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1 The Taipei Representative Office in the United Kingdom andthe British Trade and Cultural Office, Taipei,hereinafterreferred to as the TRO and the BTCO; Desiring to conclude an Agreement for the avoidance of double t-axation and the prevention of fiscal evasion with respect to ta-xes on income and on capital gains; Have agreed as follows: ARTICLE 1 Persons covered This Agreement shall apply to persons who are residents of oneor both of the territories. ARTICLE 2 Taxes covered (1) This Agreement shall apply to taxes on income and on capitalgains imposed in either of the territories, irrespective ofthe manner in which they are levied. (2) There shall be regarded as taxes on income and on capital g-ains all taxes imposed on total income, or on elements of i-ncome, including taxes on gains from the alienation of mova-ble or immovable property. (3) The existing taxes to which this Agreement shall apply arein particular: (a) in the territory in which the taxation law administeredby the United Kingdom Inland Revenue is applied: (i) the income tax; (ii) the corporation tax; and (iii) the capital gains tax; (b) in the territory in which the taxation law administeredby the Department of Taxation, Ministry of Finance, Tai- pei is applied: (i) the profit seeking enterprise income tax; and (ii) the individual consolidated income tax. (4) This Agreement shall also apply to any identical or substan-tially similar taxes which are imposed in either territoryafter the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authori-ties of the territories shall notify each other of any subs-tantial changes which have been made in the taxation laws ofthe respective territories. ARTICLE 3 General definitions (1) For the purposes of this Agreement, unless the context othe-rwise resuires: (a) the term "territory" means the territory referred to inparagraph (3) (a) or (3) (b) of Article 2 of this Agree- ment, as the case requires, and "other territory" and " territories" shall be construed accordingly; (b) the term "person" includes an individual, a company andany other body of persons, and subject to paragraph (2) of this Article does not include a partnership; (c) the term "company" means any body corporate or any enti-ty that is treated as a body corporate for tax purposes; (d) the terms "enterprise of a territory" and "enterprise ofthe other territory" mean respectively an enterprise ca- rried on by a resident of a territory and an enterprise carried on by a resident of the other territory; (e) the term "international traffic" means any transport bya ship or aircraft operated by an enterprise of a terri- tory, except when the ship or aircraft is operated sole- ly between places in the other territory; (f) the term "competent authority" means: (i) in the case of the territory in which the taxation lawadministered by the United Kingdom Inland Revenue is applied, the Commissioners of Inland Revenue or their authorised representative; (ii) in the case of the territory in which the taxation l-aw administered by the Department of Taxation, Minis- try of Finance, Taipei is applied, the Director-Gene- ral of the Department of Taxation or his authorised representative. (2) A Partnership deriving its status from the law of the terri-tory referre to in paragraph (3) (b) of Article 2 of this A-greement which is treated as a taxable unit under the taxat-ion law of that territory, shall be treated as a person forthe purposes of the Agreement. (3) As regards the application of this Agreement at any time ina territory, any term not defined therein shall, unless thecontext otherwise requires, have the meaning that it has atthat time under the laws of that territory for the purposesof the taxes to which this Agreement applies, any meaning u-nder the applicable tax laws of that territory prevailing o-ver a meaning given to the term under other laws of that te-rritory. ARTICLE 4 Residence (1) For the purposes of this Agreement, the term "resident of aterritory" means any person who, under the laws of that ter-ritory, is liable to tax therein by reason of his domicile,residence, place of management, place of incorporation or a-ny other criterion of a similar nature. (2) A person is not a resident of a territory for the purposesof this Agreement if that person is liable to tax in that t-erritory in respect only of income or capital gains from so-urces in that territory, provided that this paragraph shallnot apply to individuals who are residents of the territoryreferred to in paragraph (3) (b) of Article 2 of this Agree-ment, as long as resident individuals are taxed only in res-pect of income from sources in that territory. (3) Where by reason of the provisions of paragraph (1) of thisArticle an individual is a resident of both territories, th-en his status shall be determined in accordance with the fo-llowing rules: (a) he shall be deemed to be a resident only of the territo-ry in which he has a permanent home available to him; if be has a permanent home available to him in both territ- ories, he shall be deemed to be a resident only of the territory with which his personal and economic relations are closer (centre of vital interests); (b) if the territory in which he has his centre of vital in-terests cannot be determined, or if he does not have a permanent home available to him in either territory, he shall be deemed to be a resident only of the territory in which he has an habitual abode; (c) if the individual has an habitual abode in both territo-ries or in neither of them, the competent authorities of the territories shall settle the question by mutual agr- eement. (4) Where by reason of the provisions of paragraph (1) of thisArticle a person other than an individual is a resident ofboth territories, then it shall be deemed to be a residentonly of the territory in which its place of effective manag-ement is situated. ARTICLE 5 Permanent establishment (1) For the purposes of this Agreement, the term "Ipermanent es-tablishment" means a fixed place of business through whichthe business of an 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 placeof extraction of natural resources. (3) A building site or canstruction or installation project con-stitutes a permanent establishment only if it lasts more th-an six months. (4) An enterprise of a territory shall be deemed to have a perm-anent establishment in the other territory if: (a) it carries on supervisory activities in that other terr-itory for more than six months in connection with a bui- lding site or construction or installation project which is being undertaken in that other territory; or (b) it furnishes services, including consultancy services,but only where activities of that nature continue, for the same or a connected project, through employees or o- ther personnel or persons engaged by the enterprise for such purpose in the other territory for a period or per- iods aggregating more than six months within any twelve month period. (5) Notwithstanding the preceding provisions of this Article, t-he term "permanent establishment" shall be deemed not to in-clude: (a) the use of facilities solely for the purpose of storage,display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belo-nging to the enterprise solely for the purpose of stora- ge, display or delivery; (c) the maintenance of a stock of goods or merchandise belo-nging to the enterprise solely for the purpose of proce- ssing by another enterprise; (d) the maintenance of a fixed place of business solely forthe purpose of plrchasing goods or merchandise, or of c- ollecting information, for the enterprise; (e) the maintenance of a fixed place of business solely forthe purpose of carrying on, for the enterprise, any oth- er activity of a preparatory or auxiliary character; (f) the maintenance of a fixed place of business solely forany combination of activities mentioned in subparagraphs (a) to (e) of this paragraph, provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary chara- cter. (6) Notwithstanding the provisions of paragraphs (1) and (2) ofthis Article, where a person is acting in a territory on be-half of an enterprise of the other territory - other than anagent of an independent status to whom paragraph (7) of thisArticle applies - the enterprise shall be deemed to have apermanent establishment in the first-mentioned territory inrespect of any activities which that person undertakes forthe enterprise if the person has, and habitually exercisesin that territory, an authority to conclude contracts on be-half of the enterprise, unless the person's activities arelimited to those mentioned in paragraph (5) of this Articlewhich, if exercised through a fixed place of business wouldnot make this fixed place of business a permanent establish-ment under the provisions of that paragraph. (7) An enterprise shall not be deemed to have a permanent estab-lishment in a territory merely because it carries on busine-ss in that territory through a broker, general commission a-gent or any other agent of an independent status, providedthat such persons are acting in the ordinary course of theirbusiness. (8) The fact that a company which is a resident of a territorycontrols or is controlled by a company which is a residentof the other territory, or which carries on business in thatother territory (whether through a permanent establishmentor otherwise), shall not of itself constitute either companya permanent establishment of the other. ARTICLE 6 Income from immovable property (1) Income derived by a resident of a territory from immovableproperty (including income from agriculture or forestry) si-tuated in the other territory may be taxed in that other te-rritory. (2) The term "immovable property" shall have the meaning whichit has under the law of the territory in which the propertyin question is situated. The term shall in any case includeproperty accessory to immovable property, livestock and equ-ipment used in agriculture and forestry, rights to which theprovisions of general law respecting landed property apply,usufruct of immovable propeity and rights to variable or fi-xed payments as consideration for the working of, or the ri-ght to work, mineral deposits, sources and other natural re-sources; ships, boats and aircraft shall not be regarded asimmovable property. (3) The provisions of paragraph (1) of this Article shall applyto income derived from the direct use, letting, or use in a-ny other form of immovable property. (4) The provisions of paragraphs (1) and (3) of this Article sh-all also apply to the income from immovable property of anenterprise and to income from immovable property used for t-he performance of independent personal services. ARTICLE 7 Business profits (1) The profits of an enterprise of a territory shall be taxableonly in that territory unless the enterprise carries on bus-iness in the Other territory through a permanent establishm-ent situated therein. If the enterprise carries on businessas aforesaid, the profits of the enterprise may be taxed inthe other territory but only so much of them as is attribut-able to that permanent establishment. (2) Subject to the provisions of paragraph (3) of this Article,where an enterprise of a territory carries on business in t-he other territory through a permanent establishmelit situa-ted therein, there shall in each territory be attributed tothat permanent establishment the profits which it might beexpected to make if it were a distinct and separate enterpr-ise engaged in the same or similar activities under the sam-eor similar conditions and dealing wholly independently withthe enterprise of which it is a permanent establishment. (3) In determining the profits of a permanent establishment, th-ere shall be allowed as deductions expenses which are incur-red for the purposes of the permanent establishment, includ-ing executive and general administrative expenses so incurr-ed, whether in the territory in which the permanent establi-shment is situated or elsewhere. (4) No profits shall be attributed to a permanent establishmentby reason of the mere purchase by that permanent establishm-ent of goods or merchandise for the enterprise. (5) For the purposes of the preceding paragraphs, the profits tobe attributed to the permanent establishment shall be deter-mined by the same method year by year unless there is goodand sufficient reason to the contrary. (6) Where profits include items of income or capital gains whichare dealt with separately in other Articles of this Agreeme-nt, then the provisions of those Articles shall not be affe-cted by the provisions of this Article. ARTICLE 8 Shipping and air transport (1) Profits of an enterprise of a territory from the operationof ships or aircraft in international traffic shall be taxa-ble only in that territory. (2) For the purposes of this Article, profits from. the operati-on of ships or aircraft in international traffic include: (a) profits from the rental on a full (time or voyage) basisor a bareboat basis of ships or aircraft; and (b) profits from the use, maintenance or rental of containe-rs (incuding trailers and related equipment for the tra- nsport of containers) used for the transport of goods or merchandise; where such rental 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) of this Article shall alsoapply to profits from the participation in a pool, a jointbusiness or an international operating agency, but only toso much of the profits so derived as is attributable to theparticipant in proportion to its share in the joint operati-on. ARTICLE 9 (1) Where: Associated enterprises (a) an enterprise of a territory participates directly or i-ndirectly in the management, control or capital of an e- nterprise of the other territory; or (b) the same persons participate directly or indirectly inthe management, control or capital of an enterprise of a territory and an enterprise of the other territory; and in either case conditions are made or imposed betwe- en the two enterprises in their commercial or ftnancial relations which differ from those which would be made b- etween independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, ha- ve not so accrued, may be included in the profits of th- at enterprise and taxed accordingly. (2) Where a territory includes in the profits of an enterpr-ise of that territory - and taxes accordingly - profits on which an enterprise of the other territory has been charged to tax in that other territory and the profits So included are profits which would have accnred to the enterprise of the first-mentioned territory if the cond- itions made between the two enterprises had been those which would have been made between independent enterpri- ses, then that other territory shall make an appropriate adjustment to the amount of the tax charged therein on those profits, in determining such adjustment, due rega- rd shall be had to the other provisions of this Agreeme- nt and the competent authorities of the territories sha- ll if necessary consult each other. ARTICLE 10 Dividends (1) Dividends paid by a company which is a resident of a territ-ory to a resident of the other territory may be taxed in th-at other territory. (2) However, such dividends may also be taxed in the territoryof which the company paying the dividends is a resident andaccording to the laws of that territory, but if the benefic-ial owner of the dividends is a resident of the other terri-tory, the tax so charged shall not exceed 10 per cent. of t-he gross amount of the dividends. The competent authoritiesof the territories shall by mutual agreement settle the modeof application of this limitation. (3) The term "dividends" as used in this Article means income f-rom shares, or other rights,not being debt-claims, particip-ating in profits, as well as income from other corporate ri-ghts which is subjected to the same taxation treatment as i-ncome from shares by the laws of the territory of which thecompany making the distribution is a resident and also incl-udes anjr other item which, under the laws of the territoryof which the company paying the dividend is a resident, istreated as a dividend or distribution of a company. (4) The provisions of paragraphs (1) and (2) of this Article sh-all not apply if the beneficial owner of the dividends, bei-ng a resident of a territory, carries on business in the ot-her territory of which the company paying the dividends is aresident, through a permanent establishment situated therein, or performs in that other territory independent personalservices from a fixed base situated therein, and the holdingin respect of which the dividends are paid is effectively c-onnected with such permanent establishment or fixed base. Insuch case the provisions of Article 7 or Article 14 of thisAgreement, as the case may be, shall apply. (5) Where a company which is a resident of a territory derivesprofits or income from the other territory, that other terr-itory may not impose any tax on the dividends paid by the c-ompany, except insofar as such dividends are paid to a resi-dent of that other territory or insofar as the holding in r-espect of which the dividends are paid is effectively conne-cted with a permanent establishment or a fixed base situatedin that other territory, nor subject the company's undistri-buted profits to a tax on undistributed profits, even if thedividends paid or the undistributed profits consist whollyor partly of profits or income arising in that other territ-ory. (6) The provisions of this Article shall not apply if it was themain purpose or one of the main purposes of any person conc-erned with the creation or assignment of the share or otherrights in respect of which the dividend is paid to take adv-antage of this Article by means of that creation or assignm-ent. ARTICE 11 Interest (1) Interest arising in a territory and paid to a resident of t-he other territory may taxed in that other territory. (2) However, such interest may also be taxed in the territory inwhich it arises and according to the laws of the territory,but if the beneficial owner of the interest is a resident ofthe other territory, the tax so charged shall not exceed 10per cent. of the gross amount of the interest. The competentauthorities of the territories shall by mutual agreement se-ttle the mode of application of this limitation. (3) The term "interest" as used in this Article means income fr-om debtclaims of every kind, whether or not secured by mort-gage and whether or not carrying a right to participate inthe debtor's profits, and in particular, income from govern-ment securities and income from bonds or debentures, includ-ing premiums and prizes attaching to such securities, bondsor debentures. The term "interest" shall not include any it-em which is treated as a dividend under the provisions of A-rticle 10 of this Agreement. (4) The provisions of paragraphs (1), (2) and (8) of this Artic-le shall not apply if the benefical owner of the interest,being a resident of a territory, carries on business in theother territory in which the interest arises, through a per-manent establishment situated therein, or performs in thatother territory independent personal services from a fixedbase situated therein, and the debtclaim in respect of whichthe interest is paid is effectively connected with such per-manent establishment or fixed base. In such case, the provi-sions of Article 7 or Article 14 of this Agreement, as thecase may be, shall apply. (5) Where, by reason of a special relationship between the payerand the benefical owner or between both of them and some ot-her person, the amount of the interest paid exceeds, for wh-atever reason, the amount which would have been agreed uponby the payer and the beneficial owner in the absence of suchrelationship, the provisions of this Article shall apply on-ly to the lastmentioned amount of interest. In such case, t-he excess part of the payments shall remain taxable accordi- ng to the laws of each territory, due regard being had to t-he other provisions of this Agreement. (6) Interest shall be deemed to arise in a territory when the p-ayer is an authority of that territory or a subdivision orlocal authority of that territory or a person who is a resi-dent of that territory for the purposes of its tax. Where,however, the person paying the interest, whether the personis a resident of a territory or not, has in a territory a p-ermanent establishment or a fixed base in connection with w-hich the indebtedness on which the interest is paid was inc-urred, and such interest is borne by such permanent establi-shment or fixed base, then such interest shall be deemed toarise in the territory in which the permanent establishmentor fixed base is situated. (7) The provisions of this Article shall not apply if it was themain purpose or noe of the main purposes of any person conc-erned with the creation or assignment of the debt-claim inrespect of which the interest is paid to take advantage ofthis Article by means of that creation or assignment. (8) Notwithstanding the provisions of paragraph (2) of this Art-icle, interest arising in a territory shall be exempt fromtax in that territory if: (a) it is paid to and beneficially owned by the other terri-tory or a local authority thereof, or agency or insturm- entality of that other territory or local authority the- rof; or (b) it is paid in respect of a loan made, guaranteed or ins-ured, or any other debt-claim or cerdit guaranteed or i- nsured by an approved agency or instrumentality of that other territory. (9) For the purposes of paragraph (8)(b) of this Article the te-rm "approved agncy or instrumentality" means: (a) in the case of territory referred to in paragraph (3) (a) of Article 2 of this Agreement, the Export Credits gu- arantee department and such other agencies and instrume- ntalities of that territory as may be agreed from time to time between the competent authorities; (b) in the case of the territory referred to in paragraph (3)(b) of Article 2 of this agreement, such agencies and instrumentalities of that territory as may be agreed fr- om time to time between the competent authorities. Article 12 Royalties (1) Royalties arising in a territory and paid to a resident ofthe other territory may be taxed in that other territory. (2) However, those royalties may also be taxed in the territoryin which they arise, and according to the law of that terri-tory, but if the beneficial owner of the royalties is a res-ident of the other territory, the tax so charged shall notexceed 10 per cent. of the gross amount of the royalties. T-he compertent authorities of the territories shall by mutualagreement settle the mode of application of this limitation.(3) The term "royalties" as used in this Article means paymentsof any kind received as a consideration for the use of, orthe right to use, any copyright of literary, artistic or sc-ientific work (including cinematorgraph films, and films ortapes for radio or television broadcasting), any patent, tr-ade mark, design or model, plan, secret formula or process,or for information (know-how) concerning industrial, commer-cial or scientific experience. (4) The provisions of paragraph (1) and (2) of this Article sha-ll not apply if the beneficial owner of the royalties, beinga resident of a territory, carries on business in the otherterritory in which the royalties arise, through a permanentestablishment situated therein, or performs in that other t-erritory independent personal services from a fixed base si-tuated therein, and the right or property in respect of whi-ch the royalties are paid is effectively connected with suchpermanent establishment or fixed base. In such case, the pr-ovisions of Article 7 or Article 14 of this Agreement, as t-he case may be, shall apply. (5) Royalties shall be deemed to arise in, a territory when thepayer is an authority of that territory or a subdivision orlocal authority of that territory or a person who is a resi-dent of that territory for the purposes of its tax. Where,however, the person paying the royalties, whether the personis a resident of a territory or not, has in a territory a p-ermanent establishment or a fixed base in connection with w-hich the liability to pay the royalties was incurred, and s-uch royalties are borne by such permanent establishment orfixed base, then such royalties shall be deemed to arise inthe territory in which the permanent establishment or fixedbase is situated. (6) Where, by reason of a special relationship between the payerand the beneficial owner or between both of them and some o-ther person, the amount of the royalties paid exceeds, forwhatever reason, the amount which would have been agreed up-on by the payer and the beneficial owner in the absence ofsuch relationship, the provisions of this Article shall app-ly only to the lastmentioned amount. In such case, the exce-ss part of the payments shall remain taxable according to t-he laws of each territory, due regard being had to the otherprovisions of this Agreement. (7) The provisions Of this Article shall not apply if it was themain purpose or one of the main purposes of any person conc-erned with the creation or assignment of the rights in resp-ect of which the royalties are paid to take advantage of th-is Article by means of that creation or assignment. ARTICLE 13 Capital gains (1) Gains derived by a resident of a territory from the alienat-ion of immovable property referred to in Article 6 of thisAgreement and situated in the other territory may be taxedin that other territory. (2) Gains derived by a resident of a territory from the alienat-ion of: (a) shares, other than shares quoted on an approved Stock E-xchange, deriving their value or the greater part of th- eir value directly or indirectly from immovable property situated in the other territory, or (b) an interest in a partnership or trust the assets of whi-ch consist principally of immovable property Situated in the other territory, or of shares referred to in sub-pa- ragraph (a) of this paragraph, may be taxed in that oth- er territory. (3) Gains from the alienation of movable property forming partof the business property of a permanent establishment whichan enterprise of a territory has in the other territory orof movable property pertaining to a fixed base available toa resident of a territory in the other territory for the pu-rpose of performing independent personal servrices, includi-ng such gains from the alienation of such a permanent estab-lishment (alone or with the whole enterprise) or of such fi-xed base, may be taxed in that other territory. (4) Gains derived by a resident of a territory from the alienat-ion of ships or aircraft operated in international trafficby an enterprise of that territory or movable property pert-aining to the operation of such ships or aircraft, shall betaxable only in that territory. (5) Gains from the alienation of any property other than that r-eferred to in paragraphs (1), (2), (3), and (4) of this Art-icle shall be taxable only in the territory of which the al-ienator is a resident. (6) The provisions of paragraph ($) of this Article shall not a-ffect the right of a territory to levy according to its lawa tax on capital gains from the alienation of any propertyderived by an individual who is a resident of the other ter-ritory and has been a resident of the first-mentioned terri-tory at any time during the six years immediately precedingthe alienation of the property. ARTICLE 14 Independent personal services (1) Income derived by a residerit of a territory in respect ofprofessional services or other activities of an independentcharacter shall be taxable only in that territory except inthe following circumstances, when such income may also be t-axed in the other territory: (a) if he has a fixed base regularly available to him in theother territory for the purpose of performing his activ- ities; in that case, only so much of the income as is a- ttributable to that fixed base may be taxed in that oth- er territory; or if his stay in the other territory is for a period or periods amounting to or exceeding in the aggregate 183 days in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other territory, may be ta- xed in that other territory. (2) The term "professional services" includes especially indepe-ndent scientific, literaryj artistic, educational or teachi-ng activities as well as the independent activities of phys-icians, lawyers, engineers, architects, dentists and accoun-tants. Article 15 Dependent personal services (1) Subject to the provisions of Articles 16, 18 and 19 of thisAgreement,salaries, wages and other similar remuneration de-rived by a resident of a territory in respect of an employm-ent shall be taxable only in that rerritory unless the empl-oyment is exercised in the other territory. If the employme-nt is so exercised, such remuneration as is derived therefr-om may be taxed in that other territory. (2) Notwithstanding the provisions of paragraph (1) of this Art-icle, remuneration derived by a resident of a territory inrespect of an employment exercised in the other territory s-hall be taxable only in the first-mentioned territory if: (a) the recipient is present in the other territory for a p-eriod or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and (b) the remuneration is paid by, or on behalf of, an employ-er who is not a resident of the other territory; and (c) the remuneration is not borne by a permanent establishm-ent or a fixed base which the employer has in the other territory. (3) Notwithstanding the preceding provisions of this Article, r-emuneration derived in respect of an employment exercised a-board a ship or aircraft operated in international trafficmay be taxed in the territory of which the enterprise opera-ting the ship or aircraft is a resident. ARTICLE 16 Directors' fees Directors' fees and other similar payments derived by a residentof a territory in his capacity as a member of the board of dire-ctors of a company which is a resident of the other territory m-ay be taxed in that other territory. ARTICLE 17 Artistes and sportsmen (1) Notwithstanding the provisions of Articles 14 and 15 of thisAgreement, income derived by a resident of a territory as anentertainer, such as a theatre, motion picture, radio or te-levision artiste, or a musician, or as a sportsman, from hispersonal activities as such exercised in the other territory, may be taxed in that other territory. (2) Where income in respect of personal activities exercised byan entertainer or a sportsman in his copacity as such accru-es not to the entertainer or sportsman himself but to anoth-er person, that income may, notwithstanding the provisionsof Articles 7, 14 and 15 of this Agreement, be taxed in theterritory in which the activities of the entertainer or spo-rtsman are exercised. (3) The provisions of paragraphs (1) and (2) of this Article sh-all not apply to income derived by entertainers or sportsmenwho are residents of a territory from their personal activi-ties as entertainers or sportsmen exercised in the other te-rritory if their visit to that other territory is wholly orsubstantially supported from the public funds of the first-mentioned territory. In such a case, the income shall be ta-xable only in the territory of which the entertainer or spo-rtsman, as the case may be, is a resident. ARTICLE 18 Pensions and annuities (1) Subject to the provisions of paragraph (2) of Article 19 ofthis Agreement: (a) pensions and other similar remuneration paid in conside-ration of past employment, and (b) any annuity paid, to an individual who is a resident ofa territory, and is subject to tax in respect thereof in that territory, shall be taxable only in that territory. (2) The term "annuity" means a stated sum payable to an individ-ual periodically at stated times during his life or during aspecified or ascertainable period of time under an obligati-on to make the payments in return for adequate and full con-sideration in money or money's worth. (3) Notwithstanding the provisions of paragraph (1) of this Art-icle, a lump-sum payment beneficially owned by a resident ofa territory from a pension scheme established in the otherterritory shall be taxable only in that other territory. ARTICLE 19 Public service (1) (a) Salaries, wages and other similar remuneration, other t-han a pension or annuity, paid by an authority administ- ering a territory or a subdivision thereof, or by a loc- al authority of that territory to an individual in resp- ect of services rendered in the discharge of public or administrative functions on behalf of such an authority shall be taxable only in that territory. (b) Notwithstanding the provisions of sub-paragraph (a) ofthis paragraph, such salaries, wages and other similar remuneration shall be taxable only in the other territo- ry if the services are rendered in that territory and t- he individual is a resident of that territory who: (i) is a citizen or national Of that territory; or (ii) did not become a resident of that territory solely f-or the purpose of rendering the services. (2) (a) Any pension or annuity paid by, or out of funds createdby, a teiritory or a political subdivision or a local a- uthority thereof to an individual in respect of services rendered to that territory or subdivision or authority shall be taxable only in that territory. (b) Notwithstanding the provisions Of sub-paragraph (a) ofthis paragraph, such pension orannuity shall be taxable only in the other territory if the individual is a resi- dent of and a citizen or national of, that territory. (3) The provisions of Articles 15,16, 17 and l8 of this Agreeme-nt shall apply to salaries, wages and other similar remuner-ation, and to pensions or annuities, in respect of servicesrendered in connection with abusiness carried on by any aut-hority refe-rred to in paragraph (1) of this Article. ARTICLE 20 Students Where a student, who is a resident of a territory or whowas a r-esident of that territory immediately before visiting the otherterritory anti whet is temporarily present in that. other terri-tciry solely for the purpose of the student's education, receiv-es payments from sources outside that other territory for the p-urpose of the student's maintenance or education, those paymentsshall be exempt from tax in that other territory. ARTICLE 21 Other income (1) Items of income, wherever arising, beneficially owned by aresident of a territory, which are not dealt with in the fo-regoing Articles of this Agreement, shall be taxable only inthat territory. (2) However, any such income derived by a resident of a territo-ry from sources in the other territory may also be taxed inthat other territory. (3) The provisions of paragraph (i) of this Article shall not a-pply to income, other than income from immovable property asdefined in paragraph (2) of Article 6 of this Agreement, ifthe recipient of such income, being a resident of a territo-ry, carries on business in the other territory through a pe-rmanent establishment situated therein, or performs in thatother territory independent personal services from a fixedbase situated therein, and the right or property in respectof which the income is paid is effectively connecteci withsuch permanent establishment or fixed base. In such case theprovisions of Article 7 or Article 14 of this Agreement, asthe case may be, shall apply. (4) Where, by reason of a special relationship between the pers-on referred to in paragraph (1) of this Article and some ot-her person, or between both of them and some third person,the amount of the income referred to in that paragraph exce-eds the amount (if any) vlhich would have been agreed uponbetween them in the absence of such a relationship, the pro-visions of this Article shall apply only to the last-mentio-ned amount. In such a case, the excess part of the income s-hall remain taxable according to the laws of each territory,due regard being had to the other applicable provisions ofthis Agreement. ARTICLE 22 Elimination of double taxation (1) Subject to the provisions of the law of the territory refer-red to in paragraph (3)(a) of Article 2 of this Agreement r-egarding the allowance as a credit against its tax of tax p-ayable in another territory (which shall not affect the gen-eral principle hereof): (a) Tax payable under the laws of the territory referred toin paragraph (3)(b) of Article 2 of this Agreement and in accordance with this Agreement, whether directly or by deduction, on profits, income or chargeable gains fr- om sources within that territory (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a cr- edit against any tax payable under the laws of the terr- itory referred to in paragraph (3)(a) of Article 2 of t- his Agreement computed by reference to the same profits, income or chargeable gains by reference to which the fi- rst mentioned tax is computed; (b) in the case of a dividend paid by a company which is aresident of the territory referred to in paragraph (3)(b ) of Article 2 of this Agreement to a company which is a resident of the territory referred to in paragraph (3)(a ) of Article 2 of this Agreement and which controls dir- ectly or indirectly at least 10 per cent. of the voting power in the company paying the dividend, the credit sh- all take into account (in addition to any tax payable u- nder the laws of the territory referred to in paragraph (3)(b) of Article 2 of this Agreement for which credit may be allowed under the provisions of sub-paragraph (a) of this paragraph) the tax payable under the laws of th- at territory by the company in respect of the profits o- ut of which such dividend is paid. (2) In the case of the territory referred to in paragraph (3)(b)of Article 2 of this Agreement, double taxation shall be av-oided as follows: Tax payable under the laws of the territo-ry referred to in paragraph (3) (a) of Article 2 of this Ag-reement and in accordance with this. Agreement (excluding inthe case of a dividend, tax payable inrespect of the profitsout of which the dividend is paid) shall be allowed as a cr-edit against the tax payable under the laws of the territoryreferred to in paragraph (3) (b) of Article 2 of this Agree-ment. The amount of credit, however, shall not exceed the a-mount of the tax referred to in paragraph (3) (b) of Article2 of this Agreement on that income computed in accordance w-ith its tax laws. (3) For the purposes of paragraph (l) of this Article, profits,income and capital gains owned by a resident of a territorywhich may be taxed in the other territory in accordance withthis Agreement shall be deemed to arise from sources in thatother territory. ARTICLE 23 Limitation of relief (1) Where under any provision of this Agreement any income or g-ains are relieved from tax in a territory and, under the lawin force in the other territory an individual, in respect ofthat income or those gains, is subject to tax by referenceto the amount thereof which is remitted to or received in t-hat other territory and not by reference to the full amountthereof, then the relief to be allowed under this Agreementin the first-mentioned territory Shall apply only to so muchof the income or gains as is taxed in the other territory.(2) Motwithstanding the provisions of any other Article of thisAgreement , a resident of a territory who, as a consequenceof domestic law concerning incentives to promote foreign in-vestment, is not subject to tax or is subject to tax at a r-educed rate in that territory on income or capital gains, s-hall not receive the benefit of any reduction in or exempti-on from tax provided for in this Agreement by the other ter-ritory if the main purpose or one of the main purposes of s-uch resident or a person connected with such resident was toobtain the benefits of this Agreement. (3) Where, under any provision of this Agreement, a partnershipis entitled, as a resident of the territory referred to inparagraph (3) (b) of Article 2 of this Agreement, to relieffrom tax in the territory referred to in paragraph (3) (a) of Article 2 of this Agreement on any income or capitalgains, that provision shall not be construed as restrictingthe right of the territory referred to in paragraph (3) (a)of Article 2 of this Agreement to tax any member of the par-tnership who is a resident of the territory referred to inparagraph (3) (a) of Article 2 of this Agreement on his sha-re of such income or capital gains; but any such income orgains shall be treated for the purposes of Article 22 of th-is Agreement as income or gains from sources in the territo-ry referred to in paragraph (3) (b) of Article 2 of this Ag-reement. ARTICLE 24 Non-discrimination (1) Citizens or nationals of a territory shall not be subjectedin the other territory to any taxation or any requirement c-onnected therewith, which is other or more burdensome thanthe taxation and connected requirements to which citizens ornationals of that other territory in the same circumstances,in particular with respect to residence, are or may be subj-ected. (2) A legal person, partnership orassociation deriving its stat-us as such from the law in one of the territories shall notbe subjected in the other territory to any taxation or anyrequirement connected therewith, which is other or more bur-densome than the taxation and connected requirements to whi-ch a legal person, partnership or association deriving itsstatus as such from the law in force in that other territoryin the same circumstances, in particular with respect to re-sidence, is or may be aibjected. (3) The taxation on a permanent establishment which an enterpri-se of a territory has in the other territory shall not be l-ess favourably levied in that other territory than the taxa-tion levied on enterprises of that other territory carryingon the same activities. (4) Except where the provisions of paragraph (1) of Article 9,paragraphs (5) or (7) of Article 11, paragraph (6) dr (7) ofArticle 12, or paragraph (4) of Article 21 of this Agreementapply, interest, royalties and other disbursements paid byan enterpkise of a territory to a resident of the other ter-ritory shall, for the purpose of determining the taxable pr-ofits of such enterprise, be deductible under the same cond-itions as if they had been paid to a resident of the first-mentioned territory. (5) Enterprises of a territory, the capital of which is whollyor partly owned or controlled, directly or indirectly, by o-ne or more residents of the other territory, shall not be s-ubjected in the first-mentioned territory to any taxation orany requirement connected therewith which is other of moreburdensome than the taxation and connected requirements towhich other similar enterprises of the first-mentioned terr-itory are or may be subjected. (6) Nothing contained in this Article shall be construed as obl-iging either territory to grant to individuals not residentin that territory any of the personal allowances, reliefs a-nd reductions for tax purposes which are granted to individ-uals so resident. (7) The provisions of this Article shall apply to the taxes whi-ch are the subject of this Agreement. ARTICLE 25 Mutual agreement procedure (1) Where a resident of a territory considers that actions in o-ne or both of the territories result or will result for himin taxation not in accordance with the provisions of this A-greement, he may, irrespective of the remedies provided bythe domestic law of those territories, present his case tothe competent authority of the territory of which he is a r-esident or, if his case comes under paragraph (1) of Article24 of this Agreement, to that of the territory in which heis a citizen or national or, if his case comes under paragr-aph (2) of Article 24 of this Agreement, to that of the ter-ritory in which he derives his status as a legal person, pa-rtnership or association. (2) The competent authority shall endeavour, if the objection a-ppears to it to be justified and if it is not itself able toarrive at a satisfactory solution, to resolve the case by m-utual agreement with the competent authority of the other t-erritory, with a view to the avoidance of taxation which isnot in accordance with this Agreement. (3) The competent authiirities of the territories shall endeavo-ur to resolve by mutual agreernent any difficulties or doub-ts arising as to the interpretation or application of thisAgreement. They may also consult together for the eliminati-on of double taxation in cases not provided for in the Agre-ement. (4) The competent authorities of the territories may communicatewith each other directly for the purpose of reaching an agr-eement in the sense of the preceding paragraphs. ARTICLE 26 Exchange of information (1) The competent authorities of the territories shall exchangesuch information as is necessary for carrying out the provi-sions of this Agreement or of the domestic laws of the terr-itories concerning taxes covered by this Agreement insofaras the taxation thereunder is not contrary to this Agreement, in particular, to prevent fraud and to facilitate the adm-inistration of statutory provisions against legal avoidanoe.The exchange of information is not restricted by Article 1of this Agreement. Any information received by a territoryshall be treated as secret and shall be disclosed only to p-ersons or authorities (including courts and administrativebodies) concerned with the assessment or collection of, theenforcement or prosecuition in respect of, or the determina-tion of appeals in relation to, the taxes covered by this A-greement. Such persons or authorities shall use the informa-tion only for such purposes. They may disclose the informat-ion in public court proceedings or in judicial decisions. (2) In no case shall the provisions of paragraph (1) of this Ar-ticle be construed so as to impose on a competent authorityof a territory the obligation: (a) to carry out administrative measures at variance with t-he laws and administrative practice of that or of the o- ther territory; (b) to supply information which is not obtainable under thelaws or in the normal course of the administration of t- hat or of the other territory; (c) to supply information which would disclose any trade, b-usiness, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy. ARTICLE 27 Entry into force The BTCO and the TRO shall each notify to the Other the complet-ion of the procedures required by the law of their respective t-erritories for the bringing into force of this Agreement. ThisAgreement shall enter into force on the date of the later of th-ese notifications and shall thereupon have effect: (a) in the territory in which the taxation laws administered bythe United Kingdom Inland Revenue are applied: (i) in respect of income tax and capital gains tax, for any y-ear of assessment beginning on or after 6th April in the calendar year next following that in which this Agreement enters into force; (ii) in respect of corporation tax, for any financial year be-ginning on or after 1st April in the calendar year next following that in which this Agreement enters into force; (b) in the territory in which the taxation laws administered bythe Department of Taxation, Ministry of Finance, Taipei areapplied, in relation to income, profits or gains of any yearof income beginning on or after 1st January in the calendaryear next following the date on which the Agreement entersinto force. ARTICLE 28 Termination This Agreement shall remain in force until terminated by the BT-CO or the TRO. Either the BTCO or the TRO may terminate this Ag-reement, by giving notice of termination to the other at leastsix months before the end of any calendar year beginning afterthe expiry of five years from the date of entry into force of t-his Agreement. In such event, this Agreement shall cease to haveeffect: (a) in the territory in which the taxation laws administered bythe United Kingdom Inland Revenue are applied: (i) in respect of income tax and capital gains tax, for any y-eat of assessment beginning on or after 6th April in the calendar year next following that in which the notice is given; (ii) in respect Of corporation tax, for any financial year be-ginning on or after lst April in the calendar year next following that in which the notice is given; (b) in the territory in which the taxation laws administered bythe Department of Taxation, Ministry of Finance, Taipei areapplied, in relation to income, profits or gains of any yearof income beginning on or after 1st January in the calendaryear next following that in which the notice of terminationis given. In witness whereof the undersigned, duly authorised thereto, ha-ve signed this Agreement. Done in duplicate at London this [date]day of April 2002 in theEnglish and Chinese languages, both texts being equally authent-ic. In the case of any divergence of meaning between the two te-xts, the English text shall prevail. For the TaipeiFor the British Trad andRepresentative Office incultural Office,Taipeithe United Kingdom ──────────────────────── Wen-hua TzenDavid Coates Representative, TaipeiDirector-General, BritishRepresentative Office inTrade and Cultural Office,the United KingdomTaipei ANNEX THE BRITISH TRADE ANDCULT~URAL OFFICE, TAIPEI AND TME TAIPEL REPRESENTATIVE OFFICE IN THE UNITED KINGDOM; Having regard to the Agreement for the avoidance Of double taxa-tion and prevention of fiscal evasion with respect to taxes onincome and on capital gains signed at London this 8th day of Ap-ril 2002 (in this Annex called the Agreement); Have agreed that the following provisions shall form an integralpart of the Agreement: With respect to the territory in which the taxation law adminis-tered by the Department of Taxation, Ministry of Finance, Taipeiis applied, it is understood that nothing in the Agreement affe-cts the imposition of the Land Value Increment Tax. The remuneration, pensions, or annuities of staff of the TaipeiRepresentative Office in the United Kingdom and of the BritishTrade and Cultural Office, Taipei shall be dealt with under theterms of Article 19 of the Agreement. IN WITNESS WHEREOF the undersigned have signed this Annex.Done in duplicate at London this 8th day of Apri1 2002 in the English and Chinese languages, both texts being equally authent-ic. In the case of any divergence of meaning between the two te-xts, the English text shall prevail. For the TaipeiFor the British Trade andRepresentative Office inCultural Office, Taipei the United Kingdom ──────────────────────────── Wen-hua TzenDavid Coates Representative, TaipeiDirector-General, BritishRepresentative Office inTrade and Cultural Office,the United KingdomTaipei