1. Taxation on Business Profits
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 profits attributable to a permanent establishment will be calculated by comprehensively recognizing internal dealings between its head office and branches and by strictly applying the arm’s length principle.
2. Taxation on Investment Income
Taxation on investment income (dividends, interest and royalties) in the source country will be subjected to the maximum rates or exempted as follows:
|Dividends|| Exempted（holding at least 25％ of voting power for 365 days）|
|Interest|| Exempted（received by the Governments, etc.）|
3. Prevention of Abuse of the Agreement
In order to prevent abuse of benefits under this Agreement, in principle, qualified persons who satisfy specified conditions may exclusively be entitled to the exemption from tax on dividends. In addition, any benefit under this Agreement will not be granted if it is reasonable to conclude that obtaining such a benefit was one of the principal purposes of any transaction, or if the income is attributable to a permanent establishment in a third country and does not satisfy specified conditions.
4. Mutual Agreement Procedure
Taxation not in accordance with the provisions of this Agreement may be resolved by mutual agreement between the tax authorities of the two countries.
5. Exchange of Information and Assistance in the Collection of Tax Claims
In order to effectively prevent international tax evasion and tax avoidance, the exchange of information concerning tax matters and the mutual assistance in the collection of tax claims between the two countries are introduced.