Thailand - Royalty

Article 12. Royalties

1.  Royalties arising in one of the States and paid to a resident of the other State may be taxed in that other State. 

2.  However, such royalties may be taxed in the State in which they arise, but the tax so charged shall not exceed:

a  5 per cent of the gross amount of such payments if they are made as consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work; 

b  15 per cent of the gross amount of such payments if they are made as consideration for the use of, or the right to use, any patent, trade mark, design or mode, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, or for the use of, or the right to use, cinematograph films or tapes for television or broadcasting. 

3.  The competent authorities of the States shall settle the mode of application of paragraph 2. 

4.  The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royalties, being a resident of one of the States, has in the other State in which the royalties arise a permanent establishment with which the right or property giving rise to the royalties is effectively connected. In such a case, the provisions of Article 7 shall apply, provided that under the law of that other State the royalties are taxed as part of the profits of that permanent establishment. 

5.  Royalties shall be deemed to arise in one of the States when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of one of the States or not, has in one of the States a permanent establishment in connection with which the contract under which the royalties are paid was concluded, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated. 

6.  Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipient 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 law of each State, due regard being had to the other provisions of this Convention. 

Protocol:

I. Re Articles 10, 11 and 12

Applications for the refund of tax levied contrary to the provisions of Articles 10, 11 and 12 have to be lodged within a period of three years after the expiration of the calendar year in which the tax p as been levied or, in the case of Article 27, after the expiration of the calendar year in which the income has been remitted.