Limitation of Benefits
(1) Except as otherwise provided in this Article, a person (other than an individual), which is a resident of a Contracting State and which derives income from the other Contracting State shall not be entitled to all the benefits of this Agreement otherwise accorded to residents of a Contracting State if the main purpose or one of the main purposes of the creation or existence of such resident or any person connected with such resident is to obtain the benefits under this Agreement that would not otherwise be available.
(2) Without prejudice to the generality of paragraph (1), the following shall be the circumstances where the main purpose or one of the main purposes for the creation or existence of such resident or any person connected with such resident will be considered to be for the purpose of obtaining the benefit under this Agreement which otherwise would not be available:
- (i) In case of a company, at least 50% of the aggregate vote or value of shares in the company is owned directly or indirectly by one or more individuals who are not residents of either of the Contracting States.
- (ii) In case of a partnership or association of persons, at least 50% or more beneficial interest is owned by one or more persons who are not residents of either of the Contracting States.
- (iii) In case of a charitable institution or a tax exempt entity whose main activities are not carried out in either of the Contracting States.
Furthermore, the person mentioned above will not be entitled to the benefits of the Agreement if more than 50% of the person's gross income for the taxable year is paid or payable to persons who are not residents of either of the Contracting States in the form of payments that are deductible for the computation of taxes in the person's State of residence.
(2) The above-mentioned provisions, however, will not apply if the person actively carries on business in the State of residence (other than the business of making or managing investments for the resident's own account unless these activities are banking or insurance and securities activities carried out by a bank, insurance company and registered securities dealers) and the income derived from the other Contracting State is derived in connection with or is incidental to that business and the resident satisfies the other conditions of this Agreement for obtaining such benefits.
(3) A resident of a Contracting State shall nevertheless be granted the benefits of the Agreement if the competent authority of the other Contracting State determines that the establishment or acquisition or maintenance of such person and the conduct of its operations did not have as one of its principal purposes the obtaining of benefits under this Agreement.