1. Taxation on Business ProfitsWhere an enterprise of one of the two countries has in the other country a permanent establishment (such as a branch, including the furnishing of services by an enterprise through personnel over a certain period of time) 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||5% (holding for 183 days at least 10% of: |
where paid by a company of Japan, voting power;
where paid by a company of Uruguay, capital)
|Interest||Exempted (received by the Governments, paid and received between financial institutions etc.) |