MINISTRY OF FOREIGN AFFAIRS OF VIETNAM
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No. 07/2011/SL-LPQT
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Hanoi, January 29, 2011
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NOTIFICATION OF ENTRY INTO FORCE OF
INTERNATIONAL TREATY
Implementing
the regulations as prescribed in clause 3, Article 47 of the 2005 Law on
conclusion, accession to and implementation of treaties, the Ministry of
Foreign Affairs of Vietnam (Department of Law and International Treaty)
notifies:
“Agreement
between the Government of the Kingdom of Saudi Arabia and the Government of the
Socialist Republic of Vietnam for the avoidance of double taxation and the
prevention of tax evasion with respect to taxes on income” signed April 10,
2010 in Riyadh takes effect since February 01, 2011.
The
Ministry of Foreign Affairs would like to send an exemplified copy of the
agreement as prescribed in Article 68 of the Law stated above./.
ON BEHALF OF THE MINISTER
PP. DIRECTOR GENERAL OF DEPARTMENT OF LAW AND INTERNATIONAL TREATY
DEPUTY DIRECTOR GENERAL
Nguyen Thi Minh Nguyet
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BETWEEN THE GOVERNMENT OF THE KINGDOM OF SAUDI ARABIA AND
THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF VIETNAM FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF TAX EVASION WITH RESPECT TO TAXES ON INCOME
The
Government of the Socialist Republic of Vietnam and Government of the Kingdom
of Saudi Arabia
Desiring
to conclude an Agreement for the avoidance of double taxation and the
prevention
Have
agreed as follows:
Article
1. Regulated entities
This
Agreement shall apply to persons who are residents of one or both of the
Contracting
Article
2. Taxes covered
1.
This Agreement shall apply to taxes on income imposed on behalf of a
Contracting State or of its local authorities, irrespective of the manner in
which they are levied
2. All
taxes imposed on total income, or on elements of income, including taxes on
gains from the alienation of movable or immovable property, taxes on the total
amounts of wages or salaries paid by enterprises, as well as taxes on capital
appreciation shall be regarded as taxes on income.
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(a) in
Vietnam:
(i)
Personal income tax;
(ii)
Business income tax;
(hereinafter
referred to as the "Vietnamese tax"); and
(b) in
the Kingdom of Saudi Arabia:
(i)
Zakat;
(ii)
Income tax including the natural gas investment tax;
(hereinafter
referred to as the "Saudi tax")
4. The
Agreement shall also apply to any identical or substantially similar taxes that
are imposed after the date of signature of this Agreement in addition to, or in
place of, the existing taxes. The competent authorities of the Contracting
States shall notify each other of significant changes which have been made in
their respective taxation laws
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1. For
the purposes of this Agreement, unless the context otherwise requires:
(a)
the term "Vietnam" means the Socialist Republic of Vietnam; when used
in a geographical sense, it means its land territory, islands, internal waters,
territorial sea and airspace above them, the maritime areas beyond territorial
sea including seabed and subsoil thereof over which the Socialist Republic of
Vietnam exercises sovereignty, sovereign rights and jurisdiction in accordance
with national legislation and international law;
(b)
the term "Kingdom of Saudi Arabia" means the territory of the Kingdom
of Saudi Arabia which also includes the area outside the territorial waters,
where the Kingdom of Saudi Arabia exercises its sovereign and jurisdictional
rights in their waters, sea bed, sub-soil and natural resources by virtue of
its law and international law;
(c)
the terms "a Contracting State" and "the other Contracting
State" mean Vietnam or the Kingdom of Saudi Arabia or, as the context
requires;
(d)
the term "person" includes an individual, a company and any other
body of persons, including the State or its local authorities;
(e)
the term "company" means any body corporate or any entity that is
treated as a body corporate for tax purposes;
(f)
the terms "enterprise of a Contracting State" and "enterprise of
the other Contracting State" mean respectively an enterprise carried on by
a resident of a Contracting State and an enterprise carried on by a resident of
the other Contracting State;
(g)
the term "international traffic" means any transport by a ship or
aircraft operated by an enterprise, that has its place of effective management
in a Contracting State, except when the ship or aircraft is operated solely
between places in the other Contracting State;
(h)
the term "national" means:
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(ii)
any legal person, partnership and association deriving its status as such from
the laws in force in a Contracting State
(i)
the term "competent authority" means:
(i) in
the case of Vietnam, the Minister of Finance or his authorized representative;
(ii)
in the case of the Kingdom of Saudi Arabia, the Ministry of Finance represented
by the Minister of Finance or his authorized representative;
2. As
regards the application of the Agreement at any time by a Contracting State,
any term not defined therein shall, unless the context otherwise requires, have
the meaning that it has at that time under the laws of that State for the
purposes of the taxes to which the Agreement applies, any meaning under the
applicable tax laws of that State prevailing over a meaning given to the term under
other laws of that State.
Article
4. Resident
1.
According to the purposes of this Agreement, the term "resident of a
Contracting State" means any person who, under the laws of that State, is
liable to tax therein by reason of his domicile, residence, place of
registration, place of management, or any other criterion of a similar nature.
The term "resident of a Contracting State" also includes that State
or its local authorities or a legal person organized under the laws of a
Contracting State and that is generally exempt from tax in that State.
However,
this term does not include any person who is liable to tax in that State in
respect only of income from sources in that State.
2.
Where by reason of the provisions of clause 1 of this Article, if an individual
is a resident of both Contracting States, then his/her status shall be
determined as follows
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(b) if
the Contracting State in which he/she has his/her centre of vital interests
cannot be determined, or if he does not have a permanent home available to him
in either Contracting State, he shall be deemed to be a resident only of the
Contracting State in which he has an habitual abode;
(c) if
he/she has an habitual abode in both Contracting States or in neither of them,
he/she shall be deemed to be a resident only of the Contracting State of which
he/she is a national;
(d) if
he/she is a national of both Contracting States or of neither of them, the
competent authorities of the Contracting States shall settle the question by
mutual agreement.
3.
Where by reason of the provisions of clause 1 of this Article, a person other
than an individual is a resident of both Contracting States, then it shall be
deemed to be a resident only of the State in which its place of effective
management is situated
Article
5. Permanent establishment
1. For
the purposes of this Agreement, the term "permanent establishment"
means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
2. The
term "permanent establishment" includes especially:
(a) a
place of management;
(b) a
branch;
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(d) a
factory;
(e) a
workshop;
(f) a
warehouse; and
(g)
any place of exploration for or extraction of natural resources.
3. The
term "permanent establishment" also encompasses:
(a) a
building site, a construction, assembly or installation project or supervisory
activities in connection therewith, but only if such site, project or
activities last more than six months; and
(b)
the furnishing of services, including consultancy services, by an enterprise
through employees or other personnel engaged by the enterprise for such
purpose, but only if activities of that nature continue (for the same or a
connected project) within a Contracting State for a period or periods
aggregating more than six months within any twelve-month period.
4.
Notwithstanding the preceding provisions of this Article, the term
"permanent establishment" shall be deemed not to include:
(a)
the use of facilities solely for the purpose of storage or display of goods or
merchandise belonging to the enterprise;
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(c)
the maintenance of a stock of goods or merchandise belonging to the enterprise
solely for the purpose of processing by another enterprise;
(d)
the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise or of collecting information for the
enterprise; and
(e)
the maintenance of a fixed place of business solely for the purpose of carrying
on, for the enterprise, any other activity of a preparatory or auxiliary
character.
5.
Notwithstanding the provisions of clauses 1 and 2 of this Article, where a
person - other than an agent of an independent status to whom clause 6 applies
– is acting in a Contracting State on behalf of an enterprise of the other
Contracting State, that enterprise shall be deemed to have a permanent
establishment in the first mentioned Contracting State in respect of any
activities which that person undertakes for the enterprise, if such a person:
(a)
has and habitually exercises in that State an authority to conclude contracts
in the name of the enterprise, unless the activities of such person are limited
to those mentioned in clause 4 which, if exercised through a fixed place of
business, would not make this fixed place of business a permanent establishment
under the provisions of that clause; or
(b)
has no such authority, but habitually maintains in the first-mentioned State a
stock of goods or merchandise from which he/she regularly delivers goods or
merchandise on behalf of the enterprise.
6. An
enterprise of a Contracting State shall not be deemed to have a permanent
establishment in the other Contracting State merely because it carries on
business in that other Contracting State through a broker, general commission
agent or any other agent of an independent status, provided that such persons
are acting in the ordinary course of their business. However, when the
activities of such an agent are devoted wholly or almost wholly on behalf of that
enterprise, and conditions are made or imposed between that enterprise and the
agent in their commercial and financial relations which differ from those which
would have been made between independent enterprises, he/she will not be
considered an agent of an independent status within the meaning of this clause.
7. The
fact that a company which is a resident of a Contracting State controls or is
controlled by a company which is a resident of the other Contracting State, or
which carries on business in that other Contracting State (whether through a
permanent establishment or otherwise), shall not of itself constitute either
company a permanent establishment of the other.
Article
6. Income from immovable property
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2. The
term "immovable property" shall have the meaning which it has under
the law of the Contracting State in which the property in question is situated.
The term shall in any case include property accessory to immovable property,
livestock and equipment used in agriculture and forestry, rights to which the
provisions of general law respecting landed property apply, usufruct of
immovable property and rights to variable or fixed payments as consideration
for the working of, or the right to work, mineral deposits, sources and other
natural resources; ships and aircraft shall not be regarded as immovable
property.
3. The
provisions of clause 1 of this Article shall apply to income derived from the
direct use, letting, or use in any other form of immovable property.
4. The
provisions of clauses 1 and 3 of this Article shall also apply to the income
from immovable property of an enterprise and to income from immovable property
used for the performance of independent personal services.
Article
7. Business profits
1. The
profits of an enterprise of a Contracting State shall be taxable only in that
State unless the enterprise carries on business in the other Contracting State
through a permanent establishment situated therein. If the enterprise carries
on business as aforesaid, the profits of the enterprise may be taxed in the
other Contracting State but only so much of them as is attributable to: (a)
that permanent establishment; (b) sales in that other Contracting State of
goods or merchandise of the same or similar kind as those sold through that
permanent establishment; or (c) other business activities carried on in that
other Contracting State of the same or similar kind as those effected through
that permanent establishment.
2.
Subject to the provisions of clause 3 of this Article, where an enterprise of a
Contracting State carries on business in the other Contracting State through a
permanent establishment situated therein, there shall in each Contracting State
be attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment.
3. In
the determination the profits of a permanent establishment, there shall be allowed
as deductions expenses which are incurred for the purposes of the business of
the permanent establishment, including executive and general administrative
expenses so incurred, whether in the State in which the permanent establishment
is situated or elsewhere. However, no such deduction shall be allowed in
respect of amounts, if any, paid (otherwise than towards reimbursement of
actual expenses) by the permanent establishment to the head office of the
enterprise or any of its other offices, by way of royalties, fees or other
similar payments in return for the use of patents or other rights, or by way of
commission, for specific services performed or for management, or, except in
the case of a banking enterprise, by way of income from debt-claim with regard
to moneys lent to the permanent establishment. Likewise, no account shall be
taken, in the determination of the profits of a permanent establishment, for
amounts charged (otherwise than towards reimbursement of actual expenses), by
the permanent establishment to the head office of the enterprise or any of its
other offices, by way of royalties, fees or other similar payments in return
for the use of patents or other rights, or by way of commission for specific
services performed or for management, or, except in the case of banking
enterprise by way of income from debt-claim with regard to moneys lent to the
head office of the enterprise or any of its other offices.
4.
Notwithstanding other provisions, the business profits derived by an enterprise
of a Contracting State from the exportation of merchandise to the other
Contracting State shall not be taxed in that other Contracting State. Where
export contracts include other activities carried on in the other Contracting
State through a permanent establishment, profits derived from such activities
may be taxed in the other Contracting State
5. The
term "business profits" includes, but is not limited to, income
derived from manufacturing, mercantile, banking, insurance and the furnishing
of services.
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6.
Insofar as it has been customary in a Contracting State to determine the
profits to be attributed to a permanent establishment on the basis of an
apportionment of the total profits of the enterprise to its various parts,
nothing in clause 2 shall preclude such Contracting State from determining the
profits to be taxed by such an apportionment as may be customary; the method of
apportionment adopted shall, however, be such that the result shall be in
accordance with the principles contained in this Article.
7. For
the purposes of the preceding clauses, the profits to be attributed to the
permanent establishment shall be determined by the same method year by year
unless there is good and sufficient reason to the contrary.
8.
Nothing in this Article shall affect the operation of any law of a Contracting
State relating to tax imposed on income derived by non-residents from insurance
activities provided that if the relevant law in force in either Contracting
State at the date of signature of this Agreement is varied (otherwise than in
minor respects so as not to affect its general character) the Contracting
States shall consult with each other with a view to agreeing to any amendment
of this clause as may be appropriate.
9.
Where profits include items of income which are dealt with separately in other
Articles of this Agreement, then the provisions of those Articles shall not be
affected by the provisions of this Article.
Article
8. Shipping and air transport
1.
Profits from the operation of ships or aircraft in international traffic shall
be taxable only in the Contracting State in which the place of effective
management of the enterprise is situated.
2. The
provisions of clause 1 of this Article shall also apply to profits from the
participation in a pool, a joint business or an international operating agency.
Article
9. Associated enterprises
1.
Where
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(b)
the same persons participate directly or indirectly in the management, control
or capital of an enterprise of a Contracting State and an enterprise of the
other Contracting State,
and in
either case conditions are made or imposed between the two enterprises in their
commercial or financial relations which differ from those which would be made
between independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by the reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
2.
Where a Contracting State includes in the profits of an enterprise of that
State – and taxes accordingly - profits on which an enterprise of the other
Contracting State has been charged to tax in that other State and the profits
so included are profits which would have accrued to the enterprise of the
first-mentioned State if the conditions made between the two enterprises had
been those which would have been made between independent enterprises, then
that other State shall make an appropriate adjustment to the amount of the tax
charged therein on those profits. In determining such adjustment, due regard
shall be had to the other provisions of this Agreement and the competent
authorities of the Contracting States shall if necessary consult each other.
Article
10. Dividends
1.
Dividends paid by a company which is a resident of a Contracting State to a
resident of the other Contracting State may be taxed in that other Contracting
State.
2.
However, such dividends may also be taxed in the Contracting State of which the
company paying the dividends is a resident and according to the laws of that
State, but if the beneficial owner of the dividends is a resident of the other
Contracting State, the tax so charged shall not exceed:
(a) 5%
of the gross amount of the dividends if the beneficial owner is a company
(other than a partnership) which holds directly at least 50% of the capital of
the company paying the dividends, or has invested 20 million US dollars or
more, or any equivalent currency, in the capital of the company paying the
dividends;
(b)
12.5% of the gross amount of the dividends in all other cases.
This
clause shall not affect the taxation of the company in respect of the profits
out of which the dividends are paid
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4. The
provisions of Clauses 1 and 2 of this Article shall not apply if the beneficial
owner of the dividends, being a resident of a Contracting State, carries on
business in the other Contracting State of which the company paying the
dividends is a resident through a permanent establishment situated therein, or
performs in that other Contracting State independent personal services from a
fixed base situated therein, and the holding in respect of which the dividends
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.
Where a company which is a resident of a Contracting State derives profits or
income from the other Contracting State, that other Contracting State may not
impose any tax on the dividends paid by the company, except insofar as such
dividends are paid to a resident of that other Contracting State or insofar as
the holding in respect of which the dividends are paid is effectively connected
with a permanent establishment or a fixed base situated in that other
Contracting State, nor subject the company's undistributed profits to a tax on
the company's undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in
such other Contracting State.
Article
11. Income from debt - claims
1.
Income from debt-claims 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 income from debt-claims may also be taxed in the Contracting
State in which it arises and according to the laws of that Contracting State,
but if the beneficial owner of the income from debt-claims is a resident of the
other Contracting State, the tax so charged shall not exceed 10% of the gross
amount of the income from debt-claims.
3.
Notwithstanding the provisions of clause 2, income from debt-claims arising in
a Contracting State and derived by the Government of the other Contracting
State, a local authority and the Central Bank thereof, any financial
institution or any pension fund wholly owned by the Government of that other
State, shall be exempt from tax in the first-mentioned Contracting State.
4. The
term "income from debt-claims" as used in this Article means income
from debt-claims of every kind, whether or not secured by mortgage and whether
or not carrying a right to participate in the debtor's profits, and in
particular, income from government securities and income from bonds or
debentures, including premiums and prizes attaching to such securities, bonds
or debentures. Penalty charges for late payment shall not be regarded as income
from debt-claims for the purpose of this Article.
5. The
provisions of clauses 1 and 2 of this Article shall not apply if the beneficial
owner of the income from debt-claims, being a resident of a Contracting State,
carries on business in the other Contracting State in which the income from
debt-claims arises, through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the debt-claim in respect of which such income is paid is
effectively connected with (a) such permanent establishment or fixed base, or
with (b) business activities referred to in point (c) of clause 1 of Article 7.
In such case, the provisions of Article 7 or Article 14 of this Agreement, as
the case may be, shall apply.
6.
Income from debt-claims shall be deemed to arise in a Contracting State when
the payer is a resident of that State. However, where the person paying such
income, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in connection with
which the indebtedness on which such income is paid was incurred, and such
income is borne by such permanent establishment or fixed base, then such income
shall be deemed to arise in the State in which the permanent establishment or
fixed base is situated.
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Article
12. Royalties
1.
Royalties arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other Contracting State.
2.
However, such royalties 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 is a resident of the other Contracting State, the tax so
charged shall not exceed:
(a)
7,5% of the gross amount of such royalties which are paid for rendering of any
services or assistance of a technical or managerial nature;
(b)
10% of the gross amount of such royalties in all other cases.
3. 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, and
films or tapes used for radio or television 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 or the
rendering of any services or assistance of a technical or managerial nature.
4. The
provisions of clauses 1 and 2 of this Article shall not apply if the beneficial
owner of the royalties, being a resident of a Contracting State, carries on
business in the other Contracting State in which the royalties arise, through a
permanent establishment situated therein, or performs in that other Contracting
State independent personal services from a fixed base situated therein, and the
right or property in respect of which the royalties are paid is effectively
connected with (a) such permanent establishment or fixed base, or with (b)
business activities referred to in point (c) of clause 1 of Article 7. In such
case, the provisions of Article 7 or Article 14, as the case may be, shall
apply.
5.
Royalties shall be deemed to arise in a Contracting State when the payer is a
resident of that State. However, where the person paying royalties, whether he
is a resident of a Contracting State or not, has in a Contracting State a
permanent establishment or fixed base in connection with which the liability to
pay the royalties was incurred, and such royalties are borne by such permanent
establishment or fixed base, then such royalties shall be deemed to arise in
the State in which the permanent establishment or fixed base is situated.
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, 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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1.
Gains derived by a resident of a Contracting State from the alienation of
immovable property referred to in Article 6 and situated in the other
Contracting State may be taxed in that other State.
2.
Gains from the alienation of movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting
State has in the other Contracting State or of movable property pertaining to a
fixed base available to a resident of a Contracting State in the other
Contracting State for the purpose of performing independent personal services,
including such gains from the alienation of such a permanent establishment
(alone or with the whole enterprise) or of such fixed base, may be taxed in
that other State.
3.
Gains from the alienation of ships or aircraft operated in international
traffic, or movable property pertaining to the operation of such ships or
aircraft, shall be taxable only in the Contracting State in which the place of
effective management of the enterprise is situated.
4.
Gains from the alienation of shares or any rights that constitute a share in a
company which is a resident of a Contracting State may be taxed in that State.
5.
Gains from the alienation of any property other than that referred to in
clauses 1, 2, 3 and 4 shall be taxable only in the Contracting State of which
the alienator is a resident.
Article
14. Independent personal services
1.
Income derived by an individual who is a resident of a Contracting State in
respect of professional services or other activities of an independent
character shall be taxable only in that State except in the following
circumstances, when such income may also be taxed in the other Contracting
State:
(a) If
he/she has a fixed base regularly available to him in the other Contracting
State for the purpose of performing his activities; in that case, only so much
of the income as is attributable to that fixed base may be taxed in that other
Contracting State; or
(b) If
his/her stay in the other Contracting State is for a period or periods
amounting to or exceeding in the aggregate 183 days within any twelve-month
period commencing or ending in the fiscal year concerned; in that case, only so
much of the income as is derived from his activities performed in that other
Contracting State may be taxed in that other Contracting State.
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Article
15. Dependent personal services
1.
Subject to the provisions of Articles 16, 17, 18, 19, 20 and 21 of this Agreement,
salaries, wages and other similar remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived therefrom may be
taxed in that other Contracting State.
2.
Notwithstanding the provisions of clause 1 of this Article, remuneration
derived by a resident of a Contracting State in respect of an employment
exercised in the other Contracting State shall be taxable only in the
first-mentioned State if:
(a)
the recipient is present in the other Contracting State for a period or periods
not exceeding in the aggregate 183 days in any twelve-month period commencing
or ending in the fiscal year concerned, and
(b)
the remuneration is paid by, or on behalf of, an employer who is not a resident
of the other State, and
(c)
the remuneration is not borne by a permanent establishment or a fixed base
which the employer has in the other State.
3.
Notwithstanding the preceding provisions of this Article, remuneration derived
in respect of an employment exercised aboard a ship or aircraft operated in
international traffic shall be taxable only in a State in which the place of
effective management of the enterprise is situated.
Article
16. Directors’ fees
Directors'
fees and other similar payments derived by a resident of a Contracting State in
his capacity as a member of the Board of Directors of a company which is a
resident of the other Contracting State may be taxed in that other Contracting
State.
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1.
Notwithstanding the provisions of Articles 14 and 15 of this Agreement, income
derived by a resident of a Contracting State as an entertainer, such as a
theatre, motion picture, radio or television artiste, or a musician, or as a
sportsperson, from his personal activities as such exercised in the other
Contracting State, may be taxed in that other State.
2.
Where income in respect of personal activities exercised by an entertainer or a
sportsperson in his capacity as such accrues not to the entertainer or
sportsperson himself but to another person, that income may, notwithstanding
the provisions of Articles 7, 14 and 15 of this Agreement, be taxed in the
Contracting State in which the activities of the entertainer or sportsperson
are exercised.
3.
Notwithstanding the provisions of clauses 1 and 2 of this Article, income
derived by entertainers or sportsmen who are residents of a Contracting State
from activities in the other Contracting State under an agreement, an
arrangement or a plan of cultural exchange between the Governments of both
Contracting States shall be exempt from tax in that other Contracting State.
Article
18. Pensions
1.
Subject to the provisions of clause 2 of Article 19 of this Agreement, pensions
and other similar remuneration paid to a resident of a Contracting State in
consideration of past employment shall be taxable only in that State.
2.
Notwithstanding the provisions of clause 1 of this Article, pensions paid and
other payments made under a public scheme which is part of the social security
system of a Contracting State or a local authority thereof shall be taxable
only in that State.
Article
19. Government service
1. (a)
Salaries, wages and other similar remunerations, other than a pension, paid by
a Contracting State or a local authority thereof to an individual in respect of
services rendered to that State or subdivision or authority shall be taxable
only in that State.
(b)
However, such salaries, wages and other similar remunerations shall be taxable
only in the other Contracting State if the services are rendered in that
Contracting State and the individual is a resident of that Contracting State
who:
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(ii)
did not become a resident of that Contracting State solely for the purpose of
rendering the services.
2. (a)
Any pension paid by, or out of funds created by, a Contracting State or a local
authority thereof to an individual in respect of services rendered to that
State or subdivision or authority shall be taxable only in that State.
(b)
However, such pension shall be taxable only in the other Contracting State if
the individual is a resident of, and a national of, that other Contracting
State.
3. The
provisions of Articles 15, 16, 17 and 18 of this Agreement shall apply to
salaries, wages and other similar remuneration and pensions in respect of
services rendered in connection with a business carried on by a Contracting
State or a political subdivision or a local authority thereof.
Article
20. Students
Payments
which a student or business apprentice or trainee who is or was immediately
before visiting a Contracting State a resident of the other Contracting State
and who is present in the first-mentioned State solely for the purpose of his
education or training receives for the purpose of his maintenance, education or
training shall not be taxed in that State, provided that such payments arise
from sources outside that State.
Article
21. Teachers and researchers
1. An
individual who is or was immediately before visiting a Contracting State a
resident of the other Contracting State and who, at the invitation of the
Government of the first-mentioned Contracting State or of a university,
college, school or educational institution or scientific research institution
recognized by the Government of the first-mentioned Contracting State shall be
exempt from tax in the first-mentioned Contracting State, for a period of two
years from the date of his first arrival in the first-mentioned Contracting
State, in respect of remuneration for such teaching, lectures or research.
2.
This Article shall only apply to income from research if such research is
undertaken by an individual for the public interest and not primarily for the
benefit of some other private person or persons.
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1.
Items of income of a resident of a Contracting State, wherever arising, not
dealt with in the foregoing Articles of this Agreement shall be taxable only in
that State.
2. The
provisions of clause 1 of this Article shall not apply to the income, other
than income from immovable property as defined in clause 2 of Article 6 of this
Agreement, if the recipient of such income, being a resident of a Contracting
State, carries on business in the other Contracting State through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the right or property
in respect of which the income is paid is effectively connected with such
permanent establishment or fixed base.
In
such case the provisions of Article 7 or Article 14 of this Agreement, as the
case may be, shall apply.
3.
Notwithstanding the provisions of clauses 1 and 2 of this Article, items of
income of a resident of a Contracting State not dealt with in the foregoing
Articles of this Agreement and arising in the other Contracting State may also
be taxed in that other Contracting State.
Article
23. Methods for elimination of double taxation
1.
Where a resident of a Contracting State derives income which, in accordance
with the provisions of this Agreement, may be taxed in the other Contracting
State, the first-mentioned State shall allow as a deduction from the tax on the
income of that resident, an amount equal to the income tax paid in that other
State.
Such
deduction shall not, however, exceed that part of the income tax, as computed
before the deduction is given, which is attributable to the income which may be
taxed in that other State.
2.
Where in accordance with any provision of the Agreement income derived by a
resident of a Contracting State is exempt from tax in that State, such State
may nevertheless, in calculating the amount of tax on the remaining income of
such resident, take into account the exempted income.
3. For
the purposes of the provisions in clause 1 of this Article, where tax on
business profits arising in a Contracting State is exempted or reduced in
accordance with the laws and regulations of that State to promote foreign
investments for economic development purposes, such tax which has been exempted
or reduced shall be deemed to have been paid
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Article
24. Mutual agreement procedure
1.
Where a person who is a resident of a Contracting State considers that the
actions of the competent authority of one or both of the Contracting States
result or will result for him/her in taxation not in accordance with the
provisions of this Agreement, she/he may, irrespective of the remedies provided
by the domestic law of those States, present his case to the competent
authority of the Contracting State of which that person is a resident. The case
must be presented within three years from the first notification of the action
resulting in taxation not in accordance with the provisions of the Agreement.
2. The
competent authority shall endeavor, if the objection appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to
resolve the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation which is not in
accordance with this Agreement Any agreement reached shall be implemented
notwithstanding any time limits in the domestic law of the Contracting States.
3. The
competent authorities of the Contracting States shall endeavor to resolve by
mutual agreement any difficulties or doubts arising as to the interpretation or
application of the Agreement. They may also consult together for the
elimination of double taxation in cases not provided for in the Agreement.
4. The
competent authorities of the Contracting States may communicate with each other
for the purpose of reaching an agreement in the sense of the preceding clauses.
Article
25. Exchange of information
1. The
competent authorities of the Contracting States shall exchange such information
as is necessary for carrying out the provisions of this Agreement or of the
domestic laws of the Contracting States concerning taxes covered by this
Agreement insofar as the taxation thereunder is not contrary to this Agreement.
The
exchange of information is not restricted by Article 1 of this Agreement. Any
information received by a Contracting State shall be treated as secret in the
same manner as information obtained under the domestic laws of that State and
shall be disclosed only to persons or authorities (including courts and
administrative bodies) concerned with the assessment or collection of, the
enforcement or prosecution in respect of, or the determination of appeals in
relation to, the taxes covered by this Agreement Such persons or
authorities shall use the information only for such purposes. They may disclose
the information in public court proceedings or in judicial decisions.
2. In
no case shall the provisions of clause 1 and clause 2 be construed so as to impose
on a Contracting State the obligation:
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(b) to
supply information which is not obtainable under the laws or in the normal
course of the administration of that or of the other Contracting State;
(c) to
supply information which would disclose any trade, business, industrial,
commercial or professional secret or trade process, or information, the
disclosure of which would be contrary to public policy.
3. If
information is requested by a Contracting State in accordance with this
Article, the other Contracting State shall use its information gathering
measures to obtain the requested information, even though that other State may
not need such information for its own tax purposes. The obligation contained in
the preceding sentence is subject to the limitation of clause 2 of this Article
but in no case shall such limitations be construed to permit a Contracting
State to decline to supply information solely because it has no domestic
interest in such information.
4. In
no case shall the provisions of 2 of this Article be construed to permit a
Contracting State to decline to supply information solely because the
information is held by a bank, other financial institution, nominee or person
acting in an agency or a fiduciary capacity or because it relates to ownership
interests in a person. However such information should be used only for tax
matters covered by this Agreement.
Article
26. Members of diplomatic missions and consular posts
Nothing
in this Agreement shall affect the fiscal privileges of members of diplomatic
missions or consular posts under the general rules of international law or
under the provisions of special agreements.
Article
27. Miscellaneous provisions
Nothing
in this Agreement shall affect the application of the domestic provisions to
prevent tax evasion and tax avoidance.
Article
28. Entry into force
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2.
This provisions of this Agreement shall have effect:
(a) in
Vietnam:
(i) in
respect of taxes withheld at source, in relation to taxable amounts as derived
on or after the first day of January following the calendar year in which the
Agreement enters into force, and in subsequent calendar years; and
(ii)
in respect of other Vietnamese taxes, in relation to income, profits gains or
capital arising on or after the first day of January following the calendar
year in which the Agreement enters into force, and in subsequent calendar
years.
(b) in
The Kingdom of Saudi Arabia:
(i)
with regard to taxes withheld at source, in respect of amounts paid on or after
the first day of January next following the date upon which the Agreement
enters into force; and
(ii)
with regard to other taxes, in respect of taxable years beginning on or after
the first day of January next following the date upon which the Agreement
enters into force.
Article
29. Termination
1.
This Agreement shall remain in force indefinitely but either of the Contracting
States may terminate the Agreement through the diplomatic channel, by giving to
the other Contracting State written notice of termination not later than 30
June of any calendar year starting five years after the year in which the
Agreement entered into force.
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(a) in
Vietnam:
(i) in
respect of taxes withheld at source, in relation to taxable amounts as derived
on or after the first day of January following the calendar year in which the
notice of termination has been received, and in any subsequent calendar years;
and
(ii)
in respect of other Vietnamese taxes, in relation to income, profits, gains or
capital arising on or after the first day of January following the calendar
year in which the notice of termination has been received, and in subsequent
calendar years; and
(b) in
the Kingdom of Saudi Arabia:
(i)
with regard to taxes withheld at source, in respect of amounts paid after the
end of the calendar year in which such notice is given; and
(ii)
with regard to other taxes, in respect of taxable years beginning after the end
of the calendar year in which such notice is given.
IN
WITNESS WHEREOF, the undersigned, being duly authorized by their respective
Governments have signed this Agreement.
DONE
in duplicate at Riyadh on April 10, 2010 in Vietnamese, English and Arabic,
each language version being equally authoritative. In case of any divergence of
interpretation, the English test shall prevail./.
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ON BEHALF OF THE GOVERNMENT OF THE KINGDOM OF SAUDI
ARABIA
MINISTER OF FINANCE
Ibrahim A. Al-Assaf