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These notes are issued for the information of taxpayers and their tax - page 33 / 68

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the investment income should be taxed in the Side of source according to its laws. Thus, where the domestic laws of the Side of source provide tax relief or special tax treatment, the Comprehensive Arrangement does not affect the

application of

such laws.

Comprehensive

Arrangement

In addition, the relevant provisions of the set limits on the tax rates that the Side of source

may impose. domestic laws

More particularly, notwithstanding the of the Side of source, the tax imposed on

provisions investment

of any income

derived by a resident of the Other following conditions) should not Comprehensive Arrangement.

Side (“beneficial owner” that satisfies exceed the amount provided for in

the the

82.

The Side of source will only limit its right to tax if a condition is met:

the beneficial owner of the investment income must be a resident of the Other Side. “Beneficial owner” may be an individual, a company or a trust, and is the person who actually receives the benefit and fully controls the income. For example, if the investment income is received by a unit trust, the beneficial owner is the unit trust itself, and is not the individual beneficiary of the unit trust. Where the recipient of the investment income does not actually receive the economic benefit of the income concerned, but only collects it in the capacity of an agent or a nominee and will subsequently transfer the income to the actual owner in accordance with a contract or law, such an agent or a nominee will not be deemed to be the beneficial owner of the income. In other words, even though an agent or a nominee is a resident of the Other Side, the Side of source need not apply the tax limitation if the beneficial owner is

not a resident of the Other Side.

83.

On the other hand, as long as the “beneficial owner” is a resident of

the Other Side, the limitation of tax on the income in the Side of source remains applicable, regardless of whether the agent or nominee is a resident of

the Other Side at the time of the receipt of the relevant income.

Article 10

DIVIDENDS

84.

Paragraph 1 of Article 10 provides that dividends paid by a company

which is a resident of One Side to a resident of the Other Side, may be taxed in that Other Side, that is, the Side of residence has the right to tax the dividends. The meaning of the term “pay” is not limited to actual payment but will include

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