Article 8-10

1.

Income of a resident of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

2.

Income of a resident of a Contracting State from the following activities shall be taxable only in that State:

a)

income from the rental of ships or aircraft operated in international traffic by the lessee;

b)

income from the rental of ships and aircraft, whether or not operated in international traffic, if such rental activity is incidental to the operation of ships or aircraft in international traffic by the lessor;

c)

income (including demurrage) from the use, or rental for use, of containers in international traffic (including trailers, barges, and related equipment for the transport of containers), and gain from the alienation of such containers and related equipment, if such gain is incidental to the income described in this subparagraph (c); and

d)

gain from the alienation of ships or aircraft operated in international traffic, if such gain is incidental to income from the operation of ships or aircraft in international traffic.

3.

The provisions of paragraphs 1 and 2 shall also apply to income from participation in a pool, a joint business, or an international transportation agency.

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 a Contracting State includes in the profits of an enterprise of that State, and taxes accordingly, profits on which an enterprise of the other Contracting State has been charged to tax in that other State, and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be paid to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.

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.

1.

Dividends that are paid by a company that is a resident of a contracting State and that are beneficially owned by a resident of the other Contracting State may be taxed in that other State.

2.

However, such dividends may also be taxed in the first Contracting State, and according to the laws of that State, but the tax so charged shall not exceed:

a)

5 percent of the gross amount of the dividends, if the beneficial owner is a company that owns at least 10 percent of the voting stock (or, if the company does not have voting stock, at least 10 percent of the authorized capital) and, in the case of Ukraine, nonresidents of Ukraine own at least 20 percent of the voting stock (or if the company does not have voting stock, at least 20 percent of the authorized capital);

b)

15 percent of the gross amount of the dividends in all other cases.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3.

The term ``dividends'' as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. The term ``dividends'' also includes income from arrangements, including debt obligations, carrying the right to participate in profits, to the extent so characterized under the law of the Contracting State in which the income arises. In the case of Ukraine, this term includes income transmitted abroad to the foreign participants of a joint venture created under the laws of Ukraine.

4.

The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on or has carried on business in the other Contracting State, of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs or has performed in that other State independent personal services from a fixed base situated therein, and the dividends are attributable to such permanent establishment or fixed base. In such case the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply.

5.

A company that is a resident of a Contracting State and that has a permanent establishment in the other Contracting State or that is subject to tax on a net basis in that other State under Article 6 (Income from Real Property) or paragraphs 1. or 2 of Article 13 (Gains from the Alienation of Property) may be subject in that other State to a tax in addition to the tax on profits. Such tax, however, may not exceed 5 percent of the portion of the profits after deducting the taxes imposed on profits imposed thereon in that other State and after adjustment for increases or decreases in the assets of the company subject to tax in the other Contracting State that represents the ``dividend equivalent amount'' of such profits.

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