Article 4-7

1.

For the purposes of this Convention, the term ``resident of a Contracting State'' means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, citizenship, place of incorporation, or any other criterion of a similar nature. However, this term does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein. In the case of income derived by a partnership, trust, or estate, residence is determined in accordance with the residence of the person liable to tax with respect to such income.

2.

Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

a)

he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (center of vital interests);

b)

if the State in which he has his center of vital interests cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;

c)

if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a citizen;

d)

if each State considers him as its citizen or if he is a citizen of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3.

Where by reason of the provisions of paragraph 1 a company is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavor to settle the question by mutual agreement, but if the competent authorities are unable to reach such an agreement, the company shall be treated as a resident of neither Contracting State for the purposes of deriving benefits under this Convention.

4.

Where by reason of the provisions of paragraph 1 a person other than an individual or a company is a resident of both Contracting States, the competent authorities of the Contracting States shall settle the question by mutual agreement and determine the mode of application of the Convention to such person.

1.

For the purposes of this Convention, the term ``permanent establishment'' means a fixed place of business through which a resident of a Contracting State, whether or not a legal entity, carries on business activities in the other Contracting State.

2.

The term ``permanent establishment'' includes especially:

a)

a place of management;

b)

a branch;

c)

an office;

d)

a factory;

e)

a workshop; and

f)

a mine, an oil or gas well, a quarry, or any other place of extraction of natural resources.

3.

A building site or construction, installation or assembly project, or an installation or drilling rig or ship used for the exploration or exploitation of natural resources, constitutes a permanent establishment only if it lasts more than 18 months.

4.

Notwithstanding the preceding provisions of this Article, the following kinds of activity of a person who is a resident of one Contracting State will not be treated as carried on in the other Contracting State through a permanent establishment:

a)

the use of facilities solely for the purpose of storage, display, or delivery of goods or merchandise belonging to this person;

b)

the maintenance of a stock of goods or merchandise belonging to this person solely for the purpose of storage, display, or delivery;

c)

the maintenance of a stock of goods or merchandise belonging to this person solely for the purpose of processing by another person;

d)

the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for this person;

e)

the maintenance of a fixed place of business solely for the purpose of carrying on, for this person, any other activity of a preparatory or auxiliary character.

f)

the maintenance of a fixed place of business by this person solely for the purpose of facilitating the conclusion of, or for the mere signing of, contracts in the name of this person concerning loans or the delivery of goods or merchandise or technical services;

g)

the maintenance of a fixed place of business solely for any combination of the activities mentioned in subparagraphs a) to f).

5.

Notwithstanding the provisions of paragraphs 1 and 2, where a person who is a resident of a Contracting State carries on activities in the other Contracting State through an agent, that person shall be deemed to have a permanent establishment in that other State in respect of any activities which the agent undertakes for that person, if the agent meets each of the following conditions:

a)

he has an authority to conclude contracts in that other State in the name of that ;

b)

he habitually exercises that authority;

c)

he is not an agent of an independent status to whom the provisions of paragraph 6 apply; and

d)

his activities are not limited to those mentioned in paragraph 4.

6.

A resident of Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

7.

The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

1.

The business profits of a resident of a Contracting State shall be taxable only in that State unless the resident carries on or has carried on business in the other Contracting State through a permanent establishment situated therein. If the resident carries on or has carried on business as aforesaid, the business profits of the resident may be taxed in the other State but only so much of them as is attributable to the assets or activity of that permanent establishment.

2.

Subject to the provisions of paragraph 3, where a resident of a Contracting State carries on or has carried on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the business profits which it might be expected to make if it were a distinct and independent person carrying on the same or similar activities under the same or similar conditions.

3.

In determining the business profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment. There shall be allowed a reasonable allocation, between a resident of a Contracting State and its permanent establishment situated in the other Contracting State, of properly documented expenses. Such allocable expenses include executive and general administrative expenses, research and development expenses, interest, and charges for management, consultancy, or technical assistance, whether incurred in the State in which the permanent establishment is situated or elsewhere. The business profits attributed to a permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

4.

No business profits shall be attributed to a permanent establishment of a person who is a resident of one Contracting State by reason of the mere purchase by the permanent establishment of goods or merchandise for that person.

5.

For purposes of this Article, the term ``business profits'' includes, for example, profits from manufacturing, mercantile, agricultural, forestry, fishing, transportation, communication, or extractive activities, from the rental of tangible movable property, and from the furnishing of services of another person. It does not include income received by an individual for his performance of personal services (either as an employee or in an independent capacity). Income of an individual from the performance of services as an employee is dealt with in Article 14 (Income from Employment). Income of an individual from the performance of services in an independent capacity is dealt with in Article 13 (Independent Personal Services).

6.

Where business profits include items of income which are dealt with separately in other Articles of the Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

Participate, Directly or Indirectly, in the Management, Control or Capital of Other Persons

1.

Where:

a)

a person which is a resident of a Contracting State participates directly or indirectly in the management, control or capital of a person which is a resident of the other Contracting State; or

b)

the same persons participate directly or indirectly in the management, control or capital of a resident of a Contracting State and any other person; and in either case conditions are made or imposed between the two persons in their commercial or financial relations which differ from those which would be made between independent persons, then any income which would have accrued to one of the persons, but by reason of those conditions has not so accrued, may be included in the income of that person and taxed accordingly.

2.

Where, in accordance with the provisions of paragraph 1, income which has been included by a Contracting State in the income of a person is later also included by the other Contracting State in the income of another person, then the first State shall make a correlative adjustment to the amount of tax charged to the first person on such income. In determining this adjustment, due regard shall be paid to the other provisions of this Convention, and the competent authorities of the Contracting States shall consult each other as necessary.

3.

The provisions of paragraph 1 shall not limit either Contracting State in applying its domestic law to make adjustments to income, deductions, credits, or allowances between persons, whether or not residents of a Contracting State, when necessary to prevent evasion of taxes or clearly to reflect the income of any such persons.

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