Vietnam
Whereas the annexed Agreement between the
Government of the Republic of India and the Government of the Socialist
Republic of Vietnam for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income has come into force on the 2nd
day of February, 1995 after the notification by both the Contracting States to
each other of the Completion of the procedures required under their laws for
bringing into force of the said Agreement in accordance with Article 29 of the
said Agreement;
Now, therefore, in exercise of the powers
conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central
Government hereby directs that all the provisions of the said Agreement shall
be given effect to in the Union of India.
ANNEXURE
AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND
THE SOCIALIST REPUBLIC OF VIETNAM FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The Government of the Republic of India and
the Government of the Socialist Republic of Vietnam, desiring to conclude an
Agreement for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income, have agreed as follows:
Article 1: PERSONAL SCOPE
This Agreement shall apply to persons who are
residents of one or both of the Contracting States.
Article 2: TAXES COVERED
1.
This Agreement shall apply to taxes on income imposed
on behalf of a Contracting State or of its political subdivisions or local
authorities, irrespective of the manner in which they are levied.
2.
There shall be regarded as taxes on income all taxes
imposed on total income or on elements of income, including taxes on gains from
the alienation of movable or immovable property, taxes on the total amounts of
wages or salaries paid by enterprises.
3. The
existing taxes to which the Agreement shall apply are: a. in India:
the income-tax including any surcharge
thereon;
(hereinafter referred to as "Indian
tax");
b. in Vietnam:
i.
the personal income-tax;
ii.
the profit tax; and iii. the profit remittance tax;
(hereinafter referred to as "Vietnamese
tax").
4.
The Agreement shall also apply to any identical or
substantially similar taxes which are imposed after the date of signature of
this Agreement in addition to, or in place of, the existing taxes. The
competent authorities of the Contracting States shall notify each other of
substantial changes which have been made in their respective taxation laws.
Article 3: GENERAL DEFINITIONS
1.
In this Agreement, unless the context otherwise
requires:
a.
the term "India" means the territory of India
and includes the territorial sea and airspace above it, as well as any other
maritime zone in which India has sovereign rights, other rights and
jurisdictions, according to the Indian law and in accordance with international
law or the U.N. Convention on the Law of the Sea;
b.
the term "Vietnam" means the Socialist
Republic of Vietnam; when used in a geographical sense, it means all its
national territory, including its territorial sea and any area beyond and
adjacent to its territorial sea, within which Vietnam, by Vietnamese
legislation and in accordance with international law, has sovereign rights of
exploration for and exploitation of natural resources of the sea bed and its
sub-soil and superjacent watermass;
c.
the terms "a Contracting State" and "the
other Contracting State" mean India or Vietnam as the context requires;
d.
the term "company" means any body corporate
or any entity which is treated as a company or body corporate under the
taxation law in force in the respective Contracting States;
e.
the term "competent authority" means:
i.
in the case of India, the Central Government in
the Ministry of Finance (Department of Revenue) or their authorized
representative; and
ii.
in the case of Vietnam, the Minister of Finance
or his authorized representative;
f.
the terms "enterprise of a Contracting State"
and "enterprise of the other Contracting State" mean respectively an
enterprise carried on by a resident of a Contracting State and an enterprise
carried on by a resident of the other Contracting State;
g.
the term "fiscal year" means:
i.
in the case of India, "previous year"
as defined under section 3 of the Income-tax Act, 1961; and
ii.
in the case of Vietnam, the accounting year
comprising of a twelve-month period;
h.
the term "international traffic" means any transport
by a ship or aircraft operated by an enterprise of a Contracting State, except
when the ship or aircraft is operated solely between places in the other
Contracting State;
i.
the term "national" means any individual,
possessing the nationality of a Contracting State and any legal person,
partnership or association deriving its status from the laws in force in the
Contracting State;
j.
the term "person" includes an individual, a
company, a body of persons and any other entity which is treated as a taxable
unit under the taxation laws in force in the respective Contracting States;
k.
the term "tax" means Indian tax or Vietnamese
tax, as the context requires, but shall not include any amount which is payable
in respect of any default or omission in relation to the taxes to which this
Agreement applies or which represents a penalty imposed relating to those
taxes.
2.
As regards the application of the Agreement by a
Contracting State, any term not defined therein shall, unless the context
otherwise requires, have the meaning which it has under the law of that State
concerning the taxes to which the Agreement applies.
Article 4: RESIDENT
1.
For the purposes of this Agreement, 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, place of management, place of registration or any other criterion of
a similar nature.
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 (centre of
vital interests);
b.
if the State in which he has his centre of vital
interests cannot be determined, or if he has no 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 national;
d.
if he is a national of both States or 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
person other than an individual is a resident of both Contracting States, then
it shall be deemed to be a resident of the State in which its place of
effective management is situated.
Article 5: PERMANENT ESTABLISHMENT
1.
For the purposes of this Agreement, the term
"permanent establishment" means a fixed place of business through
which the business of the enterprise is wholly or partly carried on.
2.
The term "permanent establishment" includes
especially:
a.
a place of management;
b.
a branch;
c.
an office;
d.
a factory;
e.
a workshop;
f.
a mine, an oil or gas well, a quarry or any other place
of extraction of natural resources;
g.
a warehouse, in relation to a person providing storage
facilities for others; and
h.
a building site or construction or assembly project or
supervisory activities in connection therewith; but only where such site,
project or activity continues for a period of more than six months.
3.
Notwithstanding the preceding provisions of this
Article, the term "permanent establishment" shall be deemed not to
include:
a.
the use of facilities solely for the purpose of
storage, display or occasional delivery of goods or merchandise belonging to
the enterprise;
b.
the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage, display or
occasional delivery;
c.
the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of processing by another
enterprise; (d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise or of collecting information for the
enterprise;
d.
the maintenance of a fixed place of business solely for
the purpose of carrying on, for the enterprise, any other activity of a
preparatory or auxiliary character.
4.
Notwithstanding the provisions of paragraphs 1 and 2,
where a person---other than an agent of an independent status to whom paragraph
5 applies---is acting in a Contracting State on behalf of an enterprise of the
other Contracting State, that enterprise shall be deemed to have a permanent
establishment in the first-mentioned Contracting State in respect of any
activities which that person undertakes for the enterprise, if such a person:
a.
has and habitually exercises in that State an authority
to conclude contracts in the name of the enterprise, unless the activities of
such person are limited to those mentioned in paragraph 3 which, if exercised
through a fixed place of business, would not make this fixed place of business
a permanent establishment under the provisions of that paragraph; or
b.
has no such authority, but habitually maintains in the first-mentioned
State a stock of goods or merchandise from which he regularly delivers goods or
merchandise on behalf of the enterprise.
5.
An enterprise of a Contracting State shall not be
deemed to have a permanent establishment in the other Contracting State merely
because it carries on business in that 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. However, when
the activities of such an agent are devoted wholly or almost wholly on behalf
of that enterprise, he will not be considered an agent of an independent status
within the meaning of this paragraph.
6.
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.
Article 6: INCOME FROM IMMOVABLE PROPERTY
1.
Income derived by a resident of a Contracting State
from immovable property (including income from agriculture or forestry)
situated in the other Contracting State may be taxed in that other State.
2.
The term "immovable property" shall have the
meaning which it has under the law of the Contracting State in which the
property in question is situated. The term shall in any case include property
accessory to immovable property, livestock and equipment used in agriculture
and forestry, rights to which the provisions of general law respecting landed
property apply, usufruct
of immovable property and rights to variable
or fixed payments as consideration for the working of, or the right to work,
mineral deposits, sources and other natural resources. Ships, boats and
aircraft shall not be regarded as immovable property.
3.
The provisions of paragraph 1 shall also apply to
income derived from the direct use, letting, or use in any other form of
immovable property.
4.
The provisions of paragraphs 1 and 3 shall also apply
to the income from immovable property of an enterprise and to income from
immovable property used for the performance of independent services.
Article 7: BUSINESS PROFITS
1.
The profits of an enterprise of a Contracting State
shall be taxable only in that State unless the enterprise carries on business
in the other Contracting State through a permanent establishment situated
therein. If the enterprise carries on business as aforesaid, the profits of the
enterprise may also be taxed in the other State but only so much of them as is
attributable directly or indirectly to that permanent establishment.
The words "directly or indirectly"
mean, for the purposes of this Article, that where a permanent establishment
takes an active part in negotiating, concluding or fulfilling contracts entered
into by the enterprise, then notwithstanding that other parts of the enterprise
have also participated in those transactions, there shall be attributed to the
permanent establishment that proportion of profits of the enterprise arising
out of those contracts as the contribution of the permanent establishment to
those transactions bears to that of the enterprise as a whole.
2.
Subject to the provisions of paragraph 3, where an
enterprise of a Contracting State carries 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 profits
which it might be expected to make if it were a distinct and separate
enterprise engaged in the same or similar activities under the same or similar
conditions and dealing wholly independently with the enterprise of which it is
a permanent establishment.
3.
In determining the profits of a permanent
establishment, there shall be allowed as deductions expenses which are incurred
for the purposes of the business of the permanent establishment, including
executive and general administrative expenses so incurred, whether in the State
in which the permanent establishment is situated or elsewhere in accordance
with the provisions of and subject to the limitations of the tax laws of that
State.
4.
Nothing in this Article shall affect the application of
any law of a Contracting State relating to the determination of the tax
liability of a person in cases where information is not available to the
competent authority of that State in order to determine the profits to be
attributed to a permanent establishment, provided that law shall be applied
consistently with the principles of this Article.
5.
Insofar as it has been customary in a Contracting State
to determine the profits to be attributed to a permanent establishment on the
basis of an apportionment of the total profits of the enterprise to its various
parts, nothing in paragraph 2 shall preclude that Contracting State from
determining the profits to be taxed by such an apportionment as may be
customary. The method of apportionment adopted shall, however, be such that the
result shall be in accordance with the principles contained in this Article.
6.
No profits shall be attributed to a permanent
establishment by reason of the mere purchase by that permanent establishment of
goods or merchandise for the enterprise.
7.
For the purposes of the preceding paragraphs, the
profits to be attributed to the permanent establishment shall be determined by
the same method year by year unless there is good and sufficient reason to the
contrary.
8.
Where profits include items of income which are dealt
with separately in other Articles of this Agreement, then the provisions of
those Articles shall not be affected by the provisions of this Article.
Article 8: SHIPPING AND AIR TRANSPORT
1.
Profits derived by an enterprise of a Contracting State
from the operation of ships or aircraft in inter-national traffic shall be
taxable only in that State.
2.
For the purposes of this Article, profits from the
operation of ships or aircraft in international traffic include:
a.
income from the lease of ships or aircraft; and
b.
profits from the use, maintenance or rental of
containers (including trailers and related equipment for the transport of
containers).
Where such lease or such use, maintenance or
rental, as the case may be, is incidental to the operation of ships or aircraft
in international traffic.
3.
The provisions of paragraph 1 shall also apply to
profits from the participation in a pool, a joint business or an international
operating agency.
4.
For the purposes of this Article, interest on funds
connected with the operation of ships or aircraft in international traffic
earmarked for the purpose of payments of all kinds of wages and maintenance of
ships or aircraft and their crew shall be regarded as income or profits derived
from the operation of such ships or aircraft and the provisions of Article 11
shall not apply in relation to such interest.
Article 9: ASSOCIATED ENTERPRISES
Where---
a.
an enterprise of a Contracting State participates
directly or indirectly in the management, control or capital of an enterprise
of the other Contracting State, or
b.
the same persons participate directly or indirectly in
the management, control or capital of an enterprise of a Contracting State and
an enterprise of the other Contracting State,
and in either case conditions are made or
imposed between the two enterprises in their commercial or financial relations
which differ from those which would be made between independent enterprises,
then any profits which would, but for those conditions, have accrued to one of
the enterprises, but, by the reason of those conditions, have not so accrued,
may be included in the profits of that enterprise and taxed accordingly.
Article 10: DIVIDENDS
1.
Dividends paid by a company which is a resident of a
Contracting State to a resident of the other Contracting State may be taxed in
that other State.
2.
However, such dividends may also be taxed in the
Contracting State of which the company paying the dividends is a resident and
according to the laws of that State, but if the recipient is the beneficial
owner of the dividends, the tax so charged shall not exceed 10 per cent of the
gross amount of the dividends. 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.
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 business in the Other Contracting State of which the company paying
the dividends is a resident through a permanent establishment situated therein,
or performs in that other State independent personal services from a fixed base
situated therein, and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment or fixed base. In such
case, the provisions of Article 7 or Article 15, as the case may be, shall
apply.
5.
Where a company which is a resident of a Contracting
State derives profits or income from the other Contracting State, that other
State may not impose any tax on the dividends paid by the company, except
insofar as such dividends are paid to a resident of that other Contracting
State or insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated
in that other State, nor subject the company's undistributed profits to a tax
on the company's undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in
such other State.
Article 11: INTEREST
1.
Interest arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other State.
2.
However, such interest may also be taxed in the
Contracting State in which it arises and according to the laws of that State,
but if the recipient is the beneficial owner of such interest the tax so
charged shall not exceed 10 per cent of the gross amount of the interest.
3.
Notwithstanding the provisions of paragraph 2,----
a.
interest arising in a Contracting State shall be exempt
from tax in that State provided it is derived and beneficially owned by:
i.
the Government, a political sub-division or a
local authority of the other Contracting State; or
ii.
the Central Bank of the other Contracting State;
b.
interest arising in a Contracting State shall be exempt
from tax in that Contracting State to the extent approved by the Government of
that State if it is derived and beneficially owned by any person [other than a
person referred to in sub-paragraph (a)] who is a resident of the other
Contracting State provided that the transaction giving rise to the debt-claim
has been approved in this regard by the Government of the first-mentioned
Contracting State.
4.
The term "interest" as used in this Article
means income from debt-claims of every kind, whether or not secured by mortgage
and whether or not carrying a right to participate in the debtor's profits, and
in particular, income from Government securities and income from bonds or
debentures, including premiums and prizes attaching to such securities, bonds
or debentures. Penalty charges for late payment shall not be regarded as
interest for the purpose of this Article.
5.
The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the interest, being a resident of a Contracting State,
carries on business in the other Contracting State in which the interest
arises, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein
and the debt-claim in respect of which the interest is paid is effectively
connected with such permanent establishment or fixed base. In such case, the
provisions of Article 7 or Article 15, as the case may be, shall apply.
6.
Interest shall be deemed to arise in a Contracting
State when the payer is that Contracting State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
7.
Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some other person,
the amount of the interest, having regard to the debt-claim for which it is
paid, exceeds the amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the provisions of this
Article shall apply only to the last-mentioned amount. In such case, the excess
part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Agreement.
Article 12: ROYALTIES
1.
Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other State.
2.
However, such royalties may also be taxed in the
Contracting State in which they arise and according to the laws of that State,
but if the recipient is the beneficial owner of the royalties, the tax so
charged shall not exceed 10 per cent of the gross amount of the royalties.
3.
The term " royalties " as used in this
Article means payments of any kind received as a consideration for the use of,
or the right to use, any copyright of literary, artistic or scientific work
including cinematograph films, or films or tapes used for radio or television
broadcasting, any patent, trade mark, design or model, plan, secret formula or
process, or for the use of, or the right to use, industrial, commercial or
scientific equipment, or for information concerning industrial, commercial or
scientific experience.
4.
The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the royalties, being a resident of a Contracting State,
carries on business in the other Contracting State in which the royalties
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the right or property in respect of which the royalties are paid is
effectively connected with such permanent establishment or fixed base. In such
case, the provisions of Article 7 or Article 15, as the case may be, shall
apply.
5.
Royalties shall be deemed to arise in a Contracting
State when the payer is that State itself, a political sub-division, a local
authority or a resident of that State. Where, however, the person paying the
royalties, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in connection with
which the liability to pay the royalties was incurred, and such royalties are
borne by such permanent establishment or fixed base, then such royalties shall
be deemed to arise in the State in which the permanent establishment or fixed
base is situated.
6.
Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some other person,
the amount of the royalties, having regard to the use, right or information for
which they are paid, exceeds the amount which would have been agreed upon by
the payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In
such case, the excess part of the payments shall remain taxable according to
the laws of each Contracting State, due regard being had to the other
provisions of this Agreement.
Article 13: TECHNICAL FEES
1.
Technical fees arising in a Contracting State which are
derived by a resident of the other Contracting State may be taxed in that other
State.
2.
However, such technical fees may also be taxed in the
Contracting State in which they arise, and according to the laws of that State;
but if the recipient is the beneficial owner of the technical fees, the tax so
charged shall not exceed 10 per cent of the gross amount of the technical fees.
3.
The term "technical fees" as used in this
Article means payments of any kind to any person, other than to an employee of
the person making the payments, in consideration for any services of a
technical, managerial or consultancy nature.
4.
The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the technical fees, being a resident of a Contracting
State carries on business in the other Contracting State in which the technical
fees arise through a permanent establishment situated therein, or performs in
that other State independent personal services, and the technical fees are
effectively connected with such permanent establishment or such services. In
such case, the provisions of Article 7 or Article 15, as the case may be, shall
apply.
5.
Technical fees shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a statutory body thereof, or a resident of
that State. Where, however, the person paying the technical fees, whether he is
a resident of a Contracting State or not, has in a Contracting State a
permanent establishment in connection with which the obligation to pay the
technical fees was incurred, and such technical fees are borne by that
permanent establishment, then such technical fees shall be deemed to arise in
the Contracting State in which the permanent establishment is situated.
6.
Where, by reason of a special relationship between the
payer and the recipient or between both of them and some other person, the
amount of the technical fees paid, exceeds for whatever reason, the amount
which would have been agreed upon by the payer and the beneficial owner in the
absence of such relationship, the provisions of this Article shall apply only
to the lastmentioned amount. In such case, the excess part of the payments shall
remain taxable according to the law of each Contracting State due regard being
had to the other provisions of this Agreement.
Article 14: CAPITAL GAINS
1.
Gains derived by a resident of a Contracting State from
the alienation of immovable property, referred to in Article 6, and situated in
the other Contracting State may be taxed in that other State.
2.
Gains from the alienation of movable property forming
part of the business property of a permanent establishment which an enterprise
of a Contracting State has in the other Contracting State or of movable
property pertaining to a fixed base available to a resident of a Contracting
State in the other Contracting State for the purpose of performing independent
personal services, including such gains from the alienation of such a permanent
establishment (alone or together with the whole enterprise) or of such fixed
base, may be taxed in that other State.
3.
Gains from the alienation of ships or aircraft operated
in international traffic or movable property pertaining to the operation of
such ships or aircraft shall be taxable only in the Contracting State of which
the alienator is a resident.
4.
Gains from the alienation of share of the capital stock
of a company the property of which consists directly or indirectly principally
of immovable property situated in a Contracting State may be taxed in that
State.
5.
Gains from the alienation of shares other than those
mentioned in paragraph 4 in a company which is a resident of a Contracting
State may be taxed in that State.
6.
Gains from the alienation of any property other than
that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the
Contracting State of which the alienator is a resident.
Article 15: INDEPENDENT PERSONAL SERVICES
1.
Income derived by a resident of a Contracting State in
respect of professional services or other independent activities of a similar
character shall be taxable only in that State except in the following
circumstances when such income may also be taxed in the other Contracting
State:
a.
if he has a fixed base regularly available to him in
the other Contracting State for the purpose of performing this activities; in
that case, only so much of the income as is attributable to that fixed base may
be taxed in that other Contracting State; or
b.
if his stay in the other Contracting State is for a
period or periods amounting to or exceeding in the aggregate 183 days in the
relevant fiscal year concerned; in that case, only so much of the income as is
derived from his activities performed in that other State may be taxed in that
other State.
2.
The term "professional services" includes
independent scientific, literary, artistic, educational or teaching activities,
as well as the independent activities of physicians, surgeons, lawyers,
engineers, architects, dentists and accountants.
Article 16: DEPENDENT PERSONAL SERVICES
1.
Subject to the provisions of Articles 17, 18, 19, 20,
21 and 22, salaries, wages and other similar remuneration derived by a resident
of a Contracting State in respect of an employment shall be taxable only in
that State unless the employment is exercised in the other Contracting State.
If the employment is so exercised, such remuneration as is derived therefrom
may be taxed in that other State.
2.
Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in
the first-mentioned State if:
a.
the recipient is present in the other State for a
period or periods not exceeding in the aggregate 183 days in the relevant
fiscal year; and
b.
the remuneration is paid by, or on behalf of, an
employer who is not a resident of the other State; and
c.
the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the other State.
3.
Notwithstanding the preceding provisions of this
Article, remuneration derived in respect of an employment exercised aboard a
ship or aircraft operated in international traffic by an enterprise of a
Contracting State shall be taxable only in that State.
Article 17: DIRECTORS' FEES
Directors' fees and similar payments derived
by a resident of a Contracting State in his capacity as a member of the Board
of Directors of a company which is a resident of the other Contracting State
may be taxed in that other State.
Article 18: INCOME EARNED BY ENTERTAINERS AND
ATHLETES
1.
Notwithstanding the provisions of Articles 15 and 16,
income derived by a resident of a Contracting State as an entertainer such as a
theatre, motion picture, radio or television artists, or
a musician, or as an athlete, from his
personal activities as such exercised in the other Contracting State may be
taxed in that other State.
2.
While income in respect of personal activities
exercised by an entertainer or an athlete in his capacity as such accrues not
to the entertainer or athlete himself but to another person, that income may,
notwithstanding the provisions of Articles 7, 15 and 16, be taxed in the
Contracting State in which the activities of the entertainer or athlete are
exercised.
3.
Notwithstanding the provisions of paragraph 1, income
derived by an entertainer or an athlete who is a resident of a Contracting
State from his personal activities as such exercised in the other Contracting
State, shall be taxable only in the first-mentioned Contracting State, if the
activities in the other Contracting State are supported wholly or substantially
from the public funds of the firstmentioned Contracting State, including any of
its political sub-divisions or local authorities.
4.
Notwithstanding the provisions of paragraph 2 and
Articles 7, 15 and 16, where income in respect of personal activities exercised
by an entertainer or an athlete in his capacity as such in a Contracting State
accrues not to the entertainer or athlete himself but to another person, that
income shall be taxable only in the other Contracting State, if that other
person is supported wholly or substantially from the public funds of the other
State, including any of its political subdivisions or local authorities.
Article 19: REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE
1.
a.
Remuneration, other than a pension, paid by a
Contracting State or a political sub-division or a local authority thereof to
an individual in respect of services rendered to that State or subdivision or
authority shall be taxable only in that State.
b.
However, such remuneration shall be taxable only in the
other Contracting State if the services are rendered in that other State and
the individual is a resident of that State who: i. is a national of that State; or ii. did not become a resident of
that State solely for the purpose of rendering the services.
2.
a.
Any pension paid by, or out of funds created by a
Contracting State or a political sub-division or a local authority thereof to
an individual in respect of services rendered to that State or sub-division or
authority shall be taxable only in that State.
b.
However, such pension shall be taxable only in the
other Contracting State if the individual is a resident of, and a national of
that other State.
3.
The provisions of Articles 16, 17 and 20 shall apply to
remuneration and pensions in respect of services rendered in connection with a
business carried on by a Contracting State or a political sub-division or a
local authority thereof.
Article 20: NON-GOVERNMENT PENSIONS AND
ANNUITIES
1.
Any pension, other than a pension referred to in
Article 19, or any annuity derived by a resident of a Contracting State from
sources within the other Contracting State shall be taxed only in the
firstmentioned Contracting State.
2.
The term "pension" means a periodic payment
made in consideration of past services or by way of compensation for injuries received
in the course of performance of services.
3.
The term "annuity" means a stated sum payable
periodically at stated times during life or during a specified or ascertainable
period of time, under an obligation to make the payments in return for adequate
and full consideration in money's worth.
Article 21: PAYMENTS RECEIVED BY STUDENTS AND
APPRENTICES
1.
A student or business apprentice who is or was a
resident of one of the Contracting States immediately before visiting the other
Contracting State and who is present in that other State solely for the purpose
of his education or training, shall be exempt from tax in that other State on:
a.
payments made to him by persons residing outside that
other State for the purposes of his maintenance, education or training; and
b.
remuneration from employment in that other State, in an
amount not exceeding US $ 2,000 or its equivalent in respective currencies
during any fiscal year, as the case may be, provided that such employment is
directly related to his studies or is undertaken for the purpose of his
maintenance.
2.
The benefits of this Article shall extend only for such
period of time as may be reasonable or customarily required to complete the
education or training undertaken, but in no event shall any individual have the
benefits of this Article for more than five consecutive years from the date of
his first arrival in that other Contracting State.
Article 22: PAYMENTS RECEIVED BY PROFESSORS,
TEACHERS AND RESEARCH SCHOLARS
1.
A professor or teacher who is or was a resident of one
of the Contracting States immediately before visiting the other Contracting
State for the purpose of teaching or engaging in research, or both, at a
university, college, school or other approved institution in that other
Contracting State shall be exempt from tax in that other State on any
remuneration for such teaching or research for a period not exceeding two years
from the date of his arrival in that other State.
2.
This Article shall not apply to income from research if
such research is undertaken primarily for the private benefit of a specific
person or persons.
3.
For the purposes of paragraph 1, "approved
institution" means an institution which has been approved in this regard
by the competent authority of the concerned Contracting State.
Article 23: OTHER INCOME
1.
Subject to the provisions of paragraph 2, items of
income of a resident of a Contracting State, wherever arising, which are not
expressly dealt with in the foregoing Articles of this Agreement, shall be
taxable only in that Contracting State.
2.
The provisions of paragraph 1 shall not apply to the
income, other than income from immovable property as defined in paragraph 2 of
Article 6, if the recipient of such income, being a resident of a Contracting
State, carries on business in the other Contracting State through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the right or property
in respect of which the income is paid is effectively connected with such
permanent establishment or fixed base. In such case, the provisions of Article
7 or Article 15, as the case may be, shall apply.
3.
Notwithstanding the provisions of paragraphs 1 and 2,
items of income of a resident of a Contracting State not dealt with in the
foregoing Articles of this Agreement and arising in other Contracting State may
also be taxed in that other State.
Article 24: AVOIDANCE OF DOUBLE TAXATION
1.
The laws in force in either of the Contracting States
will continue to govern the taxation of income in the respective Contracting
States except where provisions to the contrary are made in this Agreement.
2.
Where a resident of a Contracting State derives income
which, in accordance with the provisions of this Agreement, may be taxed in the
other Contracting State, the first-mentioned Contracting State shall allow as a
deduction from the tax on the income of that resident an amount equal to the
income-tax paid in the other Contracting State whether directly or by
deduction. Such deduction shall not, however, exceed that part of the
income-tax (as computed before the deduction is given) in the first-mentioned
Contracting State which is attributable to the income which may be taxed in the
other Contracting State.
3.
The tax paid in the other Contracting State mentioned
in paragraph 2 of this Article shall be deemed to include the tax which would
have been payable but for the tax incentives granted under the laws of that
Contracting State and which are designed to promote economic development.
Article 25: NON-DISCRIMINATION
1.
Nationals of a Contracting State shall not be subjected
in the other Contracting State to any taxation or any requirement connected
therewith which is other or more burdensome than the taxation and connected
requirements to which nationals of that other State in the same circumstances
are or may be subjected.
2.
The taxation on a permanent establishment which an
enterprise of a Contracting State has in the other Contracting State shall not
be less favourably levied in that other State than the taxation levied on
enterprises of that other State carrying on the same activities in the same
circumstances. This provision shall not be construed as preventing a
Contracting State from charging the profits of a permanent establishment which
an enterprise of the other Contracting State has in the first-mentioned State
at a rate higher than that imposed on the profits of a similar enterprise of
the first-mentioned Contracting State, nor as being in conflict with the
provisions of paragraph 3 of Article 7 of this Agreement.
3.
Nothing contained in this Article shall be construed as
obliging a Contracting State to grant to persons not resident in that State any
personal allowances, reliefs, reductions and deductions for taxation purposes
which are by law available only to persons who are so resident.
4.
Enterprises of a Contracting State, the capital of
which is wholly or partly owned or controlled, directly or indirectly by one or
more residents of the other Contracting State, shall not be subjected in the
first-mentioned Contracting State to any taxation or any requirement connected
therewith which is other or more burdensome than the taxation and connected
requirements to which other similar enterprises of that first-mentioned State are
or may be subjected in the same circumstances.
5.
The provisions of paragraphs 2 and 4 of this Article
shall not apply to the Vietnamese profit remittance tax, which in any case
shall not exceed 10 per cent of the gross amount of profits remitted, and the Vietnamese
taxation in respect of agricultural production activities.
6.
In this Article, the term "taxation" means
taxes which are the subject of this Agreement.
Article 26: MUTUAL AGREEMENT PROCEDURE
1.
Where a resident of a Contracting State considers that the
actions of one or both of the Contracting States result or will result for him
in taxation not in accordance with this Agreement, he may, notwithstanding the
remedies provided by the national laws of those States, present his case to the
competent authority of the Contracting State of which he is a resident. This
case must
be presented within three years of the date
of receipt of notice of the action which gives rise to taxation not in
accordance with the Agreement.
2.
The competent authority shall endeavour, if the
objection appears to it to be justified and if it is not itself able to arrive
at a satisfactory solution, to resolve the case by mutual agreement with the
competent authority of the other Contracting State, with a view to the
avoidance of taxation not in accordance with the Agreement. Any agreement
reached shall be implemented notwithstanding any time limits in the national
laws of the Contracting States.
3.
The competent authorities of the Contracting States
shall endeavour to resolve by mutual agreement any difficulties or doubts
arising as to the interpretation or application of the Agreement. They may also
consult together for the elimination of double taxation in cases not provided
for in the Agreement.
4.
The competent authorities of the Contracting States may
communicate with each other directly for the purpose of reaching an agreement
in the sense of the preceding paragraphs. When it seems advisable in order to
reach agreement to have an oral exchange of opinions, such exchange may take
place through a Commission consisting of representative of the competent
authorities of the Contracting State.
Article 27: EXCHANGE OF INFORMATION
1.
The competent authorities of the Contracting States
shall exchange such information (including documents) as is necessary for
carrying out the provisions of the Agreement or of the domestic laws of the
Contracting States concerning taxes covered by the Agreement, insofar as the
taxation thereunder is not contrary to the Agreement, in particular for the
prevention of fraud or evasion of such taxes. Any information received by a
Contracting State shall be treated as secret in the same manner as information
obtained under the domestic laws of the State. However, if the information is
originally regarded as secret in the transmitting State, it shall be disclosed
only to persons or authorities (including courts and administrative bodies)
involved in the assessment or collection of, the enforcement or prosecution in
respect of, or the determination of appeals in relation to, the taxes which are
the subject of the Agreement. Such persons or authorities shall use the
information only for such purposes but may disclose the information in public
court proceedings or in judicial decisions. The competent authorities shall, through
consultation, develop appropriate conditions, methods and techniques concerning
the matters in respect of which such exchange of information shall be made,
including, where appropriate, exchange of information regarding tax avoidance.
2.
The exchange of information or documents shall be
either on a routine basis or on request with reference to particular cases or
both. The competent authorities of the Contracting States shall agree from time
to time on the list of the information or documents which shall be furnished on
a routine basis.
3.
In no case shall the provisions of paragraph 1 be
construed so as to impose on a Contracting State the obligation:
a.
to carry out administrative measures at variance with
the laws or administrative practice of that or of the other Contracting State;
b.
to supply information or documents which are not
obtainable under the laws or in the normal course of the administration of that
or of the other Contracting State;
c.
to supply information or documents which would disclose
any trade, business, industrial, commercial or professional secret of trade
process of information the disclosure of which would be contrary to public
policy.
Article 28: DIPLOMATIC AGENTS AND CONSULAR
OFFICERS
Nothing in this Agreement shall affect the
fiscal privileges of diplomatic or consular officers under the general rules of
international law or under the provisions of special agreements.
Article 29: ENTRY INTO FORCE
Each of the Contracting State shall notify to the other the
completion of the procedures required by its law for the bringing into force of
this Agreement. This Agreement shall enter into force on the date of the latter
of these notifications and shall thereupon have effect:
a. in India, in respect of
income arising in any previous year beginning on or after the first day of
April next following the calendar year in which the latter of the notifications
is given; b. in Vietnam:
i.
in respect of taxes withheld at source, in
relation to taxable amount paid on or after 1 January following the calendar
year in which the Agreement enters into force;
ii.
in respect of other Vietnamese taxes, in
relation to income, profits or gains arising in the calendar year following the
calendar year in which the Agreement enters into force, and in subsequent
calendar years.
Article 30: TERMINATION
This Agreement shall remain in force
indefinitely but either of the Contracting States may, on or before the
thirtieth day of June in any calendar year beginning after the expiration of a
period of five years from the date of its entry into force, give the other
Contracting State through diplomatic channels, written notice of termination
and, in such event, this Agreement shall cease to have effect:
a. in India, in respect of
income arising in any previous year beginning on or after the first day of
April next following the calendar year in which the notice is given; b. in Vietnam:
i.
in respect of taxes withheld at source, in
relation to taxable amount paid on or after 1 January following the calendar
year in which the notice of termination is given;
ii.
in respect of other Vietnamese taxes, in
relation to income, profits or gains arising in the calendar year following the
calendar year in which the notice of termination is given, and in subsequent
calendar years.
In
witness whereof the undersigned, being duly authorized thereto by their
respective Governments, have signed the present Agreement.
Done
in duplicate at Hanoi this 7th day of September one thousand nine hundred and
ninety four in Hindi, Vietnamese and English languages. In case of divergence
of interpretation, the English text shall prevail.
(Sd.)............
For the Government of the Republic of India
(Sd.)............
For the Government of the Socialist Republic
of Vietnam.
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