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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 12

Royalties

(1) Royalties arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable in that other State.

(2) However, such royalties shall also be taxable in the Contracting State in which they arise and according to the law of that State, but if the beneficial owner is a resident of the other Contracting State the tax so charged shall not exceed ten percent (10 percent) of the gross amount.

(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 in literary, artistic or scientific work, including cinematographic films, or films, tapes and other means of image or sound reproduction; for the use of, or the right to use, any patent, trademark, design or model, plan, secret formula or process, computer software copyright; for or the use of, or the right to use, information concerning industrial, commercial or scientific experience.

(4) The provisions of paragraphs (1) and (2) of this Article 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 in that other State, and the right or property in respect of which the royalties are paid is effectively connected with such a permanent establishment. In such a 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 if the payer is that State itself, one of its local authorities or a resident of that State. However, where the person paying the royalties, whether he is a resident of a Contracting State or not, has in the Contracting States 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 Contracting State in which the permanent establishment or fixed base is situated.

(6) Where, by reason of a special relationship, either between the payer and the beneficial owner or between both of them and some other person, the amount of royalties, having regard to the service 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 similar 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.