Điều ước quốc tế Khongso

AGREEMENT

BETWEEN THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF VIETNAM AND THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND PROPERTY

The Socialist Republic of Vietnam and The Federal Republic Of Germany

Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and property,

Have agreed as follows:

Article 1. Personal scope

This Agreement shall apply to persons who are residents of one or both of the Contracting States

Article 2. Taxes covered

1. This Agreement shall apply to taxes on income and property imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income 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 augment property value.

3. The existing taxes to which this Agreement shall apply are:

a. In Vietnam:

(i) The personal income tax;

(ii) The profit tax; and

(iii) The profit remittance tax;

(hereinafter referred to as "Vietnamese tax");

b. In the Federal Republic of Germany:

(i) Income tax;

(ii) Corporation tax;

(iii) The property tax; and

(iv) The business tax;

(hereinafter referred to as "German tax");

4. The Agreement shall also apply to any identical or substantially similar taxes which 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 any important changes which have been made in their respective taxation laws.

Article 3. General definitions

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 all its national territory, including its territorial sea and any area beyond its territorial sea, within which Vietnam, by Vietnamese legislation and in accordance with international law, has sovereign rights of exploration for and exploitation of natural resources of the sea bed and its sub-soil and superjacent watermass;

b. The term "Federal Republic of Germany" means the territory where the tax law of Federal Republic of Germany take effect, includes the territorial sea and airspace above it, as well as superjacent watermass and adjacent to its territorial sea in which Federal Republic of Germany has sovereign rights and jurisdictions in accordance with international law and the national law of Germany;

c. The terms "a Contracting State" and "the other Contracting State" mean Vietnam or Federal Republic of Germany as the context requires;

d. The term "person" includes an individual, a company;

e. The term "company" means any body corporate or any entity which 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 "national" means:

(i) In the case of Vietnam, any individual possessing the nationality of Vietnam and any legal person, partnership and association deriving its status as such from the laws in force in Vietnam;

(ii) In the case of the Federal Republic of Germany, any German under the meaning of Article 116, clause 1, the Fundamental Law of Federal Republic of Germany and any legal person, partnership and association deriving its status as such from the laws in force in Federal Republic of Germany;

h. The term "international traffic" means any transport by a ship or aircraft operated by an enterprise of which place of effective management is situated in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

i. The term "competent authority" means:

(i) In the case of Vietnam, the Minister of Finance or his or her authorized representative; and

(ii) In the case of Federal Republic of Germany, the Federal Minister of Finance.

2. As regards the application of the Agreement by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Agreement applies.

Article 4. Resident

1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State if liable to tax therein by reason of his domicile, residence, place of management, place of registration or any other criterion of a similar nature

2. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, and then his status shall be determined as follows:

a. He shall be deemed to be a resident of the State in which he has a permanent home available to him. If he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests);

b. If the State in which he has his centre of vital interests cannot be determined, or if he has no permanent home available to him in either State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;

c. If he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;

d. If he is a national of both 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 paragraph 1, a company is a resident of both Contracting States, and then it shall be deemed to be a resident 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 the enterprise is wholly or partly carried on.

2. The term "permanent establishment" includes especially:

a. A place of management;

b. A branch;

c. An office;

d. A factory;

e. A workshop; and

f. A mine, an oil or gas well, a quarry or any other place of extraction or exploration of natural resources.

3. A building site or construction or assembly project in connection therewith; but only where such site, project for a period of more than six months.

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, display of goods or property belonging to the enterprise;

b. The maintenance of a stock of goods or property belonging to the enterprise solely for the purpose of storage or display;

c. The maintenance of a stock of goods or property 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 property or of collecting information for the enterprise;

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;

f. The maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character;

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 6 applies - is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 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 paragraph.

6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that 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.

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 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

1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

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, boats and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 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 State but only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, 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 was 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 determining 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.

4. 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 paragraph 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.

5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

6. For the purposes of the preceding paragraphs, 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 change the determining method.

7. 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 derived from the operation of ships, boats or aircraft in international traffic shall be taxable in that Contracting State in which the place of effective management of the enterprise is situated.

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

Article 9. Associated Enterprises

Where:

a. An enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

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.

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 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 recipient is the beneficial owner of the dividends the tax so charged shall not exceed:

a. 5 per cent of the gross amount of the dividends if the beneficial owner is a company (excluding partnerships) which holds directly at least 70 per cent of the capital of the paying company;

b. 10 per cent of the gross amount of the dividends if the beneficial owner is a company (excluding partnerships) which holds directly at least 25 per cent of the capital of the paying company;

c. 15 per cent of the gross amount of the dividends in all other cases.

3. The term “dividends” as used in this Article means interests from shares, including income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights not being revenue as well as other income which are subjected to the same taxation treatment as income from shares by the taxation laws of the State of which the company making the distribution is a resident.

4. The provisions of paragraphs 1 and 2 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 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 of this Agreement, 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 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 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 State.

Article 11. Interests from provision of loans

1. Interest 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 interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2.

a. Interest arising in Vietnam and paid to the Government of Federal Republic of Germany, Bundesbank of Germany, Kreditanstalt Fỹr Wiederaufbau or Deutsche Investitions-und Entwicklungsgesllschaft (DEG) and interest related to loans that are secured by HERMES - Deckung shall be exempted from tax in Vietnam;

b. Interest arising in Federal Republic of Germany and paid to the Government of Vietnam, the State bank of Vietnam or agencies of grassroots authorities of Vietnam shall be exempted from tax in Germany.

4. 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 and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

5. The provisions of paragraphs 1 and 2 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. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

6. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political or administrative 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.

7. 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 this Agreement.

Article 12. Royalties and charges for technical services

1. Royalties and charges for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of such royalties or charges for technical services the tax so charged shall not exceed:

a. In the case of royalties, 10 per cent of the gross amount of the royalties;

b. In the case of charges for technical services, 7.5 per cent of the gross amount of the charges for technical services.

2. 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, or films or tapes used for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for use or use right of industrial, commercial or scientific euipment, or provision of information concerning industrial, commercial or scientific experience.

3. The term “charges for technical services” as used in this Article means payments of any kind to any person, other than payments to an employee of the person making the payment, in consideration for any services of a managerial, technical or consultancy nature rendered in the Contracting State of which the payer is a resident.

4. The provisions of paragraphs 1 shall not apply if the beneficial owner of the royalties or charges for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or charges for technical services 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, property or cotract in respect of which the royalties or charges for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 and Article 14, as the case may be, shall apply.

5. Royalties and charges for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political or administrative subdivision, or a local authority or a resident of that State. Where, however, the person paying the royalties or charges for technical services, 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 obligation to make the payments was incurred and the payments are borne by that permanent establishment or fixed base, then the royalties or charges for technical services shall be deemed to arise in the Contracting 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 or charges for technical services are paid for any reason, 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 that 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.

Article 13. Gains from the Alienation of Property

1. Gains derived by a resident of a Contracting State from the alienation of immovable property as defined in Article 6 and that immovable property is 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 aliennation of shares of an enterprise of which properties include directly or indirectly immovable properties that are situated in the other Contracting State may be taxed in that State.

5. Gains derived from the alienation of any property other than those referred to in clauses from 1 to 4, shall be taxed only in the Contracting State of which the alienator is a resident.

Article 14. Independent Personal Service activities

1. Income derived by 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 unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other Contracting State but only so much of it as is attributable to that fixed base.

2. The term “professional services” includes, especially, independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, architects, dentists and accountants.

Article 15. Dependent Personal Service activities

1. Subject to the provisions of Articles 16, 18 and 19 and 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 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 by an enterprise of a Contracting State shall be taxable only in that State.

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 State.

Article 17. Entertainers and Sportsmen

1. Notwithstanding the provisions of Articles 14 and 15, 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 sportsman, 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 sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.

3. Notwithstanding the provisions of paragraphs 1 and 2 of this Article, income derived in respect of the activities of preformance referred to in paragraph 1 of this Article within the framework of cultural or sports exchange programme agreed to by both Contracting States, shall be exempt from taxation in the Contracting State in which these activities are exercised.

Article 18. Pensions

Subject to the provisions of paragraph 2 of Article 19, 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.

Article 19. Government Service

1/a. Remuneration, other than a pension, paid by a Contracting State or a political or administrative subdivision 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 remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State, who:

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services

2/a. Any pension paid by a Contracting State or a political or administrative subdivision 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 State.

3. The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political or administrative subdivision or a local authority thereof.

4. The provisions of paragraphs 1 of this Article shall likewise apply in respect of remuneration paid under program on development assistance of a Contracting State, a political or administrative subdivision or a local authority thereof, from funds that are wholly financed by such Contracting State, a political or administrative subdivision or a local authority thereof and that remuneration paid for experts or voluntary persons who are appointed to arrive the other Contracting State with the consent of the other Contracting State.

Article 20. Teachers, Students and Apprentices

1. An individual who arrives a Contracting State according to the visition of that State or a university, college, school, museum or other cultural institution of that State or according to an official culture exchange program, for a period of not more than two years, for the solely purpose of teaching, giving lectures or conducting research at that institution and be person who is or was resident of the other Contracting State at the time of or before the journey, shall be exempted from taxation at the first-mentioned Contracting State in respect of remuneration received from outside of this State.

2. Payments which a student or apprentice 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.

3. Notwithstanding the provisions of Articles 15, remuneration for services rendered by a student or a apprentice (in case of Federal Republic of Germany, including “vonlontar” or “Praktikant”) in a Contracting State, shall not be taxed in that State, provided that such services are in connection with his studies or training, and total remuneration not exceed 9,000 DM or an equivalent amount in Vietnam dong in a calendar year.

Article 21. Other income

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 paragraph 1 shall not apply to the income, other than income from immovable property as defined in paragraph 2 of Article 6, 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, as the case may be, shall apply.

Article 22. Property

1. Property that is immovable property stated in article 6, owned by resident of a Contracting State in the other Contracting State, may be taxed in that other State.

2. Property that is immovable property formed partly in business property of a permanent establishment which an enterprise of a Contracting State situated in the other Contracting State, or property that is immovable 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, may be taxed in that other State.

3. Property that is ship, boat or aircraft operated in international transport by an enterprise of a Contracting State and movable property pertaining to the operation of such ships or aircraft shall be taxable in the Contracting State in which the place of effective management of the enterprise is situated.

4. All other property of resident of a Contracting State shall be solely taxed in that State.

Article 23. Elimination of double taxation

1. In Vietnam, double taxation shall be eliminates as follows:

where a resident of Vietnam derives income or owns property parts which in accordance with this Agreement may be taxed in Federal Republic of Germany, Vietnam shall allow:

(a) a credit against its tax on the income of such resident an amount equal to the tax paid in Federal Republic of Germany;

(b) a credit against its tax on the property of such resident an amount equal to the property tax paid in Federal Republic of Germany;

However, the such credit in all case shall not exceed the amount of income tax or property tax of Vietnam, that calculated on income or property before being allowed for credit in accordance with the taxation laws and regulations of Vietnam.

2. In the case of resident of Federal Republic of Germany, the tax shall be determined as follows:

(a). Except for case of deducting tax paid overseas as prescribed in point (b), any income derived in Vietnam and any property located in Vietnam which in accordance with this Agreement may be taxed in Vietnam shall be exempted from taxation in Germany. However, Federal Republic of Germany is still entitled to include the income and property that have been exempted from taxation as above while determining the tax rates of Germany.

In the case of dividend, the tax exemption shall apply only dividend paid by a company which is a resident of Vietnam to a company (excluding partnership) which is a resident of Federal Republic of Germany and company of Germany owns directly not less than 10 per cent of the company paying the dividend.

Share capital shall be exempted from taxes on property in case the dividend from those shares are exempted from tax or if it is assumed to paid tax is shall be exempted from tax according to the purpose of the above sentence.

(b) In accordance with provisions of German tax law on deduction of tax paid overseas, Federal Republic of Germany shall allow deducting in the payable income tax, enterprise tax and property tax of Germany for the following incomes arising in Vietnam and for property in Vietnam, the Vietnamese tax paided in accordance with law of Vietnam and in conformity with this Agreement which are calculated on:

(aa) Dividend that has not yet been mentioned in paragraph (a);

(bb) Interests from provision of loans;

(cc) Royalties;

(dd) Charges for technicla services;

(ee) Income according to clause 4 Article 13;

(ff) Directors' Fees

(gg) Income of entertainers and sportsmen

(c) According to definition on tax deduction mentioned in paragraph (b), irrespective of how much the tax paid actually, the Vietnamese tax shall be considered as:

(aa) In case in respect to dividend that has not yet been mentioned in paragraph (a), 10 per cent of the gross amount of dividend;

(bb) In case in respect to interest from provision of loans, 10 per cent of the gross amount of interest from provision of loans but shall be 5 per cent during the period applying clause 5 of Protocol; and

(cc) In case of royalties, 10 per cent of the gross amount of the royalties.

provided that the dividends, interest form provision of loans and royalties are paid before time ending the tenth year after this Agreement comes into effect.

(d) Notwithstanding the provisions of paragraph (a), incomes mentioned in Article 7 and Article 10 and gains from the alienation of business property of a permanent establishment as well as property creating that income shall be exempted from German tax only when resident of Federal Republic of Germany may prove that the received amount of that permanent establishment of company is entirely or almost entirely get from direct business activities.

In case of incomes mentioned in Article 10 and property creating those incomes, the tax exemption shall be applied even when the dividends derived from holding shares in other company being resident of Vietnam exercised the direct business activities and the company paying dividends holding over 25 per cent of share capital of the mentioned-above Vietnamese company.

Direct business activities are the following activities: Production or sale of goods or property, provision of technical or consulting services or implementation of mechanical services or carrying out the business in insurance or banking, in scope of Vietnam’s territory.

If fail to prove as above, only measure of deduction mentioned in paragraph (b) shall apply, eliminating the deduction mentioned in paragraph (c).

Article 24. Non-discrimination

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. This provision shall, notwithstanding the provision of Arcticle 1, also apply to persons who are not residents of one or both of the Contracting State.

2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities, provided that this paragraph shall not prevent that other Contracting State from imposing on the profits attributable to a permanent establishment in that State of a company which is a resident of the first-mentioned Contracting State further tax not exceeding 10 percent of those profit when those profit are remitted from the permanent establishment bach the head office. Moreover, this paragraph will not apply to the taxation on permanent establishments in Vietnam of enterprises involving activities of oil and gas exploration or production or involving activities in which enterprises of Vietnam must be taxed according to the Law on tax for use of agricultural land.

3. Nothing in this Article shall be construed as obliging a Contracting State to grant to individuals not being its residents any personal allowances, reliefs and reductions for taxation purposes on account which it grants to its own residents.

4. Except where the provisions of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest from provision of loans, royalties and other disbursements paid by an enterprise of a Contracting State to a residents of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, debts of enterprise of a Contracting State paid to a resident of the other Contracting State while determining taxable property, shall be allowed to deduct from basis of tax calculation, with the same conditions such as debts commited for payment to resident of the first-mentioned State

5. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

Article 25. Mutual agreement procedure

1. Where a person being resident in a Contracting State considers that the actions of competent authority in one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, 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 the 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 endeavour, 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 not in accordance with the 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 jointly endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. The competent authorities of the Contracting States may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

4. If taxation on income of a Contracting State is affected by way of tax deduction at source, and if this taxation is limited by provisions in this Agreement, application of exemption or reduction of this tax shall be settled according to the national law of the Contracting State in combination with procedures agreed on this matter between competent authorities of both of Contracting States.

5. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

Article 26. Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions 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 which are applied 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 paragraphs 1 be construed so as to impose on a Contracting State the obligation:

a. To carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

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 (ordre public).

Article 27. Diplomatic and Consular Officers

Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic delegation or consular officers or of an international organization under the general rules of international law or under the provisions of special agreements.

Article 28. Entry into force

Each Government of the Contracting State shall notify to the other the completion of the procedures required by its legislation for the entry into force of this Agreement. This Agreement shall enter into force onemonth after the date of the later of these notifications and be applied:

(a) In respect of taxes withheld at source, taxed on dividends, interest from provision of loans, royalties and charges for technical services, which are paid on or after the first day of January in the calendar year next following that in which the Agreement enters into force;

(b) With regard to other taxes, in respect of taxable periods beginning on or after the first day of January in the calendar year next following that in which the Agreement enters into force;

Article 29. Termination

This Agreement shall remain in force indefinitely, but either of the Contracting States may, on or before 30th of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give to the other Contracting State, through diplomatic channels, written notice of termination. In such event, the Agreement shall cease to have effect:

(a) In respect of taxes withheld at source, on dividends, interest from provision of loans, royalties and charges for technical services paid or remitted on or after the first day of January in next calendar year following that in which the notice is given;

(b) In respect of other taxes calculated for durations beginning on or after the first day of January in next calendar year following that in which the notice is given.

In witness where of, the undersigned, being duly authorized thereto, have signed this Agreement.

Done in duplicate at Hanoi the 16th day of November of the year one thousand nine hundred and ninety-five, in the Vietnamese, German and English languages, all texts being equally authoritative. In the case of doubt, when the English text shall prevail.