Thailand Law Source: The Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income

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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 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)

5 percent of the gross amount of the royalties described in subparagraph (a) of paragraph 3;

(b)

8 percent of the gross amount of the royalties described in subparagraph (b) of paragraph 3; and

(c)

15 percent of the gross amount of the royalties described in subparagraph (c) of paragraph 3.

3. The term "royalties" as used in this Article means payments of any kind received as a consideration:

(a)

for the use of or the right to use any copyright of literary, artistic or scientific work, including software, and motion pictures and works on film, tape or other means of reproduction for use in connection with radio or television broadcasting;

(b)

for the use of or the right to use industrial, commercial or scientific equipment; or

(c)

for the use of or the right to use any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.

The term "royalties" also includes gains derived from the alienation of any such right or property which are contingent on the productivity, use or disposition thereof.

4. The provisions of paragraphs 1 and 2 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 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 under subparagraph (c) of paragraph 1 of Article 7 (Business Profits). In such case the provisions of Article 7 (Business Profits) or Article 15 (Independent Personal Services), as the case may be, shall apply.

5.

a)
Royalties 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. However, when the person paying the royalties, 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 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.

b)
Where subparagraph (a) does not operate to treat royalties as being from sources in one of the Contracting States and the royalties relate to the use of or the right to use in one of the Contracting States any property or right described in paragraph 3, the royalties shall be deemed to arise in that State.

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 the Convention.

ARTICLE 13
Gains

1. Except as otherwise provided in this Convention, each Contracting State may tax gains from the alienation of property in accordance with the provisions of its domestic law.

2. Notwithstanding the provisions of paragraph 1, gains from the alienation of ships, aircraft or containers used or operated by an enterprise of a Contracting State in international traffic or movable property pertaining to the use or operation of such ships, aircraft or containers shall be taxable only in the Contracting State of which the enterprise is a resident.

ARTICLE 14
Branch Tax

1. A corporation which is a resident of a Contracting State may, as provided in paragraphs 2 and 3, be subject in the other Contracting State to a tax in addition to the tax allowable under the other provisions of this Convention.

2. In the case of the United States, such tax may be imposed only on:

(a)

the "dividend equivalent amount" of the business profits of the corporation which are effectively connected (or treated as effectively connected) with the conduct of a trade or business in the United States and which are either attributable to a permanent establishment in the United States or subject to tax in the United States under Article 6 (Income from Immovable (Real) Property) or Article 13 (Gains) of this Convention; and

(b)

the excess, if any, of interest deductible in the United States in computing the profits of the corporation that are subject to tax in the United States and are either attributable to a permanent establishment in the United States or subject to tax in the United States under Article 6 (Income from Immovable (Real) Property) or Article 13 (Gains) of this Convention over the interest paid by or from the permanent establishment or trade or business in the United States.

ARTICLE 15
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 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 stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 90 days in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State; or

(c)

if the remuneration for his activities in the other Contracting State is paid by a resident of that Contracting State or is borne by a permanent establishment or a fixed base situated in that Contracting State and exceeds in the fiscal year 10,000 United States dollars or its equivalent in Thai currency, not including expenses reimbursed to him or borne on his behalf.

2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
ARTICLE 16
Dependent Personal Services

1. Subject to the provisions of Articles 17 (Directors' Fees), 20 (Pensions and Social Security Payments), 21 (Government Service), 22 (Students and Trainees) and 23 (Teachers), 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 State.

2. Notwithstanding the provisions of paragraph 1, 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 State for a period or periods not exceeding in the aggregate 183 days in any 12- month period commencing or ending in the taxable year concerned;

(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 by an enterprise of a Contracting State in international traffic may be taxed in the Contracting State in which the enterprise is resident.

ARTICLE 17
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, or as a designee of a director serving in the capacity of a director, of a company which is a resident of the other Contracting State may be taxed in that other State unless the services are performed in the first-mentioned Contracting State.

ARTICLE 18
Limitation on Benefits

1. person that is a resident of a Contracting State and derives income from the other Contracting State shall be entitled, in that other Contracting State, to all the benefits of this Convention only if such person is:

(a)

an individual;

(b)

a Contracting State or a political subdivision or local authority thereof;

(c)
a person:

i)
more than 50 percent of the beneficial interest in which (or in the case of a company, more than 50 percent of the number of shares of each class of shares) is owned, directly or indirectly, by persons entitled to the benefits of this Convention under subparagraphs (a), (b), (d), (e), or (f) or who are citizens of the United States; and

ii)
more than 50 percent of the gross income of which is not used, directly or indirectly, to meet liabilities (including liabilities for interest or royalties) to persons not entitled to the benefits of this Convention under subparagraphs (a), (b), (d), (e) or (f) or who are not citizens of the United States;

(d)

a company in whose principal class of shares there is substantial and regular trading on a recognized stock exchange;

(e)

a company that is wholly owned, directly or indirectly, by a company referred to in subparagraph (d), provided that each company in the chain of ownership that is used to satisfy the control requirement of this subparagraph is a resident of a Contracting State; or

(f)

an entity that is a not-for-profit organization and that, by virtue of that status, is generally exempt from income taxation in its Contracting State of residence, provided that more than half of the beneficiaries, members or participants, if any, in such organization are persons that are entitled, under this Article, to the benefits of this Convention.

2. A person that is a resident of a Contracting State and that is engaged in the active conduct of a trade or business in that Contracting State (other than the business of making or managing investments, unless these activities are banking or insurance activities carried on by a bank or insurance company), shall, notwithstanding the provisions of paragraph 1, be entitled to benefits of the Convention with respect to any item of income derived from the other Contracting State, if:

(a)

i) the income derived from that other Contracting State is derived in connection with the trade or business carried on in the first-mentioned Contracting State; and

ii) the trade or business carried on in the first- mentioned Contracting State is substantial in relation to the business or activity giving rise to the income in the other Contracting State; or

(b)

the income derived from the other Contracting State is incidental to the trade or business carried on in the first- mentioned Contracting State.

3. A resident of Thailand that is an "international banking facility" as that term is defined under the laws of Thailand (or any other resident of Thailand that is subject to the same taxation treatment under the laws of Thailand), shall not be entitled to any U.S. benefits under this Convention with respect to any income that such facility receives from the United States.

4. A person that is not entitled to the benefits of the Convention pursuant to the provisions of the preceding paragraphs, may, nevertheless, be granted the benefits of the Convention if the competent authority of the State in which the income in question arises so determines.

5. For purposes of paragraph 1, the term "recognized stock exchange" means:

(a)

the NASDAQ System owned by the National Association of Securities Dealers, Inc. and any stock exchange registered with the Securities and Exchange Commission as a National Securities Exchange for purposes of the Securities Exchange Act of 1934;

(b)

any securities exchange recognized by the Securities and Exchange Commission of Thailand; and

(c)
any other stock exchange agreed upon by the competent authorities of the Contracting States.

6. here under any provision of this Convention income arising in one of the Contracting States is relieved in whole or in part from tax in that Contracting State and, under the law in force in the other Contracting State, a person, in respect of the said income, is subject to tax by reference to the amount of the income which is remitted to or received in the other Contracting State and not by reference to the full amount of the income, then the relief to be allowed under this Convention in the first-mentioned Contracting State shall apply only to so much of the income as is remitted to or received in the other Contracting State during the calendar year such income accrues or the next succeeding year.

7. he competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Article.

ARTICLE 19
Artistes and Sportsmen

1. Notwithstanding the provisions of Articles 15 (Independent Personal Services) and 16 (Dependent Personal Services), income derived by a resident of a Contracting State as an entertainer, such as a theater, motion picture, radio, or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State, except where the amount of the gross receipts derived by such entertainer or sportsman from such activities does not exceed the lesser of 100 United States dollars or its equivalent in Thai currency per day or 3,000 United States dollars or its equivalent in Thai currency in the aggregate for the taxable year concerned.

2. Where income in respect of activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman but to another person, that income of that other person may, notwithstanding the provisions of Articles 7 (Business Profits), 15 (Independent Personal Services) and 16 (Dependent Personal Services), be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised, unless it is established that neither the entertainer or sportsman nor persons related thereto participate directly or indirectly in the profits of that other person in any manner, including the receipt of deferred remuneration, bonuses, fees, dividends, partnership distributions, or other distributions.

3. The provisions of paragraphs 1 and 2 of this Article shall not apply to remuneration or profits, salaries, wages and similar income derived from activities performed in a Contracting State by public entertainers if the visit to that Contracting State is substantially supported by public funds of the other Contracting State, including any political subdivision or local authority thereof.

Part 4

(a)	5 percent of the gross amount of the royalties described in subparagraph (a) of paragraph 3;
(b)	8 percent of the gross amount of the royalties described in subparagraph (b) of paragraph 3; and
(c)	15 percent of the gross amount of the royalties described in subparagraph (c) of paragraph 3.

(a)	for the use of or the right to use any copyright of literary, artistic or scientific work, including software, and motion pictures and works on film, tape or other means of reproduction for use in connection with radio or television broadcasting;
(b)	for the use of or the right to use industrial, commercial or scientific equipment; or
(c)	for the use of or the right to use any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.

(a)	if he 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 stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 90 days in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State; or
(c)	if the remuneration for his activities in the other Contracting State is paid by a resident of that Contracting State or is borne by a permanent establishment or a fixed base situated in that Contracting State and exceeds in the fiscal year 10,000 United States dollars or its equivalent in Thai currency, not including expenses reimbursed to him or borne on his behalf.

(a)	the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12- month period commencing or ending in the taxable year concerned;
(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.

(a)	the NASDAQ System owned by the National Association of Securities Dealers, Inc. and any stock exchange registered with the Securities and Exchange Commission as a National Securities Exchange for purposes of the Securities Exchange Act of 1934;
(b)	any securities exchange recognized by the Securities and Exchange Commission of Thailand; and
(c)	any other stock exchange agreed upon by the competent authorities of the Contracting States.