The Taipei Economic and Cultural Office in Tel-Aviv and the
Israel Economic and Cultural Office in Taipei 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 PERSONS COVERED
This Agreement shall apply to persons who are
residents of one or both of the territories.
Article 2 TAXES COVERED
1.This Agreement shall apply to taxes on income
imposed by either of the territories or by their
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, as well as taxes on capital
appreciation.
3.The existing taxes to which the Agreement shall
apply are in particular:
a)in the territory in which the taxation law
administered by the Taxation Agency, Ministry of
Finance, Taipei is applied:
(i)the profit seeking enterprise income tax;
(ii)the individual consolidated income tax;
(iii)the income basic tax;
b)in the territory in which the taxation law
administered by Israeli Tax Authority or State
Revenue Administration is applied:
(i)the income tax and company tax (including tax
on capital gains);
(ii)the tax imposed on gains from the alienation
of real property according to the Real Estate
Taxation Law.
4.The Agreement shall apply also to any identical or
substantially similar taxes that are imposed after
the date of signature of the Agreement in addition
to, or in place of, the existing taxes. The
competent authorities of the territories shall
notify each other of any significant changes that
have been made in their respective taxation laws.
Article 3 GENERAL DEFINITIONS
1.For the purposes of this Agreement, unless the
context otherwise requires:
a)the term“territory”means the territory referred
to in paragraph 3(a) or 3(b) of Article 2 of this
Agreement, as the context requires, and “ the
other territory ” and “ territories ” shall be
construed accordingly;
b)the term “person” includes an individual, a
company and any other body of persons;
c)the term “company” means any body corporate or
any entity that is treated as a body corporate
for tax purposes;
d)the terms "enterprise of a territory" and "
enterprise of the other territory" mean
respectively an enterprise carried 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 by a ship or aircraft operated by an
enterprise of a territory, except when the ship
or aircraft is operated solely between places in
the other territory;
f)the term "competent authority" means:
(i)in the territory in which the taxation law
administered by the Taxation Agency, Ministry
of Finance, Taipei is applied, the
Director-General of Taxation Agency or his
authorized representative;
(ii)in the territory in which the taxation law
administered by the Israeli Tax Authority or
State Revenue Administration is applied, the
General Directors of Revenues and Taxes or
their authorized representative.
2.As regards the application of the Agreement at any
time by a territory, any term not defined therein
shall, unless the context otherwise requires, have
the meaning that it has at that time under the law
of that territory for the purposes of the taxes to
which the Agreement applies, any meaning under the
applicable tax laws of that territory prevailing
over a meaning given to the term under other laws
of that territory.
Article 4 RESIDENT
1.For the purposes of this Agreement, the term
"resident of a territory" means any person who,
under the laws of that territory, is liable to tax
therein by reason of his domicile, residence, place
of incorporation, place of management or any other
criterion of a similar nature and also includes the
authority administering a territory or any
subdivision or local authority thereof. This term,
however, does not include any person who is liable
to tax in that territory in respect only of income
from sources in that territory.
2.Where by reason of the provisions of paragraph 1 an
individual is a resident of both territories, then
his status shall be determined as follows:
a)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 interests cannot be determined, he shall be
deemed to be a resident only of the territory in
which he has a permanent home available to him;
c)if he has a permanent home available to him in
both territories or if he has not 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;
d)if he has a an habitual abode in both territories
or in neither of them, the competent authorities
of the territories 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 territories, then it shall be deemed to be a
resident only of the territory 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 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, and
f)a mine, an oil or gas well, a quarry or any other
place of extraction of natural resources.
3.A building site or construction, assembly or
installation project or a supervisory activity
connected therewith constitutes a permanent
establishment only if it lasts more than 6 months.
4.An enterprise of a territory shall be deemed to
have a permanent establishment in the other
territory if:
a)it carries on supervisory activities for more
than six months in connection with a building
site or construction or installation project
which is being undertaken in the other territory;
b)it furnishes services, including consultancy
services, through employees or other personnel or
persons engaged by the enterprise for such
purpose, but only where activities of that nature
continue for the same or a connected project, for
a period or periods aggregating more than 183
days within any twelve-month period.
5.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 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 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;
e)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;
f)the maintenance of a fixed place of business
solely for any combination of activities
mentioned in sub-paragraphs (a) to (e), provided
that the overall activity of the fixed place of
business resulting from this combination is of a
preparatory or auxiliary character.
6.Notwithstanding the provisions of paragraphs 1 and
2, where a person - other than an agent of an
independent status to whom paragraph 7 applies - is
acting on behalf of an enterprise and has, and
habitually exercises, in a territory an authority
to conclude contracts in the name of the
enterprise, that enterprise shall be deemed to have
a permanent establishment in that territory in
respect of any activities which that person
undertakes for the enterprise, unless the
activities of such person are limited to those
mentioned in paragraph 5 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.
7.An enterprise shall not be deemed to have a
permanent establishment in a territory merely
because it carries on business in that territory
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.
8.The fact that a company which is a resident of a
territory controls or is controlled by a company
which is a resident of the other territory, or
which carries on business in that other territory
(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 territory from
immovable property (including income from
agriculture or forestry) situated in the other
territory may be taxed in that other territory.
2.The term "immovable property" shall have the
meaning which it has under the law of the territory
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 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 personal
services.
Article 7 BUSINESS PROFITS
1.The profits of an enterprise of a territory shall
be taxable only in that territory unless the
enterprise carries on business in the other
territory through a permanent establishment
situated therein. If the enterprise carries on
business as aforesaid, the profits of the
enterprise may be taxed in the other territory but
only so much of them as is attributable to that
permanent establishment.
2.Subject to the provisions of paragraph 3, where an
enterprise of a territory carries on business in
the other territory through a permanent
establishment situated therein, there shall in each
territory 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
permanent establishment, including executive and
general administrative expenses so incurred,
whether in the territory in which the permanent
establishment is situated or elsewhere.
4.Insofar as it has been customary in a territory 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 territory 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.
5.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.
6.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.
7.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 territory
from the operation of ships or aircraft in
international traffic shall be taxable only in that
territory.
2.For the purpose of this Article, profits from the
operation of ships or aircraft in international
traffic include:
a)profits from the rental on a full (time or voyage
)basis or a bareboat basis of ships or aircraft;
and
b)profits from the use, maintenance or rental of
containers and related equipment 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 shall also apply to
profits from the participation in a pool, a joint
business or an international operating agency, but
only to so much of the profits so derived as is
attributable to the participant in proportion to
its share in the joint operation.
Article 9 ASSOCIATED ENTERPRISES
1.Where
a)an enterprise of a territory participates
directly or indirectly in the management, control
or capital of an enterprise of the other
territory, or
b)the same persons participate directly or
indirectly in the 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
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 reason of those conditions,
have not so accrued, may be included in the
profits of that enterprise and taxed accordingly.
2.Where a competent authority of a territory includes
in the profits of an enterprise 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 accrued to
the enterprise of the first-mentioned territory if
the conditions made between the two enterprises had
been those which would have been made between
independent enterprises, then that other territory
shall make an appropriate adjustment to the amount
of the tax charged therein on those profits if that
other territory considers the adjustment justified.
In determining such adjustment, due regard shall be
had to the other provisions of this Agreement and
the competent authorities of the territories shall
if necessary consult each other.
Article 10 DIVIDENDS
1.Dividends paid by a company which is a resident of
a territory to a resident of the other territory
may be taxed in that other territory.
2.However, such dividends may also be taxed in the
territory of which the company paying the
dividends is a resident and according to the laws
of that territory, but if the beneficial owner of
the dividends is a resident of the other
territory, the tax so charged shall not exceed 10
per cent of the gross amount of the dividends.
The competent authorities of the territories shall
by mutual agreement settle the mode of application
of these limitations.
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, "jouissance" shares or
"jouissance" rights, founders' 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
territory 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 territory, carries on
business in the other territory of which the
company paying the dividends is a resident,
through a permanent establishment situated
therein, or performs in that other territory
independent personal services from a fixed a 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 14, as the case may be, shall apply.
5.Where a company which is a resident of a territory
derives profits or income from the other
territory, that other territory 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 territory 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 territory, 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
territory.
Article 11 INTEREST
1.Interest arising in a territory and paid to a
resident of the other territory may be taxed in
that other territory.
2.However, such interest may also be taxed in the
territory in which it arises and according to the
laws of that territory, but if the beneficial
owner of the interest is a resident of the other
territory, the tax so charged shall not exceed:
a)7 per cent of the gross amount of the interest
arising in a territory and paid on any loan of
whatever kind granted by a bank of the other
territory.
b)10 per cent of the gross amount of the interest
in all other cases.
The competent authorities of the territories
shall by mutual agreement settle the mode of
application of this limitation.
3.Notwithstanding the provisions of paragraph 2,
interest arising in a territory shall be exempt
from tax in that territory if it is paid:
a)to the authority administering the other
territory or a local authority or the Central
Bank thereof in relation to any loan, debt-claim
or credit granted by any such bodies;
b)in respect to a loan, debt-claim or credit
guaranteed or insured by an institution for
insurance or financing of international trade
transactions which is wholly owned by the other
territory or the authority administering the
other territory.
4.The provisions of paragraphs 1 and 2 shall not
apply if an interest arising in a territory is
paid to a resident of the other territory, and the
recipient is the beneficial owner of the interest,
and the interest is paid with respect to
indebtedness arising on the sale on credit, by
that resident, of any merchandise or industrial,
commercial or scientific equipment to a resident
of the first-mentioned territory. In such case the
provisions of Article 7 shall apply.
5.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.
6.The provisions of paragraphs 1 and 2 shall not
apply if the beneficial owner of the interest,
being a resident of a territory, carries on
business in the other territory in which the
interest arises through a permanent establishment
situated therein, or performs in that other
territory 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 14, as the case
may be, shall apply.
7.Interest shall be deemed to arise in a territory
when the payer is a resident of that territory.
Where, however, the person paying the interest,
whether he is a resident of a territory or not,
has in a territory 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 territory
in which the permanent establishment or fixed base
is situated.
8.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 territory,
due regard being had to the other provisions of
this Agreement.
Article 12 ROYALTIES
1.Royalties arising in a territory and paid to a
resident of the other territory may be taxed in
that other territory.
2.However, such royalties may also be taxed in the
territory in which they arise and according to the
laws of that territory, but if the beneficial
owner of the royalties is a resident of the other
territory, the tax so charged shall not exceed 10
per cent of the gross amount of the royalties.
The competent authorities of the territories shall
by mutual agreement settle the mode of application
of this limitation.
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
(including copyright of literary, artistic work or
cinematograph films), any patent, trade mark,
design or model, plan, secret formula or process,
or for information concerning industrial,
commercial or scientific experience, or for the
use or the right to use a person ’ s name,
picture or any other similar personality right.
4.The provisions of paragraphs 1 and 2 shall not
apply if the beneficial owner of the royalties,
being a resident of a territory, carries on
business in the other territory in which the
royalties arise, through a permanent establishment
situated therein, or performs in that other
territory 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 14, as the case
may be, shall apply.
5.Royalties shall be deemed to arise in a territory
when the payer is a resident of that territory.
Where, however, the person paying the royalties,
whether he is a resident of a territory or not,
has in a territory 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 territory 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
territory, due regard being had to the other
provisions of this Agreement.
Article 13 CAPITAL GAINS
1.Gains derived by a resident of a territory from
the alienation of immovable property referred to
in Article 6 and situated in the other territory,
or from the alienation of any option or similar
right to acquire such an immovable property, may
be taxed in that other territory.
2.Gains derived by a resident of a territory from
the alienation of shares or of a comparable
interest of any kind deriving more than 50 percent
of their value, directly or indirectly, from
immovable property situated in the other territory
may be taxed in that other territory.
3.Gains from the alienation of movable property
forming part of the business property of a
permanent establishment which an enterprise of a
territory has in the other territory or of movable
property pertaining to a fixed base available to a
resident of a territory in the other territory for
the purpose of performing independent personal
services, including such gains from the alienation
of such a permanent establishment (alone or with
the whole enterprise) or of such fixed base, may
be taxed in that other territory.
4.Gains derived by an enterprise of a territory 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 that territory.
5.Gains from the alienation of any property other
than that referred to in paragraphs 1, 2, 3 and 4,
shall be taxable only in the territory of which
the alienator is a resident, if that resident is
the beneficial owner of such capital gains.
Article 14 INDEPENDENT PERSONAL SERVICES
1.Income derived by a resident of a territory in
respect of professional services or other
activities of an independent character shall be
taxable only in that territory except in the
following circumstances, when such income may also
be taxed in the other territory:
a)if he has a fixed base regularly available to
him in the other territory for the purpose of
performing his activities; in that case, only so
much of the income as is attributable to that
fixed base may be taxed in that territory; or
b)if his stay in the other territory is for a
period or periods amounting to or exceeding in
the aggregate 183 days in any twelve-month
period; in that case, only so much income as is
derived from his activities performed in the
other territory may be taxed in that territory.
2.The term “ professional services “ includes
especially independent scientific, literary,
artistic, educational or teaching activities as
well as the independent activities of physicians,
lawyers, engineers, architects, dentists and
accountants.
Article 15 INCOME FROM EMPLOYMENT
1.Subject to the provisions of Articles 16, 18, 19,
and 20, salaries, wages and other similar
remuneration derived by a resident of a territory
in respect of an employment shall be taxable only
in that territory unless the employment is
exercised in the other territory. If the
employment is so exercised, such remuneration as
is derived therefrom may be taxed in that other
territory.
2.Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a territory
in respect of an employment exercised in the other
territory shall be taxable only in the
first?mentioned territory if:
a)the recipient is present in the other territory
for a period or periods not exceeding in the
aggregate 183 days in any twelve month period
commencing or ending in the calendar year
concerned, and
b)the remuneration is paid by, or on behalf of, an
employer who is not a resident of the other
territory, and
c)the remuneration is not borne by a permanent
establishment or a fixed base which the employer
has in the other territory.
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 territory, may be taxed in that territory.
Article 16 DIRECTORS' FEES
Directors' fees and other similar payments derived
by a resident of a territory in his capacity as a
member of the board of directors of a company which
is a resident of the other territory may be taxed in
that other territory.
Article 17 ARTISTES AND SPORTSPERSONS
1.Notwithstanding the provisions of Articles 14 and
15, income derived by a resident of a territory as
an entertainer, such as a theatre, motion picture,
radio or television artiste, or a musician, or as
a sportsperson, from his personal activities as
such exercised in the other territory, may be
taxed in that other territory.
2.Where income in respect of personal activities
exercised by an entertainer or a sportsperson in
his capacity as such accrues not to the
entertainer or sportsperson himself but to another
person, that income may, notwithstanding the
provisions of Articles 7, 14 and 15, be taxed in
the territory in which the activities of the
entertainer or sportsperson are exercised.
3.The provisions of paragraphs 1 and 2 shall not
apply to income derived from activities exercised
in a territory by an entertainer or sportsperson
if the visit to that territory is wholly or mainly
supported by public funds of one or both of the
authorities administering a territory or any
subdivision or local authority thereof. In such a
case, the income shall be taxable in accordance
with the provisions of Article 7, 14 or 15, as the
case may be.
Article 18 PENSIONS
1.Subject to the provisions of paragraph 2 of
Article 19, pensions and other similar
remuneration paid to a resident of a territory in
consideration of past employment shall be taxable
only in that territory.
2.Notwithstanding the provisions of paragraph 1,
pensions and other payments made under the social
security legislation of a territory shall be
taxable only in that territory.
Article 19 PUBLIC SERVICE
1.
a)Salaries, wages and other similar remuneration,
other than a pension, paid by an authority
administering a territory or any subdivision or
a local authority thereof to an individual in
respect of services rendered to that
administering authority or subdivision or local
authority shall be taxable only in that
territory.
b)However, such salaries, wages and other similar
remuneration shall be taxable only in the other
territory if the services are rendered in that
territory and the 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 for the purpose of rendering the
services.
2.
a)Any pension paid by, or out of funds created by,
an authority administering a territory or any
subdivision or a local authority thereof to an
individual in respect of services rendered to
that administering authority or subdivision or
local authority shall be taxable only in that
territory.
b)However, such pension shall be taxable only in
the other territory if the individual is a
resident of, and a citizen or national of, that
territory.
3.The provisions of Articles 15, 16, 17, and 18
shall apply to salaries, wages and other similar
remuneration, and to pensions in respect of
services rendered in connection with a business
carried on by an authority administering a
territory or any subdivision or a local authority
thereof.
Article 20 PROFESSORS AND RESEARCHERS
1.A resident of a territory who, at the invitation
of a university, college, school or other similar
institution, situated in the other territory and
recognized by the authority administering that
other territory, is temporarily present in that
other territory solely for the purpose of
teaching, or engaging in research, or both, at the
educational institution shall, for a period not
exceeding two years from the date of his first
arrival in that other territory, be exempt from
tax in that other territory for his remuneration
for such teaching or research.
2.The provisions of paragraph 1 shall not apply to
any remuneration for research if such research is
undertaken not in the public interest but for the
private benefit of a specific person or persons.
Article 21 STUDENTS
Payments which a student or business apprentice who
is or was immediately before visiting a territory a
resident of the other territory and who is present
in the first-mentioned territory solely for the
purpose of his education or training receives for
the purpose of his maintenance, education or
training shall not be taxed in that territory,
provided that such payments arise from sources
outside that territory.
Article 22 OTHER INCOME
1.Items of income of a resident of a territory,
wherever arising, not dealt with in the foregoing
Articles of this Agreement shall be taxable only
in that territory.
2.The provisions of paragraph 1 shall not apply to
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
territory, carries on business in the other
territory through a permanent establishment
situated therein or performs in that other
territory 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 14, as the case
may be, shall apply.
Article 23 ELIMINATION OF DOUBLE TAXATION
1.In the case of the territory referred to in
paragraph 3(a) of Article 2 of this Agreement
double taxation shall be avoided as follows:
Where a resident of that territory derives income
from the other territory, the amount of tax on
that income paid in the last-mentioned territory
(but excluding, in the case of a dividend, tax
paid in respect of the profits out of which the
dividend is paid) and in accordance with the
provisions of this Agreement, shall be credited
against the tax levied in the first-mentioned
territory imposed on that resident. The amount of
credit, however, shall not exceed the amount of
the first-mentioned territory tax on that income
computed in accordance with its taxation laws and
regulations.
2.In the case of the territory referred to in
paragraph 3(b) of Article 2 of this Agreement
double taxation shall be avoided as follows:
Where a resident of that territory derives income
which, in accordance with the provisions of this
Agreement, may be taxed in the other territory,
the first-mentioned territory shall (subject to
the laws of the first-mentioned territory
regarding the allowance of a credit of foreign
taxes, which shall not affect the general
principle contained in this paragraph) allow as a
deduction from the tax on the income of that
resident, an amount equal to the income tax paid
in the last-mentioned territory. Such deduction
shall not, however, exceed that part of the income
tax as computed before the tax credit is given,
which is attributable, as the case may be, to the
income which may be taxed in the last-mentioned
territory.
Article 24 NON-DISCRIMINATION
1.Citizens or nationals of a territory shall not be
subjected in the other territory to any taxation
or any requirement connected therewith, which is
other or more burdensome than the taxation and
connected requirements to which citizens or
nationals of that other territory in the same
circumstances, in particular with respect to
residence, are or may be subjected. This provision
shall, notwithstanding the provisions of Article
l, also apply to persons who are not residents of
one or both of the territories.
2.The taxation on a permanent establishment which an
enterprise of a territory has in the other
territory shall not be less favorably levied in
that other territory than the taxation levied on
enterprises of that other territory carrying on
the same activities. This provision shall not be
construed as obliging a territory to grant to
residents of the other territory any personal
allowances, reliefs and reductions for taxation
purposes on account of civil status or family
responsibilities which it grants to its own
residents.
3.Except where the provisions of paragraph 1 of
Article 9, paragraph 8 of Article 11, or paragraph
6 of Article 12, apply, interest, royalties and
other disbursements paid by an enterprise of a
territory to a resident of the other territory
shall, for the purpose of determining the taxable
profits of such enterprise, be deductible under
the same conditions as if they had been paid to a
resident of the first?mentioned territory.
4.Enterprises of a territory, the capital of which
is wholly or partly owned or controlled, directly
or indirectly, by one or more residents of the
other territory, shall not be subjected in the
first-mentioned territory 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
the first-mentioned territory are or may be
subjected.
5.The provisions of this Article shall apply to
taxes which are the subject of this Agreement.
Article 25 MUTUAL AGREEMENT PROCEDURE
1.Where a person considers that the actions of one
or both of the territories result or will result
for him in taxation not in accordance with the
provisions of this Agreement, he may, irrespective
of the remedies provided by the domestic law of
the territory, present his case to the competent
authority of the territory of which he is a
resident or, if his case comes under paragraph 1
of Article 24, to that of the territory of which
he is a citizen or national. The case must be
presented within three years from the first
notification of the action resulting in taxation
not in accordance with the provisions of the
Agreement.
2.The competent authority shall endeavor, 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
territory, with a view to the avoidance of
taxation which is not in accordance with the
Agreement. Any agreement reached shall be
implemented notwithstanding any time limits in the
domestic law of the territories.
3.The competent authorities of the territories shall
endeavor 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 territories may
communicate with each other directly for the
purpose of reaching an agreement in the sense of
the preceding paragraphs.
Article 26 EXCHANGE OF INFORMATION
1.The competent authorities of the territories shall
exchange such information as is necessary for
carrying out the provisions of this Agreement or
of the domestic laws concerning taxes covered by
this Agreement imposed on behalf of the
territories, or of their subdivisions or local
authorities, insofar as the taxation thereunder is
not contrary to the Agreement. The exchange of
information is not restricted by Article 1. Any
information received by a territory shall be
treated as secret in the same manner as
information obtained under the domestic laws of
that territory and shall be disclosed only to
persons or authorities (including courts and
administrative bodies) concerned with the
assessment or collection of, the enforcement or
prosecution in respect of, or the determination of
appeals in relation to the taxes referred to in
the first sentence. Such persons or authorities
shall use the information only for such purposes.
They may disclose the information in public court
proceedings or in judicial decisions.
2.In no case shall the provisions of paragraph 1 be
construed so as to impose on a territory the
obligation:
a)to carry out administrative measures at variance
with the laws or the administrative practice of
that or of the other territory;
b)to supply information which is not obtainable
under the laws or in the normal course of the
administration of that or of the other
territory;
c)to supply information which would disclose any
trade, business, industrial, commercial or
professional secret or trade process, or
information, the disclosure of which would be
contrary to public policy.
Article 27 LIMITATION OF BENEFITS
1.Notwithstanding the provisions of any other
Article of this Agreement, a resident of a
territory shall not receive the benefit of any
reduction in or exemption from tax provided for in
the Agreement by the other territory if the main
purpose or one of the main purposes of such
resident or a person connected with such resident
was to obtain the benefits of this Agreement.
2.The Agreement shall not prevent a territory from
applying its domestic law on the prevention of tax
evasion or tax avoidance.
3.The benefits under this Agreement shall not be
granted to a person who is not the beneficial
owner of the item of income.
Article 28 ENTRY INTO FORCE
1.This Agreement shall enter into force on the date
of the last signature.
2.This Agreement shall be applicable to income
derived on or after 1 January of the calendar year
following the year in which the Agreement enters
into force. On that date, the Memorandum of
Understanding Concerning Reciprocal Exemption with
Respect to Income Tax on Shipping Enterprises
between the Taipei Economic and Cultural Office in
Tel-Aviv and the Israel Economic and Cultural
Office in Taipei shall cease to have effect.
Article 29 TERMINATION
1.This Agreement shall remain in force until
terminated by the Taipei Economic and Cultural
Office in Tel-Aviv or the Israel Economic and
Cultural Office in Taipei. Either of them may
terminate the Agreement by giving notice of
termination at least six months before the end of
any calendar year beginning after the expiration
of a period of five years from the date of its
entry into force.
2.The Agreement shall cease to have effect on income
derived on or after 1 January of the calendar year
following that in which such notice has been
given.
IN WITNESS WHEREOF the undersigned, duly authorized thereto,
have signed this Agreement.
Done at Taipei this 18th, day of December 2009 in duplicate in
the English language.
Done at Tel Aviv this 24th day of December 2009 in duplicate in
the English language.
Gan Cheng Ting R. Gamzou
───────────── ──────────────
For the Taipei Economic and For the Israel Economic and
Cultural Office in Tel-Aviv Cultural Office in Taipei
ANNEX
Upon signing the Agreement for the Avoidance of Double Taxation
and the Prevention of Fiscal Evasion with Respect to Taxes on
Income between the Taipei Economic and Cultural Office in
Tel-Aviv and the Israel Economic and Cultural Office in Taipei
have agreed that the following provisions shall form an integral
part of the Agreement:
1.Ad Paragraph 1 of Article 4
It is understood that as long as residents individuals of the
territory referred to in paragraph 3(a) of Article 2 of this
Agreement are taxed only in respect to income from sources in
that territory, the term "resident of a territory" includes a
person who is liable to tax in that territory in respect only
of income from sources in that territory.
2.Ad Paragraph 3 of Article 7
It is understood that the provisions of this paragraph do not
apply to expenses which would not be deductible if the
permanent establishment was a separate enterprise of the
territory in which it is located.
3.Ad Article 10
If, an agreement for the avoidance of double taxation or a
protocol amending such an agreement is signed after the
signature of this Agreement between the territory referred to
in paragraph 3(a) of Article 2 and a third territory, being a
member of the Organisation for Economic Co-operation and
Development (OECD), (hereinafter in this paragraph and
paragraph 4 referred as “ the other agreement ” ), and the
first-mentioned territory would exempt dividends from tax or
reduce the rate of tax on dividends below 10 per cent
according to the other agreement, such exemption or reduced
rate shall automatically apply, as if it had been specified in
this Agreement, with effect from the date on which the
provisions of the other agreement enter into force or from the
date on which this agreement enters into force, whichever is
later.
This provision shall apply to dividends if the beneficial
owner of the dividends shall meet the same requirements for
the exemption or the reduced rate of the other agreement.
4.Ad Article 12
If, in the other agreement, the first mentioned territory
would exempt royalties from tax or reduce the rate of tax on
royalties below 10 per cent, such exemption or reduced rate
shall automatically apply as if it had been specified in this
Agreement, with effect from the date on which the provisions
of the other agreement enter into force or from the date on
which this agreement enters into force, whichever is later.
5.Ad Paragraph 1 of Article 14
If income derived by a resident of a territory in respect of
professional services or other activities of an independent
character is taxed in the other territory, there shall be
allowed as deductions expenses which are incurred for the
purposes of performing such services in determining the
taxable income.
6.Tax relief
Relief provided in this Agreement to a resident of a territory
by the tax authorities of the other territory shall be
conditioned upon the presentation of a certificate of
residence indicating the relevant income, signed by the tax
authorities of the first-mentioned territory.
7.Partnerships
a)This Agreement shall not prevent a territory from taxing
resident partners on their share of the income of a
partnership that is treated as a resident of the other
territory.
b)Each territory shall allow credit for tax paid in the other
territory in respect to income derived in that other
territory even if that income is regarded in one territory
as an income of a partnership and in the other territory as
an income of the partners.
IN WITNESS WHEREOF the undersigned, duly authorized thereto,
have signed this Annex.
Done at Taipei this 18th day of December 2009 in duplicate in
the English language.
Done at Tel Aviv this 24th day of December 2009 in duplicate in
the English language.
Gan Cheng Ting R. Gamzou
───────────── ──────────────
For the Taipei Economic and For the Israel Economic and
Cultural Office in Tel-Aviv Cultural Office in Taipei