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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 may be taxed in that other State.

(2)  However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State by way of withholding at the source, provided that the tax so charged does not exceed sixteen percent of the gross amount of the royalties.

(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 work, including cinematographic films and films, tapes or other recordings used for television transmissions; for the use of or the right to use any patent, trademark, design or model, plan, secret formula or process; for the use of, or the right to use any industrial, commercial or scientific equipment; or for information concerning industrial, commercial or scientific experience.

(4) The provisions of paragraphs (1) and (2) 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 therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14 of this Convention, 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 administrative and political subdivisions or local authorities, or a resident of that State. Where, however, the person paying the royalties, whether he is resident of a Contracting State or not, has in a Contracting State 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 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 the royalties, having regard to the use, right of use, or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner of the royalties 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. Where there is a disagreement between the two States in this regard, then the dispute shall be settled in accordance with the procedure provided by the provisions of Article 25 of this Convention.