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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.



(1) Interest paid by a resident of the Republic of Iraq to a resident of the United Arab Republic may be taxed in the Republic of Iraq, and the tax so charged shall not exceed 10 percent of the national security tax.

(2) Interest paid by a resident of the United Arab Republic to a resident of the Republic of Iraq may be taxed in the United Arab Republic. Such Interest shall only be subject to the tax on income derived from movable property, the defence tax, the national security tax and the supplementary taxes. If such tax is paid to a person, it shall be exempted from general income tax.

(3) Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a local authority or a resident of that State.

(4) The term "interest", as used in this Article includes income from debt-claims of every kind, whether or not secured by mortgage under the tax laws of the State where such income arises and whether or not carrying a right to participate in debtors profits, and in particular, income from Government securities and income from bonds or debentures.

(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, owns a permanent establishment in the other Contracting State in which the interest arises and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, Article 6 of this Convention shall apply.

(6) Where, by reason of a special relationship, either between the payer and the beneficial owner of the interest or between both of them and some other person, the amount of 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 special 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.