[Provisional translation]
1．Taxation on Profits from Business Activities
Where an enterprise of one of the two countries has in the other country a permanent establishment (such as a branch) through which the enterprise carries on business, only the profits attributable to the permanent establishment may be taxed in that other country. The Convention introduces provisions concerning taxation on business profits attributable to a permanent establishment, under which business profits are calculated by recognizing internal dealings between its head office and branches and by applying arm’s length principle.
2．Taxation on Investment Income in the Source Country
As for investment income (dividends, interest and royalties), taxation in the source country is limited to the maximum rates or exempted as follows:
| Dividends | Interest | Royalties |
|---|---|---|
| 5％ | Exemption (received by Governments, etc.) 5％（others） |
5％ |
3. The Provision for Prevention of Abuse of the Convention
In order to prevent tax treaty abuse, a benefit under the Convention shall not be granted if it is reasonable to conclude that obtaining that benefit was one of the principal purposes of any transaction.
4. Dispute Resolution between the Tax Authorities
Taxation not in accordance with the provisions of the Convention may be resolved by mutual agreement between the tax authorities of the two countries. Where the issue has not been resolved by the consultation between the tax authorities of the two countries within two years, the unresolved issue shall be submitted to arbitration and resolved by the decision of an arbitration panel composed of third parties.
5. Exchange of Information and Assistance in the Collection of Taxes
In order to prevent international tax evasion and tax avoidance effectively, the exchange of information concerning tax matters and the mutual assistance in the collection of tax claims between the two countries are introduced.