Direct Tax Avoidance Agreements

Taipei

Article 23

METHODS FOR ELIMINATION OF DOUBLE TAXATION

Double taxation shall be eliminated as follows:

1. In the territory referred to in paragraph 3(a) of Article 2:

 (a)  Where a resident of the territory referred to in paragraph 3(a) of Article 2 derives income which, in accordance with the provisions of this Agreement, may be taxed in the territory referred to in paragraph 3(b) of Article 2, the territory referred to in paragraph 3(a) of Article 2 shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in the territory referred to in paragraph 3(b) of Article 2.

        Such deduction shall not, however, exceed that part of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in the territory referred to in paragraph 3(b) of Article 2.

 (b)  Where in accordance with any provision of the Agreement income derived by a resident of the territory referred to in paragraph 3(a) of Article 2 is exempt from tax in the territory referred to in paragraph 3(a) of Article 2, the territory referred to in paragraph 3(a) of Article 2 may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.

2. In the territory referred to in paragraph 3(b) of Article 2:

 (a)  Where a resident of the territory referred to in paragraph 3(b) of Article 2 derives income from the other territory, the amount of tax on that income paid in that other 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 on that resident.

        The amount of credit, however, shall not exceed the amount of the tax in the first-mentioned territory on that income computed in accordance with its taxation laws and regulations.

 (b)  Where in accordance with any provision of the Agreement income derived by a resident of the territory referred to in paragraph 3(b) of Article 2 is exempt from tax in the territory referred to in paragraph 3(b) of Article 2, the territory referred to in paragraph 3(b) of Article 2 may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.