AGREEMENT
BETWEEN
THE GOVERNEMENT OF THE KINGDOM OF THAILAND
AND
THE GOVERNMENT OF THE LAO PEOPLE'S DEMOCRATIC REPUBLIC
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 Lao People's Democratic Republic,
Desiring to conclude an Agreement 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
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 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 capital appreciation.
3. The existing taxes to which the Agreement shall apply are:
(a). In Lao People's Democratic Republic:
- the personal income tax; and
- the profit tax;
(hereinafter referred to as "Lao tax");
(b). In Thailand:
- the income tax; and
- the petroleum income tax.
(hereinafter referred to as "Thai tax").
4. This Agreement shall apply also 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 significant 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 "Lao PDR" means the Lao People's Democratic
Republic; when used in a geographical sense, it means all
its national territory, including its territorial water and any
area beyond its territorial water within which Lao PDR, by
Lao PDR legislation and in accordance with international
law, has sovereign rights of exploration for and exploitation of
natural resources of waterbed and its subsoil and
superjacent water mass.
(b). the term "Thailand" means the Kingdom of Thailand and
includes any area adjacent to the territorial waters of the
Kingdom of Thailand which by Thai legislation, and in
accordance with the 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 sea-bed and
subsoil and their natural resources may be exercised;
(c). the terms "a Contracting State" and "the other Contracting
State" mean Lao PDR or Thailand as the context requires;
(d). the term "person" includes an individual, a company and any
other body of persons as well as any entity treated as a
taxable unit under the taxation laws in force in either
Contracting State;
(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 "tax" means Lao tax or Thai tax as the context
requires;
(h). the term "national" means:
(i) any individual possessing the nationality of a
Contracting State;
(ii) any legal person, partnership, association and any 3
other entity deriving its status as such from the laws
in force in a Contracting State;
(i). the term "international traffic" means any transport by a
vessel, aircraft or vehicle operated by an enterprise of a
Contracting State, except when the vessel, aircraft or vehicle
operated solely between places in the other Contracting
State; and
(j). the term "competent authority" means, in the case of Lao
PDR, the Minister of Finance or his authorized representative,
and in the case of Thailand, the Minister of Finance or his
authorized representative.
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, is liable to Lax therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion or a similar nature. But 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 paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
(a) the 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 Contracting State in which he has his centre of vital
interests cannot be determined, or if he has not 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 State, then it shall be deemed to be a resident of the State where it was incorporated.
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;
(f) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources;
(g) a farm or plantation;
(h) a warehouse, in relation to a person providing storage
facilities for others;
(i) a building site, a construction, installation or assembly
project or supervisory activities in connection therewith,
where such site, project or activities continue for a period of
more than six months;
(j) the furnishing of services including consultancy services by a
resident of one of the Contracting States through employees
or other personnel, where activities of that nature continue for
the same or a connected project within the other Contracting
State for a period or periods aggregating more than six
months within any twelve- month period.
3. Notwithstanding the preceding provisions or this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display
or delivery 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,
display or delivery;
(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 advertising, for the supply of information, for
scientific research or for similar activities which have a
preparatory or auxiliary character, for the enterprise.
(f) the maintenance of a fixed place of business solely for any
combination of 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.
4. Notwithstanding the provisions of paragraphs 1 and 2, where a person -- other than an agent or in independent status to whom paragraph 5 applies -- is acting on behalf of the 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 or any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 3 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions or that paragraph.
5. 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 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.
6. 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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