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Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

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 2 per cent of the gross amount of the interest.

(3) Notwithstanding the provisions of paragraphs 1 and 2 of this Article, interest paid to a resident of the other Contracting State shall be taxable only in that other Contracting State if the beneficial owner of the interest is the other State itself, a political subdivision, local government, local authority or the Central Bank thereof, Abu Dhabi Investment Authority, Dubai Investment Office, International Petroleum Investment Company, Abu Dhabi Investment Council or any other institution created by the Government, a political subdivision, a local authority or local government of that other State which is recognised as an integral part of the Government, as shall be agreed through exchange of letters between the compete authorities of the Contracting States.

(4) The term "interest" as used in this Article means income form debt-claims of evening kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from govemme securities and income from bonds or debentures, including the premium and prize attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

(5) The provisions of paragraphs 1 and 2 of this Article shall not apply if the benefit 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 person 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 fixed base. In such case the provisions of Article 7 and Article 14, as the case be, shall apply.

(6) Interest shall be deemed to arise in a Contracting State when the payer is Government of that State, a political subdivision, a local authority thereof or resident of that State. Where, however, the person paying the interest, whether he 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 come 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 payments shall remain taxable according to the laws of each Contracting State, due regard being had to the provisions of this Convention.

(8) An entity which is a resident of a Contracting State shall not be entitled to the benefits of this Convention if the main purposes of the creation of such entity was to obtain the benefits of this Convention that would not be otherwise available. The cases of legal entities not having bonfire business activities shall not be covered by this Article.