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Article 12 - ROYALTIES AND FEES FOR TECHNICAL OR PROFESSIONAL SERVICES - BHUTANExtract Article 12 ROYALTIES AND FEES FOR TECHNICAL OR PROFESSIONAL SERVICES 1. Royalties or fees for technical or professional services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such royalties or fees for technical or professional services may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties or fees for technical or professional services is a resident of the other Contracting State the tax so charged shall not exceed 10 per cent of the gross amount of the royalties or fees for technical or professional services. 3. (a) The term royalties as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. (b) The term fees for technical or professional services as used in this Article means payments of any kind, other than those mentioned in Articles 14 of this Agreement as consideration for- (i) managerial or technical or consultancy services, including the provision of services of technical or other personnel; or (ii) professional services including independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, surgeons, dentists and accountants. 4. The provisions of paragraph 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical or professional services being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical or professional services arise, through a permanent establishment situated therein and the right or property in respect of which the royalties or fees for technical or professional services are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 read with Article 5 of the Agreement shall apply. 5. (a) Royalties and fees for technical or professional services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority, or a resident of that State. Where, however, the person paying the royalties or fees for technical or professional services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties or fees for technical or professional services was incurred, and such royalties or fees for technical or professional services are borne by such permanent establishment, then such royalties or fees for technical or professional services shall be deemed to arise in the Contracting State in which the permanent establishment is situated. (b) Where under sub-paragraph (a) royalties or fees for technical or professional services do not arise in one of the Contracting States, and the royalties relate to the use of, or the right to use, the right or property, or the fees for technical or professional services relate to services performed, in one of the Contracting States, the royalties or fees for technical or professional services shall be deemed to arise in that Contracting State. 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 or fees for technical or professional services, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
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