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HMRC internal manual

Double Taxation Relief Manual

DT: Thailand: double taxation agreement, Article 12: Interest

(1) Interest arising in a Contracting State and paid to a resident of the otherContracting State may be taxed in that other State.

(2) Such interest may also be taxed in the Contracting State in which it arises, andaccording to the law of that State, but where the interest is paid to a resident of theother Contracting State who is subject to tax in that other State in respect of it, thetax so charged in the State in which the interest arises shall not exceed:

(a) 10 per cent of the gross amount of the interest, if the interest is derived by a bank or any other financial institution (including an insurance company) which is a resident of the other State;
(b) 25 per cent of the gross amount of the interest, in all other cases.

(3) Notwithstanding the provisions of paragraph (2) of this Article, interest arisingin a Contracting State and paid to the Government of the other Contracting State apolitical subdivision or a local authority thereof, the Central Bank of that otherContracting State, or any agency (other than an agency with share capital) wholly owned bythat Government, political subdivision or local authority shall be exempt from tax in thefirst-mentioned Contracting State. The competent authorities of the Contracting States maydetermine by mutual agreement any other governmental institution to which this paragraphshall apply.

(4) The term `interest` as used in this Article means income from Government securities,bonds or debentures, whether or not secured by mortgage and whether or not carrying aright to participate in profits, and other debt-claims of every kind as well as otherincome assimilated to income from money lent by the taxation law of the State in which theincome arises.

(5) The provisions of paragraphs (1) and (2) of this Article shall not apply if therecipient of the interest, being a resident of a Contracting State, has in the otherContracting State in which the interest arises a permanent establishment with which thedebt-claim from which the interest arises is effectively connected. In such case, theprovisions of Article 8 shall apply.

(6) Interest shall be deemed to arise in a Contracting State when the payer is that Stateitself, a political subdivision, a local authority or a resident of that State. Where,however, the person paying the interest, whether he is a resident of a Contracting Stateor not, has in a Contracting State a permanent establishment in connection with which theindebtedness on which the interest is paid was incurred, then such interest shall bedeemed to arise in the Contracting State in which the permanent establishment is situated.

(7) Where, owing to a special relationship between the payer and the recipient of theinterest or between both of them and some other person, the amount of the interest paidexceeds, for whatever reason, the amount which would have been paid in the absence of suchrelationship, the provisions of this Article shall apply to the last-mentioned amount. Inthat case, the excess part of the payments shall remain taxable according to the law ofeach Contracting State, due regard being had to the other provisions of this Convention.