital owned by a resident of Canada is exempt from tax in Canada, Canada may nevertheless, in calculating the amount of tax on other income or capital, take into account the exempted income or capital.

  • 3. For the purposes of this Article, profits, income or gains of a resident of a Contracting State that may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise from sources in that other State.

VI. SPECIAL PROVISIONS

Article 23
Non-Discrimination

  • 1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith that is more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to individuals who are not residents of one or both of the Contracting States.

  • 2. The taxation on a permanent establishment that an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.

  • 3. Nothing in this Article shall be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities that it grants to its own residents.

  • 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 that is more burdensome than the taxation and connected requirements to which other similar enterprises that are residents of the first-mentioned State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of a third State, are or may be subjected.

  • 5. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11 or paragraph 7 of Article 12 apply, interest, royalties and other disbursements paid by a resident of a Contracting State to a resident of the other Contracting State shall, for the purposes of determining the taxable profits of the first-mentioned resident, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of a resident of a Contracting State to a resident of the other Contracting State shall, for the purposes of determining the taxable capital of the first-mentioned resident, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.

  • 6. The provisions of paragraph 5 shall not affect the operation of any provision of the taxation laws of a Contracting State:

    • (a) relating to the deductibility of interest and which is in force on the date of signature of this Convention (including any subsequent modification of such provisions that does not change the general nature thereof); or

    • (b) adopted after such date by a Contracting State and which is designed to ensure that a person who is not a resident of that state does not enjoy, under the laws of that State, a tax treatment that is more favorable than that enjoyed by residents of that State.

  • 7. In this Article, the term “taxation” means taxes that are the subject of this Convention.

Article 24
Mutual Agreement Procedure

  • 1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Convention, that person may, irrespective of the remedies provided by the domestic law of those States, present the case to the competent authority of the Contracting State of which that person is a resident or, if the case comes under paragraph 1 of Article 23, to that State of which the person is a national. To be admissible, the case must be presented in writing stating the grounds for claiming revision of such taxation within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention.

  • 2. The competent authority referred to in paragraph 1 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 Contracting State, with a view to the avoidance of taxation not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic laws of the Contracting States.

  • 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 Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.

  • 4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

  • 5. A Contracting State shall not, after the expiry of the time limits provided in its domestic laws and, in any case, after seven years from the end of the taxable period to which the income concerned was attributed, increase the tax base of a resident of either of the Contracting States by including therein items of income that have also been charged to tax in the other Contracting State. This paragraph shall not apply in the case of fraud, wilful default or neglect.

  • 6. If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities pursuant to the preceding paragraphs of this Article, the case may be submitted for arbitration if both competent authorities and the taxpayer agree and the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedure shall be established in an exchange of notes between the Contracting States.

Article 25
Exchange of Information

  • 1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or of the domestic laws in the Contracting States concerning taxes of every kind and description imposed on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1. Any information received by 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, the enforcement or prosecution in respect of, or the determination of appeals in relation to taxes. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

  • 2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

    • (a) to carry out administrative measures at variance with the laws and the administrative practice of that or of the other Contracting State;

    • (b) to supply information that is 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 that 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).

  • 3. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though the other State does not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 2 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

  • 4. In no case shall the provisions of paragraph 2 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or fiduciary capacity or because the information relates to ownership interests in a person.

  • 5. Authorised representatives of a Contracting State shall be permitted to enter the other Contracting State to interview individuals or examine a person’s books and records with their consent, with procedures mutually agreed upon by the competent authorities.

Article 26
Members of Diplomatic Missions and Consular Posts

Nothing in this Convention 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.

Article 27
Miscellaneous Rules

  • 1. The provisions of this Convention shall not be construed to restrict in any manner any exemption, allowance, credit or other deduction accorded by the laws of a Contracting State in the determination of the tax imposed by that State.

  • 2. Nothing in the Convention shall be construed as preventing a Contracting State from imposing a tax on amounts included in the income of a resident of that Contracting State with respect to a partnership, trust, or controlled foreign affiliate, in which that resident has an interest.

  • 3. The Convention shall not apply to any company, trust or other entity that is a resident of a Contracting State and is beneficially owned or controlled, directly or indirectly, by one or more persons who are not residents of that State, if the amount of the tax imposed on the income or capital of the company, trust or other entity by that State (after taking into account any reduction or offset of the amount of tax in any manner, including a refund, reimbursement, contribution, credit, or allowance to the company, trust or partnership, or to any other person) is substantially lower than the amount that would be imposed by that State if all of the shares of the capital stock of the company or all of the interests in the trust or other entity, as the case may be, were beneficially owned by one or more individuals who were residents of that State.

  • 4. For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of the convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph 4 of Article 24 or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Contracting States.

VII. FINAL PROVISIONS

Article 28
Entry into Force

Each of the Contracting States shall notify the other through diplomatic channels of the completion of the procedures required by law for the bringing into force of this Convention. The Convention shall enter into force on the date of the later of these notifications and its provisions shall thereupon have effect:

  • (a) in Namibia:

    • (i) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of March in the calendar year next following that in which the Convention enters into force, and

    • (ii) in respect of other taxes, for any year of assessment beginning on or after the first day of March in the calendar year next following that in which the Convention enters into force;

  • (b) in Canada:

    • (i) in respect of tax withheld at the source on amounts paid or credited to non-residents, on or after the first day of January in the calendar year next following that in which the Convention enters into force, and

    • (ii) in respect of other Canadian tax, for taxation years beginning on or after the first day of January in the calendar year next following that in which the Convention enters into force.

Article 29
Termination

This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiry of five years from the date of entry into force of the Convention. In such event, the Convention shall cease to have effect:

  • (a) in Namibia:

    • (i) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of March in the calendar year next following that in which the notice is given, and

    • (ii) in respect of other taxes, for any year of assessment beginning on or after the first day of March in the calendar year next following that in which the notice is given;

  • (b) in Canada:

    • (i) in respect of tax withheld at the source on amounts paid or credited to non-residents, after the end of the calendar year in which the notice is given, and

    • (ii) in respect of other Canadian tax, for taxation years beginning after the end of the calendar year in which the notice is given.

IN WITNESS WHEREOF the undersigned, duly authorized to that effect by their respective Governments, have signed this Convention.

DONE in duplicate at Windhoek, this 25th day of March 2010, in the English and French, each version being equally authentic.

Adèle Dion
High Commissioner to the Republic of Namibia
for Canada
Saara Kuugongelwa-Amadhila
Minister of Finance
for the Republic of Namibia

SCHEDULE 2(Section 2)PROTOCOL

At the time of signing of the Convention between Canada and the Republic of Namibia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, the undersigned have agreed upon the following provisions which shall be an integral part of the Convention.

  • 1. With reference to subparagraph (d) of paragraph 1 of Article 3 of the Convention, it is understood that the reference to “any other body of persons” includes a reference to a partnership.

  • 2. With reference to Article 13 of the Convention:

    • (a) the provisions of paragraph 5 thereof shall not affect the right of a Contracting State to levy, according to its law, a tax on gains from the alienation of any property derived by an individual who is a resident of the other Contracting State and has been a resident of the first-mentioned State at any time during the six years immediately preceding the alienation of the property.

    • (b) should Namibia amend its domestic tax laws to provide for the taxation of capital gains realized on the alienation of property, the following provision shall also apply:

      “Where an individual, who ceases to be a resident of a Contracting State, and immediately thereafter, becomes a resident of the other Contracting State, is treated for the purposes of taxation in the first-mentioned State as having alienated a property and is taxed in that State by reason thereof, the individual may elect to be treated for purposes of taxation in the other State as if the individual had, immediately before becoming a resident of that State, sold and repurchased the property for an amount equal to its fair market value at that time. However, this provision shall not apply to property, any gain from which that other State could have taxed in accordance with the provisions of Article 13 of the Convention if the individual had realized the gain before becoming a resident of that other State. The competent authorities of the Contracting States may consult to determine the application of this paragraph.”

  • 3. Nothing in this Convention shall be construed as preventing a Contracting State from imposing on the earnings of a company attributable to a permanent establishment in that State, or the earnings attributable to the alienation of immovable property situated in that State by a company carrying on a trade in immovable property, a tax in addition to the tax that would be chargeable on the earnings of a company that is a national of that State, except that any additional tax so imposed shall not exceed 5 per cent of the amount of such earnings that have not been subjected to such additional tax in previous tax years.

IN WITNESS WHEREOF the undersigned, duly authorised to that effect by their respective Governments, have signed this Protocol.

DONE in duplicate at Windhoek, this 25th day of March 2010, in the English and French languages, each version being equally authentic.

Adèle Dion
High Commissioner to the Republic of Namibia
for Canada
Saara Kuugongelwa-Amadhila
Minister of Finance
for the Republic of Namibia

SCHEDULE 2(Section 3)

SCHEDULE 1(Section 2)CONVENTION BETWEEN CANADA AND THE REPUBLIC OF SERBIA FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

Canada and the Republic of Serbia,

Desiring to conclude a Convention for the avoidance of double taxation with respect to taxes on income and on capital,

Have agreed as follows:

Article 1
Persons Covered

This Convention shall apply to persons who are residents of one or both of the Contracting States.

Article 2
Taxes Covered

  • 1. This Convention shall apply to taxes on income and on capital imposed on behalf of a Contracting State and, in the case of Serbia, or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

  • 2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, as well as taxes on capital appreciation.

  • 3. The existing taxes to which this Convention shall apply are in particular:

    • 1) in the case of Canada, the taxes imposed by the Government of Canada under the Income Tax Act (hereinafter referred to as “Canadian tax”);

    • 2) in the case of the Serbia:

      • (1) corporate income tax;

      • (2) personal income tax;

      • (3) tax on capital

    (hereinafter referred to as “Serbian tax”).

  • 4. This Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of this Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their taxation laws.

Article 3
General Definitions

  • 1. For the purposes of this Convention:

    • 1) the terms “a Contracting State” and “the other Contracting State” mean Canada or Serbia, as the context requires;

    • 2) the term “Canada”, used in a geographical sense, means the territory of Canada, including its territorial sea and air space over the territory and the territorial sea, as well as the exclusive economic zone and the continental shelf beyond that zone, over which Canada exercises, in accordance with its legislation and with international law, sovereign rights or jurisdiction;

    • 3) the term “Serbia” means the Republic of Serbia, and when used in a geographical sense it means the territory of the Republic of Serbia;

    • 4) the terms “national” means:

      • (1) any individual possessing the nationality of a Contracting State; and

      • (2) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

    • 5) the terms “person” includes an individual, a trust, a company and any other body of persons;

    • 6) the terms “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;

    • 7) 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;

    • 8) the terms “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

    • 9) the term “competent authority” means:

      • (1) in the case of Canada, the Minister of National Revenue or the Minister’s authorized representative;

      • (2) in the case of Serbia, the Ministry of Finance or its authorized representative.

  • 2. As regards the application of this Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which this Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

Article 4
Resident

  • 1. For the purposes of this Convention, 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 the person’s domicile, residence, place of management or any other criterion of a similar nature. It also includes that State, and any political subdivision or local authority thereof, or any agency or legal entity wholly-owned by that State, subdivision or authority. However, this term does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

  • 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then the individual’s status shall be determined as follows:

    • 1) the individual shall be deemed to be a resident only of the State in which the individual has a permanent home available; if the individual has a permanent home available in both States, the individual shall be deemed to be a resident only of the State with which the individual’s personal and economic relations are closer (centre of vital interests);

    • 2) if the State in which the individual’s centre of vital interests cannot be determined, or if the individual has not a permanent home available to the individual in either State, the individual shall be deemed to be a resident only of the State in which the individual has an habitual abode;

    • 3) if the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be a resident only of the State of which the individual is a national; and

    • 4) if the individual 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, the competent authorities of the Contracting States shall, by mutual agreement, endeavour to settle the question and to determine the mode of application of this Convention to that person, having regard to that person’s place of effective management, the place where that person is incorporated or any other relevant criteria. In the absence of mutual agreement, that person shall not be entitled to claim any relief or exemption from tax provided by this Convention, except to the extent and in such manner as may be agreed upon by the competent authorities of the Contracting States.

Article 5
Permanent Establishment

  • 1. For the purposes of this Convention, 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:

    • 1) a place of management;

    • 2) a branch;

    • 3) an office;

    • 4) a factory;

    • 5) a workshop; and

    • 6) a mine, an oil or gas well, a quarry or any other place relating to the exploration for or the exploitation of natural resources.

  • 3. A building site or construction or installation project constitutes a permanent establishment only if it lasts more than twelve months.

  • 4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

    • 1) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

    • 2) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

    • 3) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

    • 4) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

    • 5) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other ctivitiy of a preparatory or auxiliary character;

    • 6) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs 1) to 5), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

  • 5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 6 applies – is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts on behalf of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for 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.

  • 6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

  • 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 constitute either company a permanent establishment of the other.

Article 6
Income from Immovable Property

  • 1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

  • 2. For the purposes of this Convention, the term “immovable property” shall have the meaning which it has for the purposes of the relevant tax law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships and aircraft shall not be regarded as immovable property.

  • 3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

  • 4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

Article 7
Business Profits

  • 1. The profits of an enterprise of a Contracting State shall be taxable only in that State, unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

  • 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

  • 3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

  • 4. Insofar 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.

  • 5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

  • 6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

  • 7. Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8
International Traffic

  • 1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

  • 2. Notwithstanding the provisions of paragraph 1 and Article 7, profits derived by an enterprise of a Contracting State from a voyage of a ship or aircraft where the principal purpose of the voyage is to transport passengers or goods solely between places in the other Contracting State may be taxed in that other State.

  • 3. 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.

  • 4. For the purposes of this Article:

    • 1) interest on funds directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft, if they are incidental to the carrying on of such business, and the provisions of Article 11 shall not apply in relation to such interest; and

    • 2) the term “operation of ships or aircraft in international traffic” by an enterprise of a Contracting State, includes:

      • (1) the charter or rental on a bare boat basis of ships or aircraft; and

      • (2) the rental of containers (including trailers and related equipment for the transport of containers),

    by that enterprise if that charter or rental is incidental to the operation by that enterprise of ships or aircraft in international traffic.

Article 9
Associated Enterprises

  • 1. Where

    • 1) 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

    • 2) 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 this Convention and the competent authorities of the Contracting States shall if necessary consult each other.

  • 3. A Contracting State shall not change the profits of an enterprise in the circumstances referred to in paragraph 1 after the expiry of the time limits provided in its domestic laws and, in any case, after five years from the end of the year in which the profits that would be subject to such change would have accrued to an enterprise of that State.

  • 4. The provisions of paragraphs 2 and 3 shall not apply in the case of fraud, wilful default or neglect.

Article 10
Dividends

  • 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

  • 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:

    • 1) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that controls directly at least 25 per cent of the voting power of the company paying the dividends;

    • 2) 15 per cent of the gross amount of the dividends in all other cases.

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 or other rights, not being debt claims, participating in profits, as well as income which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

  • 4. The provisions of 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 14, as the case may be, shall apply.

  • 5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other 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 of profits or income arising in such other State.

  • 6. Nothing in this Convention shall be construed as preventing a Contracting State from imposing on the earnings of a company attributable to a permanent establishment in that State, or the earnings attributable to the alienation of immovable property situated in that State by a company carrying on a trade in immovable property, a tax in addition to the tax that would be chargeable on the earnings of a company that is a resident of that State. Any additional tax so imposed shall not exceed 5 per cent of the amount of those earnings that have not been subjected to this additional tax in previous taxation years.

Article 11
Interest

  • 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

  • 2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

  • 3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State if it is derived and beneficially owned by:

    • 1) the Government of the other Contracting State or of a political subdivision or local authority of that State; or

    • 2) the Central or National Bank of the other Contracting State.

  • 4. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures as well as income which is subjected to the same taxation treatment, as income from money lent, by the laws of the State in which the income arises. However, the term “interest” does not include income dealt with in Article 10.

  • 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 such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

  • 6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether the payer is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a 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.

  • 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 Contracting State, due regard being had to the other provisions of this Convention.

Article 12
Royalties

  • 1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

  • 2. However, such royalties 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 royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

  • 3. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films, and films, tapes or other means of reproduction for use in connection with television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.

  • 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 such permanent establishment or fixed base. In such 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 a resident of that State. Where, however, the person paying the royalties, whether the payer is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

  • 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 Contracting State, due regard being had to the other provisions of this Convention.

Article 13
Capital Gains

  • 1. Income and gains derived by a resident of a Contracting State from the alienation of immovable property situated in the other Contracting State may be taxed in that other State.

  • 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base that is available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including 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. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.

  • 4. Gains derived by a resident of a Contracting State from the alienation of shares or comparable interests deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.

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

  • 6. The provisions of paragraph 5 shall not affect the right of a Contracting State to levy, according to its law, a tax on gains from the alienation of any property (other than property to which paragraph 7 applies) derived by an individual who is a resident of the other Contracting State and has been a resident of the first-mentioned State at any time during the six years immediately preceding the alienation of the property.

  • 7. Where an individual ceases to be a resident of a Contracting State and by reason thereof is treated under the laws of that State as having alienated property before ceasing to be a resident of that State and is taxed in that State accordingly and, at any time thereafter, becomes a resident of the other Contracting State, the other Contracting State may tax gains in respect of the property only to the extent that such gains had not accrued while the individual was a resident of the first-mentioned State. However, this provision shall not apply to property, any gain from which that other State could have taxed in accordance with this Article, other than this paragraph, if the individual had realized the gain before becoming a resident of the other State.

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 activities of an independent character shall be taxable only in that State, unless:

    • 1) the individual has a fixed base regularly available in the other Contracting State for the purpose of performing the 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

    • 2) the individual’s stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned; in that case, only so much of the income as is derived from the activities performed in that other Contracting State may be taxed in that other State.

  • 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 15
Dependent Personal Services

  • 1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

  • 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first mentioned State if:

    • 1) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and

    • 2) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

    • 3) 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 by an enterprise of a Contracting State may be taxed in that State.

  • 4. Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State in respect of an employment directly connected with a building site or construction or installation project in the other Contracting State which does not constitute a permanent establishment of the employer paying the remuneration, or on whose behalf the remuneration is paid, under the provisions of paragraph 3 of Article 5, shall be taxable only in the first-mentioned State.

Article 16
Directors’ Fees

Directors’ fees and other similar payments derived by a resident of a Contracting State in that resident’s capacity as a member of the board of directors or a similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17
Artistes and Sportspersons

  • 1. Notwithstanding the provisions of Articles 14 and 15, 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 that resident’s 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 that individual’s capacity as such accrues not to the entertainer or sportsperson person 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 or sportsperson are exercised.

  • 3. The provisions of paragraph 2 shall not apply if it is established that neither the entertainer or the sportsperson nor persons related to them participate directly or indirectly in the profits of the person referred to in that paragraph.

  • 4. Notwithstanding the provisions of paragraphs 1 and 2, income derived by a resident of a Contracting State from that person’s personal activities as an entertainer or as a sportsperson shall be taxable only in that State if the activities are wholly or mainly supported by public funds of one or both of the Contracting States or political subdivisions or local authorities thereof or the activities are exercised in the other Contracting State within the framework of a cultural or sports exchange programme approved by both Contracting States.

Article 18
Pensions

  • 1. Pensions and other similar remuneration arising in a Contracting State and paid to a resident of the other Contracting State shall, subject to the provisions of paragraphs 2 and 3 of this Article, be taxable only in that other State.

  • 2. Pensions and other similar remuneration arising in a Contracting State and paid to a resident of the other Contracting State may also be taxed in the State in which they arise and according to the law of that State. However, in the case of periodic pension payments, the tax so charged shall not exceed 15 per cent of the gross amount of the payment.

  • 3. Any pension paid by, or out of funds created by Serbia or a political subdivision or a local authority thereof to an individual in respect of services rendered to Serbia or to a subdivision or authority shall be taxable only in Serbia. However, such pension shall be taxable only in Canada if the individual is a resident of, and a national of Canada.

Article 19
Government Service

  • 1. 1) 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.

    • 2) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

      • (1) is a national of that State, or

      • (2) did not become a resident of that State solely for the purpose of rendering the services.

  • 2. The provisions of Articles 15, 16 and 17 shall apply to salaries, wages and other similar remuneration, 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

Payments which a student apprentice or business trainee 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 that individual’s education or training receives for the purpose of that individual’s maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.

Article 21
Other Income

  • 1. Subject to the provisions of paragraph 2, items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.

  • 2. However, if such income is derived by a resident of a Contracting State from sources in the other Contracting State, such income may also be taxed in the State in which it arises and according to the law of that State. Where such income is income from a trust, other than a trust to which contributions were deductible, the tax so charged shall, if the income is taxable in the Contracting State in which the beneficial owner is a resident, not exceed 15 per cent of the gross amount of the income.

Article 22
Capital

  • 1. Capital represented by immovable property owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

  • 2. Capital represented by 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 by 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, may be taxed in that other State.

  • 3. Capital represented by ships and aircraft operated by an enterprise of a Contracting State in international traffic, and by movable property pertaining to the operation of such ships and aircraft, shall be taxable only in that State.

  • 4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

Article 23
Elimination of Double Taxation

  • 1. In the case of Canada, double taxation shall be eliminated as follows:

    • 1) subject to the existing provisions of the laws of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions which shall not affect the general principle hereof and unless a greater deduction or relief is provided under the laws of Canada, tax payable in Serbia on profits, income or gains arising in Serbia shall be deducted from any Canadian tax payable in respect of such profits, income or gains;

    • 2) where, in accordance with any provision of this Convention, income derived or capital owned by a resident of Canada is exempt from tax in Canada, Canada may nevertheless, in calculating the amount of tax on other income or capital, take into account the exempted income or capital.

  • 2. In the case of Serbia, double taxation shall be eliminated as follows:

    • 1) Where a resident of Serbia derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Canada, Serbia shall allow:

      • (1) as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in Canada;

      • (2) as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in Canada.

    Such deduction in either case shall not, however, exceed that part of the income tax or capital tax, as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital which may be taxed in Canada.

    • 2) Where in accordance with any provision of this Convention income derived or capital owned by a resident of Serbia is exempt from tax in Serbia, Serbia may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.

  • 3. For the purposes of this Article, profits, income or gains, of a resident of a Contracting State that may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise from sources in that other State.

Article 24
Non-Discrimination

  • 1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected.

  • 2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.

  • 3. Nothing in this Article shall be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

  • 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, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State or of a third State are or may be subjected.

  • 5. The provisions of this Article shall apply to the taxes referred to in Article 2.

Article 25
Mutual Agreement Procedure

  • 1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Convention, that person may, irrespective of the remedies provided by the domestic law of those States, address to the competent authority of the Contracting State of which that person is a resident or, if that person’s case comes under paragraph 1 of Article 24, to that of the Contracting State of which that person is a national, an application in writing stating the grounds for claiming the revision of such taxation. 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 this Convention.

  • 2. The competent authority referred to in paragraph 1 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 Contracting State, with a view to the avoidance of taxation which is not in accordance with this Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

  • 3. A Contracting State shall not, after the expiry of the time limits provided in its domestic law and, in any case, after five years from the end of the year to which the income concerned was attributed, increase the tax base of a resident of either of the Contracting States by including therein items of income that have also been charged to tax in the other Contracting State. This paragraph shall not apply in the case of fraud, wilful default or neglect.

  • 4. 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 this Convention. They may also consult together for the elimination of double taxation in cases not provided for in this Convention.

  • 5. 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.

Article 26
Exchange of Information

  • 1. The competent authorities of the Contracting States shall exchange such information as is forseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to this Convention. The exchange of information is not restricted by Articles 1 and 2.

  • 2. Any information received under paragraph 1 by 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, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

  • 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

    • 1) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

    • 2) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

    • 3) 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).

  • 4. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or fiduciary capacity or because the information relates to ownership interests in a person.

  • 5. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

Article 27
Members of Diplomatic Missions and Consular Posts

  • 1. Nothing in this Convention 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.

  • 2. Notwithstanding the provisions of Article 4, an individual who is a member of a diplomatic mission, consular post or permanent mission of a Contracting State that is situated in the other Contracting State or in a third State shall be deemed for the purposes of this Convention to be a resident of the sending State if that individual is liable in the sending State to the same obligations in relation to tax on total income or capital as are residents of that sending State.

  • 3. This Convention shall not apply to international organizations, to organs or officials thereof and to persons who are members of a diplomatic mission, consular post or permanent mission of a third State or group of States, being present in a Contracting State and who are not liable in either Contracting State to the same obligations in relation to tax on their total income or capital as are residents thereof.

Article 28
Miscellaneous Rules

  • 1. Nothing in this Convention shall be construed as preventing Canada from imposing a tax on amounts included in the income of a resident of Canada with respect to a partnership, trust, or controlled foreign affiliate, in which that resident has an interest.

  • 2. Any company, trust or partnership that is a resident of a Contracting State and is beneficially owned or controlled, directly or indirectly, by one or more persons who are not residents of that State shall not be entitled to the benefits of this Convention if the amount of the tax imposed on the income or capital of the company, trust or partnership by that State (after taking into account any reduction or offset of the amount of tax in any manner, including a refund, reimbursement, contribution, credit or allowance to the company, trust or partnership, or to any other person) is substantially lower than the amount that would be imposed by that State if all of the shares of the capital stock of the company or all of the interests in the trust or partnership, as the case may be, were beneficially owned by one or more residents of that State.

  • 3. Where under any provision of this Convention any income is relieved from tax in a Contracting State and, under the law in force in the other Contracting State a person, in respect of that income, is subject to tax by reference to the amount thereof that is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the relief to be allowed under this Convention in the first-mentioned Contracting State shall apply only to so much of the income as is taxed in the other Contracting State.

  • 4. This Convention shall not apply to a company or other entity that is entitled to income tax benefits pursuant to any law in either Contracting State relating to promotion of increased economic activity (including any law providing for tax-free zones), unless:

    • 1) the company or other entity is a resident of the Contracting State providing the income tax benefits and is wholly-owned directly by individuals who are residents of that State or indirectly by such individuals through one or more entities provided that all such entities are resident of that State; or

    • 2) 90 per cent or more of the income eligible for such benefits is derived exclusively from the active conduct of a trade or business carried on by it other than an investment business.

Article 29
Entry into Force

  • 1. The Contracting States shall notify each other in writing, through diplomatic channels, that the procedures required by their domestic laws for the entry into force of this Convention have been completed.

    • 2. This Convention shall enter into force on the date of the later of these notifications and its provisions shall have effect:

      • 1) in the case of Canada:

        • (1) in respect of tax withheld at the source on amounts paid or credited to non-residents, on or after the first day of January in the calendar year next following the year in which this Convention enters into force;

        • (2) in respect of other Canadian tax, for taxation years beginning on or after the first day of January in the calendar year next following the year in which this Convention enters into force;

      • 2) in the case of Serbia, in respect of the taxes on income derived and the taxes on capital owned in each fiscal year beginning on or after the first day of January in the calendar year next following the year in which this Convention enters into force.

Article 30
Termination

This Convention shall remain in force until terminated by a Contracting State. A Contracting State may terminate this Convention, through diplomatic channels, by giving written notice of termination at least six months before the end of any calendar year after the fifth year from the date of entry into force of this Convention. In such event, this Convention shall cease to have effect:

  • 1) in the case of Canada:

    • (1) in respect of tax withheld at the source on amounts paid or credited to non-residents, on or after the first day of January in the calendar year next following that in which the notice of termination has been given;

    • (2) in respect of other Canadian tax, for taxation years beginning on or after the first day of January in the calendar year next following that in which the notice of termination has been given;

  • 2) in the case of Serbia, in respect of the taxes on income derived and the taxes on capital owned in each fiscal year beginning on or after the first day of January in the calendar year next following the year in which the notice of termination has been given.

IN WITNESS WHEREOF the undersigned, being duly authorized thereto, have signed this Convention.

DONE in duplicate at Belgrade, this 27th day of April 2012, in the English, French and Serbian languages, each version being equally authentic.

Roman Waschuk
Ambassador
for Canada
Dusan Nikezic
State Secretary, Ministry of Finance
for the Republic of Serbia

SCHEDULE 2(Section 2)PROTOCOL

At the time of signing of this Convention between the Republic of Serbia and Canada for the Avoidance of Double Taxation with respect to Taxes on Income and Capital (hereinafter referred to as “Convention”), the undersigned have agreed upon the following provisions, which shall form an integral part of this Convention:

  • 1. With reference to paragraph 4 of Article 13 of this Convention, it is understood that the term “comparable interests” includes an interest in a partnership or trust.

  • 2. With reference to subparagraph 2) of paragraph 1 of Article 14 of this Convention, it is understood that in the determination of the income of the individual there shall be allowed as deductions those deductible expenses incurred for the purposes of earning the income as is derived from the activities performed in the other Contracting State.

  • 3. It is understood that, should Serbia become a member of World Trade Organization, the following provision would apply:

    For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, of the Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of this Convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph 4 of Article 25 or, failing agreement under that procedure, pursuant to any other procedure accepted by both Contracting States.

IN WITNESS whereof the undersigned, duly authorised thereto, by their respective Governments, have signed this Protocol.

DONE in duplicate at Belgrade, this 27th day of April 2012, in the English, French and Serbian languages, each version being equally authentic.

Roman Waschuk
Ambassador
for Canada
Dusan Nikezic
State Secretary, Ministry of Finance
for the Republic of Serbia

SCHEDULE 3(Section 4)

SCHEDULE 1(Section 2)CONVENTION BETWEEN CANADA AND THE REPUBLIC OF POLAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

CANADA AND THE REPUBLIC OF POLAND, desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,

Have agreed as follows:

Article 1
Persons Covered

This Convention shall apply to persons who are residents of one or both of the Contracting States.

Article 2
Taxes Covered

  • 1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State, irrespective of the manner in which they are levied.

  • 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, as well as taxes on capital appreciation.

  • 3. The existing taxes to which this Convention shall apply are in particular:

    • (a) in the case of Poland:

      • (i) the personal income tax, and

      • (ii) the corporate income tax,

    (hereinafter referred to as “Polish tax”).

    • (b) in the case of Canada, the taxes imposed by the Government of Canada under the Income Tax Act (hereinafter referred to as “Canadian tax”).

  • 4. The Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their taxation laws.

Article 3
General Definitions

  • 1. For the purposes of this Convention, unless the context otherwise requires:

    • (a) the term “Poland” means the Republic of Poland and, when used in a geographical sense, means the territory of the Republic of Poland, and any area adjacent to the territorial sea of the Republic of Poland within which, under the laws of Poland and in accordance with international law, the rights of Poland with respect to the exploration and exploitation of the natural resources of the seabed and its sub-soil may be exercised;

    • (b) the term “Canada”, used in a geographical sense, means:

      • (i) the land territory, air space, internal waters and territorial sea of Canada,

      • (ii) the exclusive economic zone of Canada, as determined by its domestic law, consistent with Part V of the United Nations Convention on the Law of the Sea of 10 December 1982, and

      • (iii) the continental shelf of Canada, as determined by its domestic law, consistent with Part VI of the United Nations Convention on the Law of the Sea of 10 December 1982;

    • (c) the term “person” includes an individual, a trust, a company and any other body of persons;

    • (d) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;

    • (e) the terms “enterprise” applies to the carrying on of any business;

    • (f) the terms “a Contracting State” and “the other Contracting State” mean, as the context requires, Poland or Canada;

    • (g) 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;

    • (h) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when such transport is solely between places in the other Contracting State;

    • (i) the term “competent authority” means:

      • (i) in the case of Poland, the Minister of Finance or the Minister’s authorized representative, and

      • (ii) in the case of Canada, the Minister of National Revenue or the Minister’s authorized representative;

    • (j) the term “national” means:

      • (i) any individual possessing the nationality or citizenship of that Contracting State, and

      • (ii) any legal person, partnership or association deriving its status as such from the laws in force in that Contracting State; and

    • (k) the term “business” includes the performance of professional services and of other activities of an independent character.

  • 2. As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the laws of that State for the purposes of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

Article 4
Resident

  • 1. For the purposes of this Convention, the term “resident of a Contracting State” means:

    • (a) any person who, under the laws of that State, is liable to tax therein by reason of the person’s domicile, residence, place of management or any other criterion of a similar nature, but does not include any person who is liable to tax in that State in respect only of income from sources in that State; and

    • (b) that State or a political subdivision or local authority thereof or any agency or instrumentality of any government of such State, subdivision or authority.

  • 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then the individual’s status shall be determined as follows:

    • (a) the individual shall be deemed to be a resident only of the State in which the individual has a permanent home available and if the individual has a permanent home available in both States, the individual shall be deemed to be a resident only of the State with which the individual’s personal and economic relations are closer (centre of vital interests);

    • (b) if the State in which the individual’s centre of vital interests is situated cannot be determined, or if there is not a permanent home available to the individual in either State, the individual shall be deemed to be a resident only of the State in which the individual has an habitual abode;

    • (c) if the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be a resident only of the State of which the individual is a national; and

    • (d) if the individual 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 a company is a national of a Contracting State and by reason of paragraph 1 a resident of both Contracting States then it shall be deemed to be a resident only of the first-mentioned State.

  • 4. Where by reason of the provisions of paragraph 1 a person other than an individual or a company referred to in paragraph 3 is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavour to determine by mutual agreement the Contracting State of which such person shall be deemed to be a resident for the purposes of the Convention, having regard to its place of effective management, the place where it is constituted and any other relevant factors. In the absence of such agreement, such person shall not be entitled to any relief or exemption from tax provided by this Convention.

Article 5
Permanent Establishment

  • 1. For the purposes of this Convention, 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; and

    • (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

  • 3. A building site, construction, assembly or installation project constitutes a permanent establishment only if it lasts more than 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, 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 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) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

  • 5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 6 applies – is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts on behalf of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for 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.

  • 6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

  • 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 constitute either company a permanent establishment of the other.

Article 6
Income from Immovable Property

  • 1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

  • 2. The term “immovable property” shall have the meaning which it has for the purposes of the relevant tax law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships and aircraft shall not be regarded as immovable property.

  • 3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

  • 4. In the case of Canada, the provisions of paragraph 1 shall also apply to income from the alienation of immovable property.

  • 5. The provisions of paragraphs 1, 3 and 4 shall also apply to the income from immovable property of an enterprise.

Article 7
Business Profits

  • 1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

  • 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

  • 3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

  • 4. 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. 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.

  • 6. Where profits include items of income or capital gains which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8
Shipping and Air Transport

  • 1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

  • 2. Notwithstanding the provisions of Article 7, profits derived by an enterprise of a Contracting State from a transport by a ship or aircraft, where such transport is solely between places in the other Contracting State, may be taxed in that other State.

  • 3. The provisions of paragraph 1 and 2 shall also apply to profits from the participation in a pool, a joint business or an international operating agency, but only to so much of the profits so derived as is attributable to the participant in proportion to its share in such joint operation.

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 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 by a Contracting State 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 this Convention and the competent authorities of the Contracting States shall if necessary consult each other.

  • 3. A Contracting State shall not change the income of an enterprise in the circumstances referred to in paragraph 1 after the expiry of the time limits provided in its domestic laws and, in any case, after nine years from the end of the taxable year in which the income which would be subject to such change would, but for the conditions referred to in paragraph 1, have been attributed to that enterprise.

  • 4. The provisions of paragraphs 2 and 3 shall not apply in the case of fraud or wilful default.

Article 10
Dividends

  • 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

  • 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:

    • (a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company that holds directly at least 10 per cent of the capital in the company paying the dividends; and

    • (b) 15 per cent of the gross amount of the dividends in all other cases.

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, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from other rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting 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, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 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 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 situated in that other State, nor subject the company’s undistributed profits to a tax on 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.

  • 6. The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or other rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment.

Article 11
Interest

  • 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

  • 2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

  • 3. Notwithstanding the provisions of paragraph 2:

    • (a) interest arising in Poland and paid to a resident of Canada shall be taxable only in Canada if it is paid in respect of a loan made, guaranteed or insured by Export Development Canada, or a credit extended, guaranteed or insured by Export Development Canada;

    • (b) interest arising in Canada and paid to a resident of Poland shall be taxable only in Poland if it is paid in respect of a loan made, guaranteed or insured by an export financing organization that is wholly owned by the State of Poland, or a credit extended, guaranteed or insured by an export financing organization that is wholly owned by the State of Poland;

    • (c) interest arising in a Contracting State and paid to a resident of the other Contracting State shall not be taxable in the first mentioned State if it is paid in respect to indebtedness arising as a consequence of the sale by a resident of the other State of any equipment, merchandise or services, except where the sale or indebtedness was between related persons or where the beneficial owner of the interest is other than the vendor or a person related to the vendor.

  • 4. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income which is subjected to the same taxation treatment as income from money lent by the laws of the State in which the income arises. However, the term “interest” does not include income dealt with in Article 8 or Article 10.

  • 5. The provisions of paragraphs 1, 2 and 3 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, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

  • 6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether the payer is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.

  • 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 Contracting State, due regard being had to the other provisions of this Convention.

  • 8. The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt-claim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment.

Article 12
Royalties

  • 1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

  • 2. However, such royalties 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 royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

  • 3. Notwithstanding the provisions of paragraph 2:

    • (a) copyright royalties and other like payments in respect of the production or reproduction of any literary, dramatic, musical or artistic work (but not including royalties in respect of motion picture films nor royalties in respect of works on film, videotape or other means of reproduction for use in connection with television broadcasting), and

    • (b) royalties for the use of, or the right to use, any patent or for information concerning industrial, commercial or scientific experience (but not including any such royalty provided in connection with a rental or franchise agreement),

arising in a Contracting State and paid to a resident of the other Contracting State, may also be taxed in the first-mentioned State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the royalties.

  • 4. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright, patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience, and includes payments of any kind in respect of motion picture films and works on film, videotape or tape for use in connection with television or radio broadcasting. However, the term “royalties” does not include income dealt with in Article 8.

  • 5. The provisions of paragraphs 1, 2 and 3 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, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

  • 6. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether the payer is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

  • 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 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 Contracting State, due regard being had to the other provisions of this Convention.

  • 8. The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the royalties are paid to take advantage of this Article by means of that creation or assignment.

Article 13
Capital Gains

  • 1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

  • 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

  • 3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State.

  • 4. Gains derived by a resident of a Contracting State from the alienation of shares, or of an interest in a partnership, trust or other entity, the value of which is derived principally (more than 50 per cent) from immovable property situated in the other State, may be taxed in that other State.

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

  • 6. The provisions of paragraph 5 shall not affect the right of a Contracting State to levy, according to its law, a tax on gains from the alienation of any property, other than property to which the provisions of paragraph 7 apply, derived by an individual who is a resident of the other Contracting State and has been a resident of the first-mentioned State at any time during the five years immediately preceding the alienation of the property.

  • 7. Where an individual who ceases to be a resident of a Contracting State, and immediately thereafter becomes a resident of the other Contracting State, is treated for the purposes of taxation in the first-mentioned State as having alienated a property and is taxed in that State by reason thereof, the individual may elect to be treated for purposes of taxation in the other State as if the individual had, immediately before becoming a resident of that State, sold and repurchased the property for an amount equal to the lesser of its fair market value at that time and the proceeds of disposition considered to have been realized by the individual in the first-mentioned State in respect of that alienation. However, this provision shall not apply to property any gain from which, arising immediately before the individual became a resident of that other State, may be taxed in that other State nor to immovable property situated in a third State.

Article 14
Income from Employment

  • 1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

  • 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

    • (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending 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 which the employer has in the other State.

  • 3. Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised aboard a ship or aircraft operated by an enterprise of a Contracting State in international traffic shall be taxable only in the first-mentioned State.

Article 15
Directors’ Fees

Directors’ fees and other similar payments derived by a resident of a Contracting State in that resident’s capacity as a member of the board of directors or of the supervisory board of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 16
Artistes and Sportspersons

  • 1. Notwithstanding the provisions of Articles 7 and 14, 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 that resident’s 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 that individual’s capacity as such accrues not to the entertainer or sportsperson personally but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

  • 3. The provisions of paragraph 2 shall not apply if it is established that neither the entertainer or the sportsperson nor persons related thereto participate directly or indirectly in the profits of the person referred to in that paragraph.

  • 4. Notwithstanding the provisions of paragraphs 1 and 2, income derived from such activities as defined in paragraph 1 performed within the framework of a cultural exchange arrangement concluded between the Contracting States, shall be exempt from tax in the Contracting State in which these activities are exercised.

Article 17
Pensions and Annuities

  • 1. Pensions and annuities arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

  • 2. Pensions arising in a Contracting State and paid to a resident of the other Contracting State may also be taxed in the State in which they arise and according to the laws of that State. However, in the case of periodic pension payments, the tax so charged shall not exceed the lesser of:

    • (a) 15 per cent of the gross amount of the payment; and

    • (b) the amount of tax that the recipient of the payment would otherwise be required to pay for the year on the total amount of the periodic pension payments received by the individual in the year, if the individual were resident in the Contracting State in which the payment arises.

  • 3. Annuities arising in a Contracting State and paid to a resident of the other Contracting State may also be taxed in the State in which they arise and according to the law of that State, but the tax so charged shall not exceed 15 per cent of the portion thereof that is subject to tax in that State.

  • 4. The term “annuities” means a stated sum paid periodically at stated times during life or during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered), but does not include a payment that is not a periodic payment or any annuity the cost of which was deductible in whole or in part for the purposes of taxation in the Contracting State in which it was acquired.

  • 5. Notwithstanding anything in this Convention:

    • (a) war pensions and allowances (including pensions and allowances paid to war veterans or paid as a consequence of damages or injuries suffered as a consequence of a war) arising in a Contracting State and paid to a resident of the other Contracting State shall be exempt from tax in that other State so long as they would be exempt from tax if received by a resident of the first-mentioned State; and

    • (b) alimony and other similar payments arising in a Contracting State and paid to a resident of the other Contracting State who is subject to tax therein in respect thereof shall be taxable only in that other State.

Article 18
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 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. The provisions of paragraph 1 shall not apply to salaries, wages and other similar remuneration 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 19
Students

Payments which a student, pupil or business 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 that individual’s education or training receives for the purpose of that individual’s maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.

Article 20
Other Income

  • 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.

  • 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, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

  • 3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in the other Contracting State may also be taxed in that other State.

  • 4. However, where income referred to in paragraph 3 is income from a trust, other than a trust to which contributions were deductible, the tax so charged shall, if the income is taxable in the Contracting State in which the beneficial owner is a resident, not exceed 15 per cent of the gross amount of the income.

Article 21
Elimination of Double Taxation

  • 1. In the case of Poland, double taxation shall be avoided as follows:

    • (a) where a resident of Poland derives income which, in accordance with the provisions of this Convention may be taxed in Canada, Poland shall, subject to the provisions of sub-paragraph (b) exempt such income from tax;

    • (b) where a resident of Poland derives income or capital gains which, in accordance with the provisions of paragraph 4 of Article 6, Articles 10, 11, 12 or 13 or paragraph 4 of Article 20, may be taxed in Canada, Poland shall allow as a deduction from the tax on the income or capital gains of that resident an amount equal to the tax paid in Canada. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is attributable to such income or capital gains derived from Canada;

    • (c) where in accordance with any provision of this Convention, income derived by a resident of Poland is exempt from tax in Poland, Poland may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income;

    • (d) where in accordance with paragraph 6 of Article 10, paragraph 8 of Article 11 or paragraph 8 of Article 12, income derived by a resident of Poland may be taxed in Canada without limitation, subparagraphs (a) and (b) shall not apply.

  • 2. In the case of Canada, double taxation shall be avoided as follows:

    • (a) subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions – which shall not affect the general principle hereof – and unless a greater deduction or relief is provided under the laws of Canada, tax payable in Poland on profits, income or gains arising in Poland shall be deducted from any Canadian tax payable in respect of such profits, income or gains; and

    • (b) where, in accordance with any provision of the Convention, income derived by a resident of Canada is exempt from tax in Canada, Canada may nevertheless, in calculating the amount of tax on other income, take into account the exempted income.

  • 3. For the purposes of this Article, profits, income or gains of a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise from sources in that other State.

Article 22
Non-Discrimination

  • 1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith that is more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to individuals who are not residents of one or both of the Contracting States.

  • 2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.

  • 3. Nothing in this Article shall be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

  • 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 more burdensome than the taxation and connected requirements to which other similar enterprises which are residents of the first-mentioned State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of a third State, are or may be subjected.

  • 5. In this Article, the term “taxation” means taxes which are the subject of this Convention.

Article 23
Mutual Agreement Procedure

  • 1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Convention, that person may, irrespective of the remedies provided by the domestic law of those States, address to the competent authority of the Contracting State of which that person is a resident or, if that person’s case comes under paragraph 1 of Article 22, to that of the Contracting State of which that person is a national, an application in writing stating the grounds for claiming the revision of such taxation. To be admissible, the said application must be submitted within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention.

  • 2. The competent authority referred to in paragraph 1 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 Contracting State, with a view to the avoidance of taxation not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

  • 3. A Contracting State shall not, after the expiry of the time limits provided in its domestic laws and, in any case, after nine years from the end of the taxable period to which the income concerned was attributed, change the income of a resident of either of the Contracting States by including therein items of income which have also been included in income in the other Contracting State. This paragraph shall not apply in the case of fraud or wilful default.

  • 4. 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 Convention.

  • 5. The competent authorities of the Contracting States may consult together for the elimination of double taxation in cases not provided for in the Convention and may communicate with each other directly for the purpose of applying the Convention.

Article 24
Exchange of Information

  • 1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2.

  • 2. Any information received under paragraph 1 by 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, the enforcement or prosecution in respect of, the determination of appeals in relation to taxes, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

  • 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

    • (a) to carry out administrative measures at variance with the laws and the administrative practice of that or of the other Contracting State;

    • (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 Contracting State; or

    • (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).

  • 4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

  • 5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because the information relates to ownership interests in a person.

Article 25
Members of Diplomatic or Permanent Missions and Consular Officers

  • 1. Nothing in this Convention shall affect the fiscal privileges of members of diplomatic or permanent missions and consular posts under the general rules of international law or under the provisions of special agreements.

  • 2. Notwithstanding the provisions of Article 4, an individual who is a member of a diplomatic mission, consular post or permanent mission of a Contracting State which is situated in the other Contracting State or in a third State shall be deemed for the purposes of the Convention to be a resident only of the sending State if that individual is liable in the sending State to the same obligations in relation to tax on total income as are residents of that sending State.

  • 3. The Convention shall not apply to international organizations, to organs or officials thereof and to persons who are members of a diplomatic mission, consular post or permanent mission of a third State or group of States, being present in a Contracting State and who are not liable in either Contracting State to the same obligations in relation to tax on their total income as are residents thereof.

Article 26
Miscellaneous Rules

  • 1. The provisions of this Convention shall not be construed to restrict in any manner any exemption, allowance, credit or other deduction accorded by the laws of a Contracting State in the determination of the tax imposed by that State.

  • 2. Nothing in the Convention shall be construed as preventing a Contracting State from imposing a tax on amounts included in the income of a resident of that State with respect to a partnership, trust, company, or other entity in which that resident has an interest.

  • 3. The Convention shall not apply to any company, trust or other entity that is a resident of a Contracting State and is beneficially owned or controlled, directly or indirectly, by one or more persons who are not residents of that State, if the amount of the tax imposed on the income or capital of the company, trust or other entity by that State is substantially lower than the amount that would be imposed by that State (after taking into account any reduction or offset of the amount of tax in any manner, including a refund, reimbursement, contribution, credit, or allowance to the company, trust or partnership, or to any other person) if all of the shares of the capital stock of the company or all of the interests in the trust or other entity, as the case may be, were beneficially owned by one or more individuals who were residents of that State.

  • 4. For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of the convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph 4 of Article 23 or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Contracting States.

  • 5. Nothing in this Convention shall be construed as preventing a Contracting State from imposing on the earnings of a company attributable to a permanent establishment in that State, or the earnings attributable to the alienation of immovable property situated in that State by a company carrying on a trade in immovable property, a tax in addition to the tax that would be chargeable on the earnings of a company that is a national of that State, except that any additional tax so imposed shall not exceed 5 per cent of the amount of such earnings that have not been subjected to such additional tax in previous taxation years. For the purpose of this provision, the term “earnings” means the earnings attributable to the alienation of such immovable property situated in a Contracting State as may be taxed by that State under the provisions of Article 6 or of paragraph 1 of Article 13, and the profits, including any gains, attributable to a permanent establishment in a Contracting State in a year and previous years, after deducting therefrom all taxes, other than the additional tax referred to herein, imposed on such profits in that State.

Article 27
Entry into Force

  • 1. Each of the Contracting States shall notify in writing through diplomatic channels to the other the completion of the procedures required by its law for the bringing into force of this Convention.

  • 2. This Convention shall enter into force on the date of the later of these notifications and shall thereupon have effect:

    • (a) in Poland:

      • (i) in respect of taxes withheld at source, on income derived on or after 1 January in the calendar year next following the year in which the Convention enters into force, and

      • (ii) in respect of other taxes, on income derived in any tax year beginning on or after 1 January in the calendar year next following the year in which the Convention enters into force;

    • (b) in Canada:

      • (i) in respect of tax withheld at the source on amounts paid or credited to non-residents, on or after the first day of January in the calendar year following that in which the Convention enters into force, and

      • (ii) in respect of other Canadian tax, for taxation years beginning on or after the first day of January in the calendar year following that in which the Convention enters into force.

  • 3. The Convention between the Government of Canada and the Government of the Polish People’s Republic for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital signed at Warsaw on 4 May 1987 (hereinafter referred to as “the 1987 Convention”) shall cease to have effect from the date upon which this Convention has effect in accordance with the provisions of paragraph 2 of this Article.

  • 4. The 1987 Convention shall terminate on the last date on which it has effect in accordance with paragraph 3.

  • 5. Notwithstanding the provisions of this Article, the provisions of paragraph 3 of Article 9 and Articles 23 and 24 of this Convention shall have effect from the date of entry into force of this Convention, without regard to the taxable period to which the matter relates.

Article 28
Termination

This Convention shall continue in effect indefinitely but either Contracting State may, on or before June 30 of any calendar year after the year of the entry into force, give to the other Contracting State a notice of termination in writing through the diplomatic channel. In such event, the Convention shall cease to have effect:

  • (a) in Poland:

    • (i) in respect of taxes withheld at source, on income derived on or after 1 January in the calendar year next following the year in which the notice is given, and

    • (ii) in respect of other taxes, on income derived in any tax year beginning on or after 1 January in the calendar year next following the year in which the notice is given;

  • (b) in Canada:

    • (i) in respect of tax withheld at the source on amounts paid or credited to non-residents, after the end of that calendar year, and

    • (ii) in respect of other Canadian tax, for taxation years beginning after the end of that calendar year.

IN WITNESS WHEREOF the undersigned, duly authorised thereto by their respective Governments, have signed this Convention.

DONE in duplicate at Ottawa, this 14th day of May 2012, in the English, French and Polish languages, all three texts being equally authentic.

Edward Fast
Minister for International Trade
for Canada
Zenon Kosiniak-Kamysz
Ambassador
for the Republic of Poland

SCHEDULE 2(Section 2)PROTOCOL

At the moment of signing the Convention between Canada and the Republic of Poland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (the “Convention”) the signatories have agreed that the following provisions shall form an integral part of the Convention:

  • 1. For the purposes of subparagraph 1(h) of Article 3 and paragraph 2 of Article 8 of the Convention, it is understood that a navigation or an incidental stop outside the other Contracting State does not, in and of itself, render a transport not “solely” between places in the other Contracting State.

  • 2. With reference to paragraph 4 of Article 6 of the Convention, that paragraph is included given that, in the case of Canada, certain alienations of immovable property, in particular in connection with trading activities, give rise to “income” rather than “capital gains” for tax purposes.

  • 3. With reference to paragraph 4 of Article 9 and paragraph 3 of Article 23 of the Convention, in the case of Poland, the expression “in the case of fraud or wilful default” also includes all cases where a person has been notified that administrative proceedings concerning fraud or wilful default have been initiated against that person.

  • 4. With reference to Article 17 of the Convention, in the case of Poland, the term “pensions” also includes disability benefits (renty) and other similar payments under the social security law of Poland.

IN WITNESS WHEREOF the undersigned, duly authorised thereto by their respective Governments, have signed this Protocol.

DONE in duplicate at Ottawa, this 14th day of May 2012, in the English, French and Polish languages, all three texts being equally authentic.

Edward Fast
Minister for International Trade
for Canada
Zenon Kosiniak-Kamysz
Ambassador
for the Republic of Poland

SCHEDULE 4(Section 5)

SCHEDULE 1(Section 2)AGREEMENT BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE’S REPUBLIC OF CHINA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

The Government of Canada and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China;

Recalling Article 151 of the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China;

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:

I. SCOPE OF THE AGREEMENT

Article 1
Persons Covered

This Agreement shall apply to persons who are residents of one or both of the Parties.

Article 2
Taxes Covered

  • 1. The existing taxes to which this Agreement shall apply are:

    • (a) in the case of the Hong Kong Special Administrative Region, the taxes imposed by the Government of the Hong Kong Special Administrative Region under the Inland Revenue Ordinance (“Hong Kong Special Administrative Region tax”);

    • (b) in the case of Canada, the taxes imposed by the Government of Canada under the Income Tax Act (“Canadian tax”).

  • 2. This Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Parties shall notify each other of any significant changes that have been made in their taxation laws.

II. DEFINITIONS

Article 3
General Definitions

  • 1. For the purposes of this Agreement, unless the context otherwise requires:

    • (a) the term “Hong Kong Special Administrative Region” means any territory where the tax laws of the Hong Kong Special Administrative Region of the People’s Republic of China apply;

    • (b) the term “Canada”, used in a geographical sense, means:

      • (i) the land territory, internal waters and territorial sea, including the air space above these areas, of Canada,

      • (ii) the exclusive economic zone of Canada, as determined by its domestic law, consistent with Part V of the United Nations Convention on the Law of the Sea, done at Montego Bay on 10 December 1982 (“UNCLOS”), and

      • (iii) the continental shelf of Canada, as determined by its domestic law, consistent with Part VI of UNCLOS;

    • (c) the term “person” includes an individual, a trust, a company, a partnership and any other body of persons;

    • (d) the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

    • (e) the terms “enterprise” applies to the carrying on of any business;

    • (f) the terms “enterprise of a Party” and “enterprise of the other Party” mean respectively an enterprise carried on by a resident of a Party and an enterprise carried on by a resident of the other Party;

    • (g) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Party, except when the ship or aircraft is operated solely between places in the other Party;

    • (h) the term “competent authority” means:

      • (i) in the case of the Hong Kong Special Administrative Region, the Commissioner of Inland Revenue or the Commissioner’s authorized representative,

      • (ii) in the case of Canada, the Minister of National Revenue or the Minister’s authorized representative;

    • (i) the term “national”, in relation to Canada, means:

      • (i) any individual possessing the nationality of Canada, and

      • (ii) any legal person, partnership or association deriving its status as such from the laws in force in Canada; and

    • (j) the term “business” includes the performance of professional services and of other activities of an independent character.

  • 2. As regards the application of this Agreement at any time by a Party, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that Party for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that Party prevailing over a meaning given to the term under other laws of that Party.

Article 4
Resident

  • 1. For the purposes of this Agreement, the term “resident of a Party” means:

    • (a) in the case of the Hong Kong Special Administrative Region:

      • (i) any individual who ordinarily resides in the Hong Kong Special Administrative Region,

      • (ii) any individual who stays in the Hong Kong Special Administrative Region for more than 180 days during a year of assessment or for more than 300 days in two consecutive years of assessment one of which is the relevant year of assessment,

      • (iii) a company incorporated in the Hong Kong Special Administrative Region or, if incorporated outside the Hong Kong Special Administrative Region, being centrally managed and controlled in the Hong Kong Special Administrative Region,

      • (iv) any other person constituted under the laws of the Hong Kong Special Administrative Region or, if constituted outside the Hong Kong Special Administrative Region, being centrally managed and controlled in the Hong Kong Special Administrative Region,

      • (v) the Government of the Hong Kong Special Administrative Region;

    • (b) in the case of Canada, any person who, under the laws of Canada, is liable to tax therein by reason of the person’s domicile, residence, place of management, place of incorporation or any other criterion of a similar nature. This term also includes the Government of Canada and any political subdivision or local authority of Canada, as well as any agency or instrumentality of the Government of Canada, or of a political subdivision or local authority of Canada. This term, however, does not include any person who is liable to tax in Canada in respect only of income from sources in Canada.

  • 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Parties, then the individual’s status shall be determined as follows:

    • (a) the individual shall be deemed to be a resident only of the Party in which the individual has a permanent home available and, if the individual has a permanent home available in both Parties, the individual shall be deemed to be a resident only of the Party with which the individual’s personal and economic relations are closer (centre of vital interests);

    • (b) if the Party in which the individual’s centre of vital interests is situated cannot be determined, or if there is not a permanent home available to the individual in either Party, the individual shall be deemed to be a resident only of the Party in which the individual has an habitual abode;

    • (c) if the individual has an habitual abode in both Parties or in neither of them, the individual shall be deemed to be a resident only of the Party in which the individual has the right of abode (in the case of the Hong Kong Special Administrative Region) or of which the individual is a national (in the case of Canada);

    • (d) if the individual has the right of abode in the Hong Kong Special Administrative Region and is also a national of Canada, or if the individual does not have the right of abode in the Hong Kong Special Administrative Region and is not a national of Canada, the competent authorities of the Parties 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 Parties, the competent authorities of the Parties shall by mutual agreement endeavour to settle the question and to determine the mode of application of this Agreement to that person. In the absence of mutual agreement, that person shall not be entitled to claim any relief or exemption from tax provided by this Agreement.

Article 5
Permanent Establishment

  • 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; and

    • (f) a mine, an oil or gas well, a quarry or any other place relating to the exploration for or the extraction of natural resources.

  • 3. The term “permanent establishment” also includes a building site, a construction, assembly or installation project, or supervisory activities in connection with a building site, or with such a project, but only if that site, project or activities last more than six 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, 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 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) the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

  • 5. Notwithstanding the provisions of paragraphs 1 and 2, where a person (other than an agent of an independent status to whom paragraph 6 applies) is acting on behalf of an enterprise and has, and habitually exercises, in a Party an authority to conclude contracts on behalf of the enterprise, that enterprise shall be deemed to have a permanent establishment in that Party in respect of any activities which that person undertakes for 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.

  • 6. An enterprise shall not be deemed to have a permanent establishment in a Party merely because it carries on business in that Party through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

  • 7. The fact that a company which is a resident of a Party controls or is controlled by a company which is a resident of the other Party, or which carries on business in that other Party (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

III. TAXATION OF INCOME

Article 6
Income from Immovable Property

  • 1. Income derived by a resident of a Party from immovable property (including income from agriculture or forestry) situated in the other Party may be taxed in that other Party.

  • 2. The term “immovable property” shall have the meaning which it has for the purposes of the relevant tax law of the Party in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, quarries, sources and other natural resources. Ships and aircraft shall not be regarded as immovable property.

  • 3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property, and to income from the alienation of such property.

  • 4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.

Article 7
Business Profits

  • 1. The profits of an enterprise of a Party shall be taxable only in that Party unless the enterprise carries on business in the other Party 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 Party 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 Party carries on business in the other Party through a permanent establishment situated therein, there shall in each Party be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

  • 3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Party in which the permanent establishment is situated or elsewhere.

  • 4. Insofar as it has been customary in a Party 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 Party from determining the profits to be taxed by such 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.

  • 5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

  • 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
Shipping and Air Transport

  • 1. Profits derived by an enterprise of a Party from the operation of ships or aircraft in international traffic shall be taxable only in that Party.

  • 2. Notwithstanding the provisions of paragraph 1 and Article 7 (Business Profits), profits derived by an enterprise of a Party from the carriage by a ship or aircraft of passengers or goods taken on board at a place in the other Party for discharge at another place in that other Party may be taxed in that other Party, unless all or substantially all of the passengers or goods were taken on board at a place outside that other Party.

  • 3. 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
Associated Enterprises

  • 1. Where

    • (a) an enterprise of a Party participates directly or indirectly in the management, control or capital of an enterprise of the other Party; or

    • (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Party and an enterprise of the other Party;

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 Party includes in the profits of an enterprise of that Party — and taxes accordingly — profits on which an enterprise of the other Party has been charged to tax in that other Party and the profits so included are profits which would have accrued to the enterprise of the first-mentioned Party if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Party 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 this Agreement and the competent authorities of the Parties shall if necessary consult each other.

  • 3. A Party shall not make a primary adjustment to the profits of an enterprise in the circumstances referred to in paragraph 1 after the expiry of the time limits provided in its domestic laws and, in any case, after seven years from the end of the taxable year in which the profits which would be subject to such change would, but for the conditions referred to in paragraph 1, have been attributed to that enterprise.

  • 4. The provisions of paragraphs 2 and 3 shall not apply in the case of fraud or wilful default.

Article 10
Dividends

  • 1. Dividends paid by a company which is a resident of a Party to a resident of the other Party may be taxed in that other Party.

  • 2. However, such dividends may also be taxed in the Party of which the company paying the dividends is a resident and according to the laws of that Party, but if the beneficial owner of the dividends is a resident of the other Party, the tax so charged shall not exceed:

    • (a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividends; and

    • (b) 15 per cent of the gross amount of the dividends, in all other cases.

    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, jouissance shares or jouissance rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income which is subjected to the same taxation treatment as income from shares by the laws of the Party 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 Party, carries on business in the other Party of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 (Business Profits) shall apply.

  • 5. Where a company which is a resident of a Party derives profits or income from the other Party, that other Party 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 Party or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other Party, 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 Party.

  • 6. Nothing in this Agreement shall be construed as preventing a Party from imposing on the earnings of a company attributable to a permanent establishment in that Party, or the earnings attributable to the alienation of immovable property situated in that Party by a company carrying on a trade in immovable property, a tax in addition to the tax that would be chargeable on the earnings of a company that is a resident of a Party. Any additional tax so imposed shall not exceed five per cent of the amount of those earnings that have not been subjected to such additional tax in previous taxation years. For the purpose of this provision, the term “earnings” means the earnings attributable to the alienation of such immovable property situated in a Party as may be taxed by that Party under the provisions of Article 6 (Income from Immovable Property) or of paragraph 1 of Article 13 (Capital Gains), and the profits, including any gains, attributable to a permanent establishment in a Party in a year and previous years, after deducting therefrom all taxes, other than the additional tax referred to herein, imposed on those profits in that Party.

  • 7. A resident of a Party shall not be entitled to any benefits provided under this Article in respect of a dividend if one of the main purposes of any person concerned with an assignment or transfer of the dividend, or with the creation, assignment, acquisition or transfer of the shares or other rights in respect of which the dividend is paid, or with the establishment, acquisition or maintenance of the person that is the beneficial owner of the dividend, is for that resident to obtain the benefits of this Article.

Article 11
Interest

  • 1. Interest arising in a Party and paid to a resident of the other Party may be taxed in that other Party.

  • 2. However, such interest may also be taxed in the Party in which it arises and according to the laws of that Party, but if the beneficial owner of the interest is a resident of the other Party, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

  • 3. Notwithstanding the provisions of paragraph 2:

    • (a) interest arising in a Party and paid to the Government of the other Party, or to a political subdivision or a local authority of that other Party, shall be exempt from tax in the first-mentioned Party;

    • (b) interest arising in the Hong Kong Special Administrative Region and paid to a resident of Canada shall be taxable only in Canada if it is paid in respect of a loan made, guaranteed or insured, or a credit extended, guaranteed or insured by Export Development Canada;

    • (c) interest arising in Canada and paid to the Hong Kong Monetary Authority shall be taxable only in the Hong Kong Special Administrative Region;

    • (d) interest arising in a Party and paid to any wholly-owned agency or instrumentality of the other Party, political subdivision or local authority, shall be taxable only in that other Party. However, this provision shall only apply in circumstances as may be agreed from time to time between the competent authorities of the Parties; and

    • (e) interest arising in a Party and paid to a resident of the other Party shall not be taxable in the first-mentioned Party if the beneficial owner of the interest is a resident of the other Party and is dealing at arm’s length with the payer.

  • 4. Subparagraph 3(e) shall not apply where all or any portion of the interest is paid or payable on an obligation that is contingent or dependent on the use of or production from property or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation.

  • 5. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures as well as income which is subjected to the same taxation treatment as income from money lent by the laws of the Party in which the income arises. However, the term “interest” does not include income dealt with in Article 8 (Shipping and Air Transport) or Article 10 (Dividends).

  • 6. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Party, carries on business in the other Party in which the interest arises through a permanent establishment situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 (Business Profits) shall apply.

  • 7. Interest shall be deemed to arise in a Party when the payer is a resident of that Party. Where, however, the person paying the interest, whether the payer is a resident of a Party or not, has in a Party a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and that interest is borne by that permanent establishment, then that interest shall be deemed to arise in the Party in which the permanent establishment is situated.

  • 8. 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 that case, the excess part of the payments shall remain taxable according to the laws of each Party, due regard being had to the other provisions of this Agreement.

  • 9. A resident of a Party shall not be entitled to any benefits provided under this Article in respect of interest if one of the main purposes of any person concerned with an assignment or transfer of the interest, or with the creation, assignment, acquisition or transfer of the debt-claim or other rights in respect of which the interest is paid, or with the establishment, acquisition or maintenance of the person that is the beneficial owner of the interest, is for that resident to obtain the benefits of this Article.

Article 12
Royalties

  • 1. Royalties arising in a Party and paid to a resident of the other Party may be taxed in that other Party.

  • 2. However, such royalties may also be taxed in the Party in which they arise and according to the laws of that Party, but if the beneficial owner of the royalties is a resident of the other Party, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

  • 3. The term “royalties” as used in this Article means payments of any kind received as a consideration for:

    • (a) the use of, or the right to use, any copyright, patent, trade mark, design or model, plan, secret formula or process or other intangible property;

    • (b) the use of, or the right to use, industrial, commercial or scientific equipment;

    • (c) information concerning industrial, commercial or scientific experience; or

    • (d) the use of, or the right to use:

      • (i) motion picture films,

      • (ii) films, videotapes or other means of reproduction for use in connection with television, or

      • (iii) tapes for use in connection with radio broadcasting.

However, the term “royalties” does not include income dealt with in Article 8 (Shipping and Air Transport).

  • 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Party, carries on business in the other Party in which the royalties arise, through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 (Business Profits) shall apply.

  • 5. Royalties shall be deemed to arise in a Party when the payer is a resident of that Party. Where, however, the person paying the royalties, whether the payer is a resident of a Party or not, has in a Party a permanent establishment in connection with which the obligation to pay the royalties was incurred, and those royalties are borne by that permanent establishment, then those royalties shall be deemed to arise in the Party in which the permanent establishment is situated.

  • 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 that case, the excess part of the payments shall remain taxable according to the laws of each Party, due regard being had to the other provisions of this Agreement.

  • 7. A resident of a Party shall not be entitled to any benefits provided under this Article in respect of a royalty if one of the main purposes of any person concerned with an assignment or transfer of the royalty, or with the creation, assignment, acquisition or transfer of rights in respect of which the royalty is paid, or with the establishment, acquisition or maintenance of the person that is the beneficial owner of the royalty, is for that resident to obtain the benefits of this Article.

Article 13
Capital Gains

  • 1. Gains derived by a resident of a Party from the alienation of immovable property referred to in Article 6 (Income from Immovable Property) and situated in the other Party may be taxed in that other Party.

  • 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Party has in the other Party, including gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other Party.

  • 3. Gains derived by an enterprise of a Party from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that Party.

  • 4. Gains derived by a resident of a Party from the alienation of:

    • (a) shares deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Party; or

    • (b) an interest in a partnership, trust or other entity, deriving more than 50 per cent of its value directly or indirectly from immovable property situated in the other Party;

may be taxed in that other Party.

  • 5. Gains from the alienation of any property, other than the gains referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the Party of which the alienator is a resident.

  • 6. Where an individual who ceases to be a resident of a Party, and immediately thereafter becomes a resident of the other Party, is treated for the purposes of taxation in the first-mentioned Party as having alienated a property (in this paragraph referred to as the “deemed alienation”) and is taxed in that Party by reason thereof, the individual may elect to be treated for purposes of taxation in the other Party as if the individual had, immediately before becoming a resident of that other Party, sold and repurchased the property for an amount equal to the lesser of its fair market value at the time of the deemed alienation and the amount the individual elects, at the time of the actual alienation of the property, to be the proceeds of disposition in the first-mentioned Party in respect of the deemed alienation. However, this provision shall not apply to property any gain from which, arising immediately before the individual became a resident of that other Party, may be taxed in that other Party or to immovable property situated in a third Party.

Article 14
Income from Employment

  • 1. Subject to the provisions of Articles 15 (Directors’ Fees), 17 (Pensions) and 18 (Government Service), salaries, wages and other remuneration derived by a resident of a Party in respect of an employment shall be taxable only in that Party unless the employment is exercised in the other Party. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Party.

  • 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Party in respect of an employment exercised in the other Party shall be taxable only in the first-mentioned Party if:

    • (a) the recipient is present in the other Party for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the taxable period concerned; and

    • (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Party; and

    • (c) the remuneration is not borne by a permanent establishment which the employer has in the other Party.

  • 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 by an enterprise of a Party may be taxed in that Party.

Article 15
Directors’ Fees

Directors’ fees and other similar payments derived by a resident of a Party in that resident’s capacity as a member of the board of directors of a company which is a resident of the other Party may be taxed in that other Party.

Article 16
Entertainers and Sportspersons

  • 1. Notwithstanding the provisions of Articles 7 (Business Profits) and 14 (Income from Employment), income derived by a resident of a Party as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that resident’s personal activities as such exercised in the other Party, may be taxed in that other Party.

  • 2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in that individual’s capacity as such accrues not to the entertainer or sportsperson personally but to another person, that income may, notwithstanding the provisions of Articles 7 (Business Profits) and 14 (Income from Employment), be taxed in the Party in which the activities of the entertainer or sportsperson are exercised.

  • 3. The provisions of paragraphs 1 and 2 shall not apply to income derived from activities performed in a Party by a resident of the other Party in the context of a visit in the first-mentioned Party of a non-profit organization of the other Party, if the visit is wholly or mainly supported by public funds.

Article 17
Pensions

Pensions (including lump sums) arising in a Party and paid to a resident of the other Party in consideration of past employment may be taxed in the Party in which they arise and according to the laws of that Party.

Article 18
Government Service

  • 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by the Government of a Party or of a political subdivision or of a local authority to an individual in respect of services rendered to that Party or subdivision or authority shall be taxable only in that Party.

    • (b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Party if the services are rendered in that Party and the individual is a resident of that Party who:

      • (i) in the case of the Hong Kong Special Administrative Region, has the right of abode therein and in the case of Canada, is a national thereof, or

      • (ii) did not become a resident of that Party solely for the purpose of rendering the services.

  • 2. The provisions of Articles 14 (Income from Employment), 15 (Director’s Fees) and 16 (Entertainers and Sportspersons) shall apply to salaries, wages and other similar remuneration in respect of services rendered in connection with a business carried on by the Government of a Party or of a political subdivision or of a local authority.

Article 19
Students

Payments which a student who is, or was immediately before visiting a Party, a resident of the other Party and who is present in the first-mentioned Party solely for the purpose of that individual’s education receives for the purpose of that individual’s maintenance or education shall not be taxed in that Party, provided that such payments arise from sources outside that Party.

Article 20
Other Income

  • 1. Subject to the provisions of paragraph 2, items of income of a resident of a Party, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that Party.

  • 2. However, if such income is derived by a resident of a Party from sources in the other Party, such income may also be taxed in the Party in which it arises and according to the law of that Party.

  • 3. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6 (Income from Immovable Property), if the recipient of such income, being a resident of a Party, carries on business in the other Party through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 (Business Profits) shall apply.

  • 4. Alimony or other maintenance payment paid by a resident of a Party to a resident of the other Party shall, to the extent it is not allowable as a deduction to the payer in the first-mentioned Party, be taxable only in that Party.

IV. ELIMINATION OF DOUBLE TAXATION

Article 21
Methods for Elimination of Double Taxation

  • 1. Double taxation shall be avoided as follows:

    • (a) In the case of the Hong Kong Special Administrative Region, subject to the provisions of the laws of the Hong Kong Special Administrative Region relating to the allowance of a credit against Hong Kong Special Administrative Region tax of tax paid in a jurisdiction outside the Hong Kong Special Administrative Region (which shall not affect the general principle of this Article), Canadian tax paid under the laws of Canada and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of the Hong Kong Special Administrative Region from sources in Canada, shall be allowed as a credit against Hong Kong Special Administrative Region tax payable in respect of that income, provided that the credit so allowed does not exceed the amount of Hong Kong Special Administrative Region tax computed in respect of that income in accordance with the tax laws of the Hong Kong Special Administrative Region.

    • (b) In the case of Canada,

      • (i) subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions (which shall not affect the general principle of those provisions) and unless a greater deduction or relief is provided under the laws of Canada, tax payable in the Hong Kong Special Administrative Region on profits, income or gains arising in the Hong Kong Special Administrative Region shall be deducted from any Canadian tax payable in respect of such profits, income or gains, and

      • (ii) where, in accordance with any provision of this Agreement, income derived by a resident of Canada is exempt from tax in Canada, Canada may nevertheless, in calculating the amount of tax on other income, take into account the exempted income.

  • 2. For the purposes of this Article, profits, income or gains of a resident of a Party which may be taxed in the other Party in accordance with this Agreement shall be deemed to arise from sources in that other Party.

V. SPECIAL PROVISIONS

Article 22
Non-Discrimination

  • 1. Persons who, in the case of the Hong Kong Special Administrative Region, have the right of abode or are incorporated or otherwise constituted therein, and, in the case of Canada, are nationals of Canada, shall not be subjected in the other Party to any taxation or any requirement connected therewith that is more burdensome than the taxation and connected requirements to which persons who have the right of abode or are incorporated or otherwise constituted in that other Party (where that other Party is the Hong Kong Special Administrative Region) or nationals of that other Party (where that other Party is Canada) in the same circumstances, in particular with respect to residence, are or may be subjected.

  • 2. The taxation on a permanent establishment which an enterprise of a Party has in the other Party shall not be less favourably levied in that other Party than the taxation levied on enterprises of that other Party carrying on the same activities.

  • 3. Nothing in this Article shall be construed as obliging a Party to grant to residents of the other Party any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

  • 4. Except where the provisions of paragraph l of Article 9 (Associated Enterprises), paragraph 8 of Article 11 (Interest), or paragraph 6 of Article 12 (Royalties), apply, interest, royalties and other disbursements paid by an enterprise of a Party to a resident of the other Party 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 Party.

  • 5. Enterprises of a Party, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Party, shall not be subjected in the first-mentioned Party to any taxation or any requirement connected therewith which is more burdensome than the taxation and connected requirements to which other similar enterprises which are residents of the first-mentioned Party, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of a third Party, are or may be subjected.

  • 6. This Article shall apply to taxes referred to in Article 2 (Taxes Covered).

Article 23
Mutual Agreement Procedure

  • 1. Where a person considers that the actions of one or both of the Parties result or will result for that person in taxation not in accordance with the provisions of this Agreement, that person may, irrespective of the remedies provided by the domestic law of those Parties, address to the competent authority of the Party of which that person is a resident an application in writing stating the grounds for claiming the revision of such taxation. To be admissible, the application must be submitted within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.

  • 2. The competent authority referred to in paragraph 1 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 Party, with a view to the avoidance of taxation which is not in accordance with this Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Parties.

  • 3. For the purposes of Articles 6 (Income from Immovable Property) and 7 (Business Profits), a Party shall not, after the expiry of the time limits provided in its domestic laws and, in any case, after seven years from the end of the taxable period to which the income concerned was attributed, make a primary adjustment to the income of a resident of one of the Parties where that income has been charged to tax in the other Party in the hands of that resident. The foregoing shall not apply in the case of fraud or wilful default.

  • 4. The competent authorities of the Parties shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement.

  • 5. The competent authorities of the Parties may consult together for the elimination of double taxation in cases not provided for in this Agreement and may communicate with each other directly for the purpose of applying this Agreement.

  • 6. If any difficulty or doubt arising as to the interpretation or application of this Agreement cannot be resolved by the competent authorities pursuant to the preceding paragraphs of this Article, the case may be submitted for arbitration if both competent authorities and the taxpayer agree and the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both Parties with respect to that case. The procedure shall be established in an exchange of notes between the Parties.

Article 24
Exchange of Information

  • 1. The competent authorities of the Parties shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws of the Parties concerning taxes covered by this Agreement, insofar as the taxation thereunder is not contrary to this Agreement. The exchange of information is not restricted by Article 1 (Persons Covered).

  • 2. Any information received under paragraph 1 by a Party shall be treated as secret in the same manner as information obtained under the domestic laws of that Party and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

  • 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Party the obligation:

    • (a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Party;

    • (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 Party;

    • (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).

  • 4. If information is requested by a Party in accordance with this Article, the other Party shall use its information gathering measures to obtain the requested information, even though that other Party may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Party to decline to supply information solely because it has no domestic interest in such information.

  • 5. In no case shall the provisions of paragraph 3 be construed to permit a Party to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because the information relates to ownership interests in a person.

Article 25
Members of Goverment Missions

Nothing in this Agreement shall affect the fiscal privileges of members of government missions, including consular posts, under the general rules of international law or under the provisions of special agreements.

Article 26
Miscellaneous Rules

  • 1. The provisions of this Agreement shall not be construed to restrict in any manner any exemption, allowance, credit or other deduction accorded by the laws of a Party in the determination of the tax imposed by that Party.

  • 2. Nothing in this Agreement shall prevent a Party from:

    • (a) imposing a tax on amounts included in the income of a resident of that Party with respect to a partnership, trust, company, or other entity in which a resident of that Party has an interest; or

    • (b) applying the provisions of its law which are designed to prevent tax avoidance, including measures relating to thin capitalization.

  • 3. The provisions of Articles 6 (Income from Immovable Property) to 20 (Other Income) of this Agreement shall not apply to any company, trust or other entity that is a resident of a Party and that is beneficially owned or controlled, directly or indirectly, by one or more persons who are not residents of that Party, if the amount of the tax imposed on the income or capital of the company, trust or other entity by that Party is substantially lower than the amount that would be imposed by that Party (after taking into account any reduction or offset of the amount of tax in any manner, including a refund, reimbursement, contribution, credit, or allowance to the company, trust or partnership, or to any other person) if all of the shares of the capital stock of the company or all of the interests in the trust or other entity, as the case may be, were beneficially owned by one or more individuals who were residents of that Party.

  • 4. Where under any provision of this Agreement any income is relieved from tax in a Party and, under the law in force in the other Party a person, in respect of that income, is subject to tax by reference to the amount thereof that is remitted to or received in that other Party and not by reference to the full amount thereof, then the relief to be allowed under this Agreement in the first-mentioned Party shall apply only to so much of the income as is taxed in the other Party.

  • 5. For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, which is part of the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994, the Parties agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of this Agreement may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Parties. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph 4 of Article 23 (Mutual Agreement Procedure) or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Parties.

VI. FINAL PROVISIONS

Article 27
Entry into Force

  • 1. Each of the Parties shall notify the other in writing of the completion of the procedures required by its law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications.

  • 2. This Agreement shall have effect:

    • (a) in the Hong Kong Special Administrative Region, in respect of Hong Kong Special Administrative Region tax, for any year of assessment beginning on or after the first day of April in the calendar year next following that in which this Agreement enters into force;

    • (b) in Canada:

      • (i) in respect of tax withheld at the source on amounts paid or credited to non-residents, on or after the first day of January in the calendar year next following that in which this Agreement enters into force, and

      • (ii) in respect of other Canadian tax, for taxation years beginning on or after the first day of January in the calendar year next following that in which this Agreement enters into force.

  • 3. Notwithstanding paragraph 2 of this Article, Article 8 (Shipping and Air Transport), and paragraph 3 of Article 13 (Capital Gains) shall have effect from the date of entry into force of this Agreement.

Article 28
Termination

  • 1. This Agreement shall remain in force until terminated by a Party. Either Party may terminate this Agreement by giving the other Party written notice of termination at least six months before the end of any calendar year. A notice of termination given less than six months before the end of a calendar year shall be deemed to have been given in the first six months of the next calendar year. In such event, this Agreement shall cease to have effect:

    • (a) in the Hong Kong Special Administrative Region, in respect of Hong Kong Special Administrative Region tax, for any year of assessment beginning on or after the first day of April in the calendar year next following that in which the notice is given;

    • (b) in Canada:

      • (i) in respect of tax withheld at the source on amounts paid or credited to non-residents, after the end of that calendar year, and

      • (ii) in respect of other Canadian tax, for taxation years beginning after the end of that calendar year.

    • 2. This Agreement shall terminate on the last date on which it has effect in accordance with paragraph 1, unless the Parties agree otherwise.

IN WITNESS WHEREOF the undersigned, duly authorized to that effect, have signed this Agreement.

DONE in duplicate at Hong Kong, this 11th day of November 2012, in the English, French and Chinese languages, each version being equally authentic.

Edward Fast
Minister for International Trade
For the Government of Canada
K. C. Chan
Secretary for Financial Services and the Treasury
For the Government of the Hong Kong Special Administrative Region of the People’s Republic of China

SCHEDULE 2(Section 2)PROTOCOL

At the time of signing the Agreement between the Government of Canada and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (the “Agreement”), the two Governments have agreed upon the following provisions which shall form an integral part of the Agreement:

General
  • 1. For purposes of the Agreement, it is understood that the term “right of abode” in relation to the Hong Kong Special Administrative Region has the meaning it has under the Immigration Ordinance applicable to the Hong Kong Special Administrative Region, as amended from time to time without affecting the general principle thereof.

With reference to Article 2 (Taxes Covered)
  • 2. It is understood that the terms “Hong Kong Special Administrative Region tax” and “Canadian tax” do not include any penalty or interest (including, in the case of the Hong Kong Special Administrative Region, any sum added to the Hong Kong Special Administrative Region tax by reason of default and recovered therewith and “additional tax” under Section 82A of the Inland Revenue Ordinance) imposed under the laws of either Party relating to the taxes to which the Agreement applies by virtue of Article 2 (Taxes Covered).

With reference to Article 10 (Dividends)
  • 3. It is understood that the term “earnings” in paragraph 6 of Article 10 (Dividends) does not include business profits attributable to a permanent establishment in a Party or income from the trading of immoveable property in a Party that have been re-invested in that Party as determined in accordance with the law of that Party.

With reference to Article 24 (Exchange of Information)
  • 4. For the purposes of Article 24 (Exchange of Information), it is understood that:

    • (a) the Article does not require the Parties to exchange information on an automatic or a spontaneous basis;

    • (b) information exchanged shall not be disclosed to any third jurisdiction for any purpose; and

    • (c) a Party may only request information relating to taxable periods for which the Agreement has effect for that Party.

IN WITNESS WHEREOF the undersigned, duly authorized to that effect, have signed this Protocol.

DONE in duplicate at Hong Kong, this 11th day of November 2012, in the English, French and Chinese languages, each version being equally authentic.

Edward Fast
Minister for International Trade
For the Government of Canada
K. C. Chan
Secretary for Financial Services and the Treasury
For the Government of the Hong Kong Special Administrative Region of the People’s Republic of China

SCHEDULE 5(Sections 8 to 11)

PART 2PROTOCOL AMENDING THE CONVENTION BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE GRAND DUCHY OF LUXEMBOURG FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL, DONE AT LUXEMBOURG ON 10 SEPTEMBER 1999

THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE GRAND DUCHY OF LUXEMBOURG,

DESIRING to amend the Convention between the Government of Canada and the Government of the Grand Duchy of Luxembourg for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, done at Luxembourg on 10 September 1999 (hereinafter referred to as the “Convention”),

Have agreed as follows:

Article I

The text of Article 26 of the Convention is deleted and replaced by the following:

  • “1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed by or on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to this Convention. The exchange of information is not restricted by Articles 1 and 2.

  • 2. Any information received under paragraph 1 by 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, the enforcement or prosecution in respect of, the determination of appeals in relation to taxes, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.

  • 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

    • (a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

    • (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 Contracting State;

    • (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).

  • 4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

  • 5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, trust, foundation, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.”

Article II

  • 1. The Contracting States shall notify each other in writing, through diplomatic channels, of the completion of their respective procedures which are necessary for the entry into force of this Protocol.

  • 2. This Protocol shall enter into force on the date of the later of the notifications referred to in paragraph 1. The provisions of this Protocol shall have effect for taxable periods beginning on or after 1 January of the calendar year next following the year of the entry into force of this Protocol, and, where there is no taxable period, for all charges to tax arising on or after 1 January of the calendar year next following the year of the entry into force of this Protocol.

IN WITNESS WHEREOF, the undersigned, duly authorized thereto by their respective governments, have signed this Protocol.

DONE in duplicate at Montreal on this 8th day of May 2012, in the English and French languages, each version being equally authentic.

Edward Fast
Minister for International Trade
for the Government of Canada
Etienne Schneider
Minister of the Economy and Foreign Trade
for the Government of the Grand Duchy of Luxembourg

PART 3AGREEMENT

Luxembourg, 8 May 2012

Excellency,

I have the honour to refer to the Convention between the Government of the Grand Duchy of Luxembourg and the Government of Canada for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, done at Luxembourg on 10 September 1999, as amended by the Protocol signed today, (hereinafter referred to as the “Convention”) and to propose on behalf of the Government of the Grand Duchy of Luxembourg the following understanding:

  • (1) The competent authority of the requested State shall provide, at the request of the competent authority of the applicant State, information for the purposes referred to in Article 26 of the Convention.

  • (2) The competent authority of the applicant State shall provide the following information to the competent authority of the requested State when making a request for information under the Convention to demonstrate the foreseeable relevance of the information requested to the administration and enforcement of the tax laws of the applicant State:

    • (a) the identity of the person under examination or investigation;

    • (b) a description of the information sought including its nature and the form in which the applicant State wishes to receive the information from the requested State;

    • (c) the tax purpose for which the information is sought;

    • (d) the grounds for believing that the information requested is held in the requested State or is in the possession or control of a person within the jurisdiction of the requested State;

    • (e) to the extent known, the name and address of any person believed to be in possession of the requested information;

    • (f) a statement that the applicant State has pursued all means available in its own territory to obtain the information, except those that would give rise to disproportionate difficulties.

If the foregoing understanding meets with the approval of the Government of Canada, I have the further honour to propose that this Note and your affirmative Note in reply shall constitute an agreement between our Governments which shall become an integral part of the Convention on the date of entry into force of the Protocol.

Please accept, your Excellency, the assurances of my highest consideration.

His Excellency Jean Asselborn
Minister of Foreign Affairs
for the Grand Duchy of Luxembourg

Brussels, 11 May 2012

Note No. 5789

Excellency,

I have the honour to acknowledge the receipt of Your Excellency’s note dated 8 may 2012, which reads as follows:

“Excellency,

I have the honour to refer to the Convention between the Government of the Grand Duchy of Luxembourg and the Government of Canada for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, done at Luxembourg on 10 September 1999, as amended by the Protocol signed today, (hereinafter referred to as the “Convention”) and to propose on behalf of the Government of the Grand Duchy of Luxembourg the following understanding:

  • (1) The competent authority of the requested State shall provide, at the request of the competent authority of the applicant State, information for the purposes referred to in Article 26 of the Convention.

  • (2) The competent authority of the applicant State shall provide the following information to the competent authority of the requested State when making a request for information under the Convention to demonstrate the foreseeable relevance of the information requested to the administration and enforcement of the tax laws of the applicant State:

    • (a) the identity of the person under examination or investigation;

    • (b) a description of the information sought including its nature and the form in which the applicant State wishes to receive the information from the requested State;

    • (c) the tax purpose for which the information is sought;

    • (d) the grounds for believing that the information requested is held in the requested State or is in the possession or control of a person within the jurisdiction of the requested State;

    • (e) to the extent known, the name and address of any person believed to be in possession of the requested information;

    • (f) a statement that the applicant State has pursued all means available in its own territory to obtain the information, except those that would give rise to disproportionate difficulties.

If the foregoing understanding meets with the approval of the Government of Canada, I have the further honour to propose that this Note and your affirmative Note in reply shall constitute an agreement between our Governments which shall become an integral part of the Convention on the date of entry into force of the Protocol.

Please accept, your Excellency, the assurances of my highest consideration.”

I have the further honour to confirm, on behalf of the Government of Canada, that the understanding contained in Your Excellency’s Note is acceptable to the Government of Canada and to confirm that Your Excellency’s Note and this reply shall constitute an agreement between our Governments which shall become an integral part of the Convention on the date of entry into force of the Protocol.

Accept, Your Excellency, the expression of my highest consideration.

Louis de Lorimier
Ambassador of Canada
to the Grand Duchy of Luxembourg

SCHEDULE 6(Sections 12 to 15)

SUPPLEMENTARY CONVENTION

Ottawa, June 28, 2012

Dear Minister,

I have the honour of referring to the Protocol amending the Convention between the Swiss Federal Council and the Government of Canada for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital, done at Berne on 5 May 1997, done at Berne on 22 October 2010 (hereinafter “Amending Protocol”), and of proposing, on behalf of the Swiss Federal Council, the following clarification regarding its interpretation:

Subparagraph (b) of paragraph 2 of the Interpretative Protocol, added to the Convention between the Swiss Federal Council and the Government of Canada for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital, done at Berne on 5 May 1997, (hereinafter “Convention”), by Article XII of the Amending Protocol, sets forth the information that the competent authority of the requesting State shall provide to the competent authority of the requested State when making a request for information under Article 25 of the Convention. Clause (i) of subparagraph (b) of paragraph 2 of the Interpretative Protocol requires that the requesting State provide the name and, to the extent known, other information, such as address, account number or date of birth, in order to identify the person(s) under examination or investigation. Clause (v) of subparagraph (b) of paragraph 2 of the Interpretative Protocol requires that the requesting State provide the name and, to the extent known, the address of any person believed to be in possession of the requested information. Subparagraph (c) of paragraph 2 of the Interpretative Protocol clarifies that, while these are important procedural requirements that are intended to ensure that fishing expeditions do not occur, these requirements nevertheless are to be interpreted in order not to frustrate effective exchange of information.

Therefore, notwithstanding the provisions of clauses (i) and (v) of subparagraph (b) of paragraph 2 of the Interpretative Protocol to the Convention, a requested State shall comply with a request for administrative assistance if the requesting State, in addition to providing the information required by clauses (ii) to (iv) of subparagraph (b) of the above mentioned paragraph:

  • (a) identifies the person under examination or investigation (such identification may be provided by other means than by indicating the name and address of the person concerned); and

  • (b) indicates, to the extent known, the name and address of any person believed to be in possession of the requested information.

If the above proposal is acceptable to the Government of Canada, I further propose that this Letter and your Letter in reply, the English and French versions of each Letter being equally authentic, shall constitute an Agreement between our Governments on the interpretation of Article 25 of the Convention, which shall enter into force on the date of the second note by which the Government of Canada and the Swiss Federal Council notify each other that they have completed their internal measures necessary for entry into force, and shall have effect from the date of entry into force of the Amending Protocol.

Please accept, Dear Minister, the assurances of my highest consideration.

Ulrich Lehner
Ambassador of Switzerland to Canada

Ottawa, 23 July 2012

Excellency,

I have the honour of confirming the receipt of your letter of June 28, 2012, in the English and French languages, reading as follows:

“Dear Minister,

I have the honour of referring to the Protocol amending the Convention between the Swiss Federal Council and the Government of Canada for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital, done at Berne on 5 May 1997, done at Berne on 22 October 2010 (hereinafter “Amending Protocol”), and of proposing, on behalf of the Swiss Federal Council, the following clarification regarding its interpretation:

Subparagraph (b) of paragraph 2 of the Interpretative Protocol, added to the Convention between the Swiss Federal Council and the Government of Canada for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital, done at Berne on 5 May 1997, (hereinafter “Convention”), by Article XII of the Amending Protocol, sets forth the information that the competent authority of the requesting State shall provide to the competent authority of the requested State when making a request for information under Article 25 of the Convention. Clause (i) of subparagraph (b) of paragraph 2 of the Interpretative Protocol requires that the requesting State provide the name and, to the extent known, other information, such as address, account number or date of birth, in order to identify the person(s) under examination or investigation. Clause (v) of subparagraph (b) of paragraph 2 of the Interpretative Protocol requires that the requesting State provide the name and, to the extent known, the address of any person believed to be in possession of the requested information. Subparagraph (c) of paragraph 2 of the Interpretative Protocol clarifies that, while these are important procedural requirements that are intended to ensure that fishing expeditions do not occur, these requirements nevertheless are to be interpreted in order not to frustrate effective exchange of information.

Therefore, notwithstanding the provisions of clauses (i) and (v) of subparagraph (b) of paragraph 2 of the Interpretative Protocol to the Convention, a requested State shall comply with a request for administrative assistance if the requesting State, in addition to providing the information required by clauses (ii) to (iv) of subparagraph (b) of the above mentioned paragraph:

  • (a) identifies the person under examination or investigation (such identification may be provided by other means than by indicating the name and address of the person concerned); and

  • (b) indicates, to the extent known, the name and address of any person believed to be in possession of the requested information.

If the above proposal is acceptable to the Government of Canada, I further propose that this Letter and your Letter in reply, the English and French versions of each Letter being equally authentic, shall constitute an Agreement between our Governments on the interpretation of Article 25 of the Convention, which shall enter into force on the date of the second note by which the Government of Canada and the Swiss Federal Council notify each other that they have completed their internal measures necessary for entry into force, and shall have effect from the date of entry into force of the Amending Protocol.

Please accept, Dear Minister, the assurances of my highest consideration.”

I have the honour of confirming, on behalf of the Government of Canada, that the proposal in the above-mentioned letter is acceptable to the Government of Canada. Therefore, your Letter, together with this reply, the English and French versions of each Letter being equally authentic, shall constitute an Agreement between our Governments, and shall enter into force on the date of the second note by which the Government of Canada and the Swiss Federal Council notify each other that they have completed their internal measures necessary for entry into force, and shall have effect from the date of entry into force of the Amending Protocol.

Accept, Excellency, the renewed assurances of my highest consideration.

John Baird
Minister of Foreign Affairs
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