CONVENTION
BETWEEN
THE GOVERNMENT OF THE KINGDOM OF THAILAND
AND
THE GOVERNMENT OF THE UNITED STATES OF AMERICA
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The Government of the Kingdom of Thailand and the Government of the United States of America,
Desiring to conclude a convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
ARTICLE 1
Personal Scope
1. This Convention shall apply to persons who are residents of one or both of the Contracting States, except as otherwise provided in the Convention.
2. Notwithstanding any provision of the Convention except paragraph 3 of this Article, a Contracting State may tax its residents (as determined under Article 4 (Residence)), and by reason of citizenship may tax its citizens, as if the Convention had not come into effect. For this purpose, the term "citizen" shall include a former citizen whose loss of citizenship had as one of its principal purposes the avoidance of tax (as defined under the laws of the Contracting States), but only for a period of 10 years following such loss. In the case of the United States, the term "resident" shall include a former long-term lawful resident (whether or not so treated under Article 4) whose loss of residence status had as one of its principal purposes the avoidance of tax (as defined under the laws of the United States), but only for a period of 10 years following such loss.
3. The provisions of paragraph 2 shall not affect:
a) the benefits conferred by a Contracting State under
paragraph 2 of Article 9 (Associated Enterprises), under
paragraphs 2 and 5 of Article 20 (Pensions and Social
Security Payments) and under Articles 25 (Relief from
Double Taxation), 26 (Non-Discrimination), and 27 (Mutual
Agreement Procedure); and
b) the benefits conferred by a Contracting State under Articles
21 (Government Service), 22 (Students and Trainees), 23
(Teachers) and 29 (Diplomatic Agents and Consular
Officers), upon individuals who are neither citizens of, nor
have immigrant status in, that State.
4. The Convention shall not restrict in any manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded:
a) by the laws of either Contracting State; or
b) by any other agreement between the Contracting States.
5. Notwithstanding the provisions of subparagraph 4(b):
a) Notwithstanding any other agreement to which the
Contracting States may be parties, a dispute concerning
whether a measure is within the scope of this Convention
shall be considered only by the competent authorities of the
Contracting States, as defined in subparagraph 1(e) of Article
3 (General Definitions) of this Convention, and the
procedures under this Convention exclusively shall apply to
the dispute.
b) Unless the competent authorities determine that a taxation
measure is not within the scope of this Convention, the
nondiscrimination obligations of this Convention exclusively
shall apply with respect to that measure, except for such
national treatment or most-favored-nation obligations as may
apply to trade in goods under the General Agreement on
Tariffs and Trade. No national treatment or most-favored-
nation obligation under any other agreement shall apply with
respect to that measure.
c) For the purpose of this paragraph, a "measure" is a law,
regulation, rule, procedure, decision, administrative action, or
any other form of measure.
ARTICLE 2
Taxes Covered
1. The existing taxes to which this Convention shall apply are:
a) in the United States: the Federal income taxes imposed by
the Internal Revenue Code, but excluding the social security
taxes, (hereinafter referred to as "United States tax");
b) in Thailand: the income tax and the petroleum income tax
(hereinafter referred to as "Thai tax").
2. The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws and of any official published material concerning the application of the Convention, including explanations, regulations, rulings, or judicial decisions.
ARTICLE 3
General Definitions
1. For the purposes of this Convention, unless the context otherwise requires:
a) the term "person" includes an individual, an estate, a trust, a
partnership, a company, and any other body of persons;
b) the term "company" means any body corporate or any entity
which is treated as a body corporate for tax purposes;
c) 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;
d) the term "international traffic" means any transport by a ship
or aircraft except when such transport is solely between
places in the other Contracting State;
e) the term "competent authority" means:
i) in the case of the United States: the Secretary of the
Treasury or his delegate; and
ii) in the case of Thailand: the Minister of Finance or his
authorized representative;
f) the term "United States" means the United States of America
and, where used in a geographic sense, includes any area
outside the territorial sea of the United States which, in
accordance with international law and the laws of the United
States, has been or may hereafter be designated as an area
within which the United States may exercise rights with
respect to the exploration and exploitation of the natural
resources of the seabed or its subsoil; the term "United
States" does not include Puerto Rico, the Virgin Islands,
Guam, or any other United States possession or territory;
g) the term "Thailand" means the Kingdom of Thailand and any
area adjacent to the territorial waters of the Kingdom of
Thailand which by Thai legislation, and in accordance with
international law, has been or may hereafter be designated
as an area within which the rights of the Kingdom of Thailand
with respect to the seabed and subsoil and their natural
resources may be exercised;
h) the terms "a Contracting State" and "the other Contracting
State" mean the United States or Thailand, as the context
requires;
i) the term "tax" means United States tax or Thai tax, as the
context requires;
j) the term "nationals" means:
i) all individuals possessing the nationality or citizenship
of a Contracting State; and
ii) all legal persons, partnerships, associations and any
other entities deriving their status as such from the
laws in force in a Contracting State.
2. As regards the application of the Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires, or the competent authorities agree to a common meaning, have the meaning which it has under the laws of that State concerning the taxes to which the Convention applies.
ARTICLE 4
Residence
1. For the purposes of this Convention, 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, citizenship, place of management, place of incorporation, or any other criterion of a similar nature. The term also includes that State and any political subdivision or local authority thereof. The term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State. For purposes of this paragraph, an individual who is not a resident of Thailand under this paragraph, and who is a United States citizen or an alien admitted to the United States for permanent residence (a "green card" holder) is a resident of the United States only if the individual has a substantial presence, permanent home or habitual abode in the United States. If such individual is a resident of Thailand under this paragraph, he shall be considered a resident of both Contracting States and his residence for purposes of the Convention shall be determined under paragraph 2.
2. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, 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 (center of vital interests);
b) if the State in which he has his center of vital interests cannot
be determined, or if he does not have a permanent home
available to him in either State, he shall be deemed to be a
resident of the State in which he has an habitual abode;
c) if he has an 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 person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall settle the question by mutual agreement and determine the mode of application of the Convention to such person.
ARTICLE 5
Permanent Establishment
1. For the purposes of this Convention, 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;
c) an office;
d) a factory;
e) a workshop;
f) a warehouse, in relation to a person performing storage
facilities for others; and
g) a mine, an oil or gas well, a quarry, or any other place of
extraction of natural resources.
3. The term "permanent establishment" likewise encompasses:
a) a building site, a construction, assembly or installation
project or supervisory activities in connection therewith or an
installation or drilling rig or ship used for the exploration or
exploitation of natural resources, but only where such site,
project or activities continue for a period or periods
aggregating more than 120 days within any 12-month period;
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
i) activities of that nature continue (for the same or a
connected project) within that State for a period or
periods aggregating more than 90 days within any 12-
month period, provided that a permanent
establishment shall not exist in any taxable year in
which such services are rendered in that State for a
period or periods aggregating less than 30 days in
that taxable year; or
ii) the services are performed within that State for a
related enterprise within the meaning of paragraph 1
of Article 9 (Associated Enterprises).
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;
b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage
or display;
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;
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 the activities mentioned in subparagraphs (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 preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include the use of facilities or the maintenance of a stock of goods or merchandise belonging to the enterprise for the purpose of occasional delivery of such goods or merchandise.
6. Even if an enterprise does not have a permanent establishment in a Contracting State under the preceding paragraphs of this Article, nevertheless, it shall be deemed to have a permanent establishment in a Contracting State if it engages in business in that State through an agent who:
a) has an authority to conclude contracts in the name of that
enterprise and regularly exercises that authority in that State
unless the activities of that person are limited to those
mentioned in paragraphs 4 and 5 which, if exercised through
a fixed place of business, would not make the fixed place of
business a permanent establishment under the provisions
of that paragraph;
b) regularly secures orders in that State for that enterprise; or
c) maintains in that State a stock of goods or merchandise
belonging to that enterprise from which he regularly makes
deliveries on behalf of the enterprise.
7. 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. However, when by agreement between the agent and the enterprise, the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise and other enterprises which are controlled by it or have a controlling interest in it, he will not be considered an agent of an independent status within the meaning of this paragraph.
8. 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.
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