Direct Tax Avoidance Agreements

Taipei

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 derived by a transportation enterprise from the operation of ships or aircraft in international traffic include :

 (a)  profits derived from the rental on a full (time or voyage) basis of ships or aircraft; and

 (b)  profits from the use, maintenance or rental of containers (including trailers and other equipment for the transport of containers) used for the transport of goods or merchandise, unless the containers are used solely within the other territory;

where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircrafts in international traffic.

3. For the purposes of this Article interest on investments directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft if they are integral to the carrying on of such business, and the provisions of Article 11 shall not apply in relation to such interest.

4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.