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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 11

Interest

(1) Interest 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 interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed ten percent of the gross amount of the interest. The competent authorities of the Contracting States shall settle the mode of application of this limitation by mutual agreement.

(3) Notwithstanding the provisions of paragraph (2) of this Article, interests arising in a Contracting State shall be exempt from tax in that Contracting State if the beneficial owner of the interest is any one of those referred to in paragraph (2) of Article 4, or if the debt-claims of a resident of the other Contracting State are secured, insured or financed directly or indirectly by a financial institution that is wholly owned by the government of the first-mentioned Contracting State or by any one of its local authorities.

(4) The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage 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, including premiums and prizes attached to such securities, bonds or debentures and also includes income subjected to the same taxation treatment as income from debt-claims under the tax laws of the Contracting State in which the income arises.

(5) The provisions of paragraphs (1) and (2) of this Article, shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on industrial or commercial activities in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid, is effectively connected to such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

(6) Interest shall be deemed to arise in a Contracting State when the person paying the interest is a resident of that Contracting State. However, where the individual paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State, a permanent establishment or fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

(7) 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.