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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 in accordance with its domestic laws.

(2) However, such royalties may be taxed in the Contracting State in which they arise and according to the laws of that State provided that the tax so charged shall not exceed 18 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, artistic or scientific work, including films and tapes used for radio and television broadcasting; 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, industrial, commercial, or scientific equipment; or for information relating to 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 industrial or commercial activities 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 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 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.