CONVENTION
BETWEEN
THE GOVERNMENT OF THE KINGDOM OF THAILAND
AND
THE GOVERNMENT OF THE HUNGARIAN PEOPLE’S REPUBLIC
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The Government of Thailand and the Government of the Hungarian People’s Republic.
Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to further develop and facilitate economic relationship.
Have agreed as follows;
ARTICLE 1
PERSONAL SCOPE
This Convention shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its 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 Convention shall apply are in particular:
(a) In the case of Thailand:
- the income tax; andthe petroleum income tax;
- (hereinafter referred to as “Thai tax”);
(b) in the case of the Hungarian People’s Republic:
- the income tax;
- the profit taxes and
- the special corporation tax;
(hereinafter referred to as “Hungarian tax”).
4. 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 significant changes which have been made in their respective taxation laws.
ARTICLE 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context otherwise requires:
(a) The term “Thailand” when used in geographical
sense,connotes the entire territory of the Kingdom of
Thailand, including its internal waters, territorial seas and any
areas overwhich the Kingdom of Thailand has jurisdiction
under international law and inwhich Thai laws relating to
taxes are applicable or may be in force;
(b) the term “Hungarian People’s Republic” when used in a
geographical sense means the territory of the Hungarian
People’s Republic;
(c) the terms “a Contracting State” and “the other contracting
State” mean Thailand or the Hungarian People’s Republic
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 a Contracting State
and an enterprise carried on by a resident of the
otherContracting State;
(g) the term “tax” means Thai tax or Hungarian 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
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 ship
or aircraft operated by an enterprise of a Contracting State
except when the ship or aircraft is operated solely between
places in the other Contracting State; and
(j) the term “competent authority” means the Minister of Finance
or his authorized representative.
2. As regards the application of the Convention 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 Convention applies.
ARTICLE 4
RESIDENT
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, place of incorporation, place of management or any other criterion of 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) 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 in which he has his
centre of vital interests;
(b) if the 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 a bode:
(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 question shall be settled by mutual agreement.
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 mine, an oil or gas well, a quarry or any other place of
extraction of natural resources;
(g) a farm of plantation;
(h) a warehouse in relation to a person providing storage
facilities for others;
(i) a building site, a construction, installation or assembly
project for supervisory activities in connection
therewith,where such site, project or activities continue for a
period of more than 6 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 6 months
within any twelve month period.
3. Notwithstanding the preceding provision 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
or delivery of goods 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 carrying on, for the enterprise, any other activityof
a preparatory or auxiliary character;
(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 of an independent status to whom paragraph 6 supplies - is acting in a Contracting State on behalf of the enterprise of the other Contracting State, the enterprise shall be deemed to have a permanent establishment in the first mentioned Contracting State, if such a person;
(a) has and habitually exercises in the first mentioned State, an
authority to conclude contracts on behalf of the
enterprise,unless his activities are limited to the purchase of
goods of merchandise for the enterprise;
(b) has no such authority, but habitually maintains in the first
mentioned State a stock of goods or merchandise belonging
to the enterprise from which he regularly fills orders or
makes deliveries on behalf of the enterprise; or
(c) has no such authority, but habitually secures orders in the
first mentioned State wholly or almost wholly for the
enterprise or for the enterprise and other enterprises which
are controlled by it or have controlling interest in it.
5. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to reinsurance, be deemed to have a permanent establishment in the other State if it collects premiums in the territory of that other State or insures risks situated therein through an employee or through a representative who is not an agent of an independent status within the meaning of paragraph 6 of this Article.
6. 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 Stat 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 the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise of 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 independent status within the meaning of this paragraph.
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.
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