Direct Tax Avoidance Agreements

Taipei

Article 12

ROYALTIES AND FEES FOR TECHNICAL SERVICES

Royalties or fees for technical services arising in a territory and paid to a resident of the other territory may be taxed in that other territory.

2. However, such royalties or fees for technical services 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 or fees for technical services is a resident of the other territory, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties or fees for technical 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 services" as used in this Article means payments of any kind, other than those mentioned in Articles 14 and 15 of this Agreement as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a territory, carries on business in the other territory in which the royalties or fees for technical services 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 or fees for technical services 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.(a) Royalties or fees for technical services shall be deemed to arise in a territory when the payer is a resident of that territory. Where, however, the person paying the royalties or fees for technical services, 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 or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the territory in which the permanent establishment or fixed base is situated.

(b) Where under sub-paragraph (a) royalties or fees for technical services do not arise in one of the territories, and the royalties relate to the use of, or the right to use, the right or property, or the fees for technical services relate to services performed, in one of the territories, the royalties or fees for technical services shall be deemed to arise in that territory.

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 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 territory, due regard being had to the other provisions of this Agreement.