PROTOCOL

At the moment of signature of the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital concluded this day between the Czech Republic and the Republic of Venezuela, the undersigned have agreed upon the following additional provisions, which form an integral part of the Convention:

Ad Article 4:

It is understood that if Venezuela changes its present territorial tax system to a worldwide system of taxation paragraph (1) of Article 4 will be replaced as follows:

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 his domicile, residence, place of management or any other criterion of a similar nature and also includes that State and any political or administrative subdivisions or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.

Ad Article 7:

In the case of Venezuela the provision of paragraph (3) would only be applied if Venezuela changes its territorial tax system to a worldwide system of taxation. Meanwhile, for the purposes of the determination of the taxable profit of a permanent establishment, interest, royalties and other disbursements may be deducted in the same terms and conditions as if they had been incurred by a resident enterprise.

Ad Article 23:

Notwithstanding paragraph (2) of Article 23, in case Venezuela adopts a worldwide basis of taxation, double taxation shall be eliminated as follows:

• (a) Where a resident of Venezuela derives income which, in accordance with the provisions of this Convention, may be taxed in the Czech Republic, Venezuela shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in the Czech Republic such deduction shall not, however exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in the Czech Republic; and
• (b) Where in accordance with any provision of the Convention, income derived by a resident of Venezuela is exempt from tax in this State, Venezuela may nevertheless, in calculating the amount of tax on the remaining income of such resident take into account the exempted income.

Ad Article 24:

Except where the provisions of Article 9, paragraph (7) of Article 11, or paragraph (6) of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. In the case of Venezuela, this provision would only be applied if Venezuela changes its territorial tax system to a worldwide system of taxation.

IN WITNESS WHEREOF, the undersigned duly authorised thereto, have signed this Protocol.

DONE in duplicate at Prague this twenty-sixth day of April 1996 in the Czech, Spanish and English languages, all texts being equally authentic. In case there is any divergency of interpretation between the Czech and the Spanish text the English text shall prevail.

FOR THE CZECH REPUBLIC:

IVAN KOCARNIK  

FOR THE REPUBLIC OF VENEZUELA:

MIGUEL ANGEL BURELLI RIVAS