Section Code: 0011
U.S. – THAILAND TAX TREATY 1998
Convention between the government of the United States of America and the government of the kingdom of Thailand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
Article 11: Interest
Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State the tax so charged shall not exceed:
- 10 percent of the gross amount of the interest if the interest is beneficially owned by any financial institution (including an insurance company);
- 10 percent of the gross amount of the interest if the interest is beneficially owned by a resident of the other Contracting State and is paid with respect to indebtedness arising as a consequence of a sale on credit by a resident of that other State of any equipment, merchandise or services, except where the sale was between persons not dealing with each other at arm's length; and
- 15 percent of the gross amount of the interest in all other cases.
Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to the Government of the other Contracting State, or to a resident of that other State with respect to debt obligations guaranteed or insured by that Government, shall be exempt from tax in the first-mentioned Contracting State. For the purposes of this paragraph, the term “Government” means:
- in the case of Thailand, the Government of Thailand and shall include:
- the Bank of Thailand;
- the Export-Import Bank of Thailand;
- the local authorities;
- such financial institutions, the capital of which is wholly owned by the Government of Thailand or any local authority as may be agreed from time to time between the competent authorities of both of the Contracting States; and
- in the case of the United States, the Government of the United States and shall include:
- the Federal Reserve Banks;
- the Export-Import Bank;
- the Overseas Private Investment Corporation;
- the states and local authorities; and
- such financial institutions, the capital of which is wholly owned by the Government of the United States or any state or local authority as may be agreed from time to time between the competent authorities of both of the Contracting States.
The term "interest" 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 or prizes attaching to such securities, bonds or debentures, as well as all other income that is treated as income from money lent by the taxation law of the Contracting State in which the income arises. However, the term, "interest" does not include income dealt with in Article 10 (Dividends).
The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest 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 the interest is paid is effectively connected with
- such permanent establishment or fixed base, or with
- business activities referred to under subparagraphs (b) and (c) of paragraph 1 of Article 7 (Business Profits). In such cases the provisions of Article 7 (Business Profits) or Article 15 (Independent Personal Services), as the case may be, shall apply.
Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, 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 the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
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 interest, having regard to the debt claim for which it is 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 the Convention.
The provisions of paragraphs 1, 2 and 3 shall not apply to an excess inclusion with respect to a residual interest in a United States Real Estate Mortgage Investment Conduit.