(under section 53(1))

(18th July, 2003)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

                1.         Citation

                2.         Approval and effective date of commencement

                            Schedule

S.I. 34, 2003,
Act 14, 2006.

            WHEREAS in exercise of the powers conferred on him by section 53(1) of the Income Tax Act, the Minister of Finance and Development Planning has, on behalf of the Government, entered into a Tax Agreement with the Government of the Russian Federation for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains;

            AND WHEREAS in accordance with the provisions of section 53(2) of the Income Tax Act the said Agreement shall be laid before the National Assembly, and shall not take effect unless approved by resolution of the National Assembly;

            NOW THEREFORE, pursuant to the provisions of the said section 53(2), this Order is presented to the National Assembly for approval by resolution.

1.       Citation

            This Order may be cited as the Botswana-Russian Federation (Double Taxation Avoidance Agreement) Order.

2.       Approval and effective date of commencement

            The Double Taxation Avoidance Agreement set out in the Schedule hereto between the Government of the Republic of Botswana and the Government of the Russian Federation is approved and shall take effect from the date specified in the Agreement.

SCHEDULE
CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF BOTSWANA AND THE GOVERNMENT OF THE RUSSIAN FEDERATION FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

     The Government of the Republic of Botswana and the Government of the Russian Federation, desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, and with the view to promote economic cooperation between the two countries 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) The taxes to which this Convention shall apply are:

     (a)      In Botswana:

              income tax including taxation of capital gains (hereinafter referred to as "Botswana tax");

     (b)      In the Russian Federation:

            (i)       tax on income (profits) of enterprises and organisations; and

           (ii)       income tax on individuals (hereinafter referred to as "Russian tax").

     (2) Nothing in this Convention shall limit the right of either Contracting State to charge tax on the profits of an enterprise engaged in exploration or development of mineral resources, at an effective rate different from that charged on the profits of other enterprises.

     (3) Notwithstanding other provisions of this Convention, where Botswana tax is paid or payable in accordance with special Tax Agreements, ratified in terms of Botswana tax legislation, this Convention shall not apply except to such an extent as may be provided in such Tax Agreements.

     (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 taxes referred to in paragraph 1). The competent authorities of the Contracting States shall notify each other of any substantial 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 "Botswana" means the Republic of Botswana;

     (b)      the term "the Russian Federation" "(Russia)" means the territory of the Russian Federation as well as its exclusive economic zone and continental shelf as they are defined in the UN Law of the Sea Convention 1982 ;

     (c)      the terms "Contracting State" and "the other Contracting State" mean Botswana or Russia, as the context requires;

     (d)      the term "person" includes an individual, a company and any other body of persons;

     (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 "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;

     (h)      the term "national" means:

            (i)       any individual possessing the citizenship of a Contracting State;

           (ii)       any legal person, partnership and association deriving its status as such from the laws in force in a Contracting State;

     (i)       the term "competent authority" means:

            (i)       in Botswana, the Minister of Finance and Development Planning, represented by the Commissioner General of Taxes;

           (ii)       in Russia, the Ministry of Finance or its authorised 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) 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 effective management, place of registration or any other criterion of a similar nature, but 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 with which his personal and economic relations are closer (centre of vital interests);

     (b)      if the State in which he has his centre of vital interests cannot be determined, or if he has no 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, then it shall be deemed to be a resident of the State in which its place of effective management is situated.

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)      place of management;

     (b)      branch;

     (c)      an office;

     (d)      factory;

     (e)      workshop;

     (f)       a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; and

     (g)      an installation or structure used for the exploration of natural resources, provided that the installation or structure continues for a period of not less than six months.

     (3) The term "permanent establishment" likewise encompasses:

     (a)      a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than six months;

     (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 where activities of that nature continue (for the same or connected project) but within the country for a period or periods aggregating more than six months within any twelve month period.

     (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.

     (5) Notwithstanding the provisions of paragraphs 1) and 2), where a person - other than an agent of an independent status to whom paragraph 6) applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such person:

     (a)      has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise;

     (b)      has no such authority but nevertheless maintains habitually in the first-mentioned Contracting State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise, unless the activities of such persons are limited to those mentioned in paragraph 4), which if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

     (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 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 the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he shall not be considered an agent of an 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.

ARTICLE 6
Income from immovable property

     (1) Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

     (2) The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, rights known as usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be regarded as immovable property.

     (3) The provisions of paragraph 1) shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

     (4) The provisions of paragraphs 1) and 3) shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

ARTICLE 7
Business profits

     (1) The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

     (2) Subject to the provisions of paragraph 3), where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

     (3) In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

     (4) No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

     (5) For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good reason to the contrary.

     (6) Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 8
Shipping and air transport

     (1) Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

     (2) The provisions of paragraph 1) shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

ARTICLE 9
Associated enterprises

     (1) Where:

     (a)      an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or

     (b)      the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

     and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

     (2) Where a Contracting State includes in the profits of an enterprise of that State -and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.

ARTICLE 10
Dividends

     (1) Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

     (2) However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed:

     (a)      5 percent of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 25 percent of the share capital of the company paying dividends;

     (b)      10 percent of the gross amount of dividends in all other cases.

     This paragraph shall not affect taxation of the company in respect of the profits out of which the dividends are paid.

     (3) The term "dividends" as used in this Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

     (4) The provisions of paragraphs 1) and 2), shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

     (5) Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed place situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

ARTICLE 11
Interest

     (1) Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

     (2) However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

     (3) Notwithstanding the provisions of paragraph 2), interest mentioned in paragraph 1), shall be taxable only in the Contracting State where the recipient of the interest is resident if:

     (a)      the recipient thereof is the government of a Contracting State, the Central Bank of a Contracting State, a political subdivision or a local authority thereof; or

     (b)      such agency of the Government of the Contracting State as may be agreed in writing between the competent authorities of both Contracting States.

     (4) The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

     (5) The provisions of paragraphs 1), 2) and 3), shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

     (6) Interest shall be deemed to arise in a Contracting State 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 interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

     (7) Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

ARTICLE 12
Royalties

     (1) Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

     (2) However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

     (3) The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and films or tapes for radio or television broadcasting, any patent, trade mark, know how, design or model, computer programme, plan, secret formula or process, or for the use of or the right to use industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience.

     (4) The provisions of paragraphs 1) and 2), shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

     (5) Royalties shall be deemed to arise in a Contracting State 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 a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then, such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

     (6) Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, 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 beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

ARTICLE 13
Capital Gains

     (1) Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State, or from the alienation of shares in a company the assets of which consist principally of such property, may be taxed in that other State.

     (2) Gains from alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.

     (3) Gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.

     (4) Gains from the alienation of any property other than that referred to in paragraphs 1), 2) and 3), shall be taxable only in the Contracting State of which the alienator is a resident.

ARTICLE 14
Independent personal services

     (1) Income derived by an individual who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State. Such income may also be taxed in the other Contracting State if:

     (a)      the individual has a fixed base regularly available to him in that other Contracting State for the purpose of performing his activities, but only so much thereof as is attributable to that fixed base; or

     (b)      the individual is present in that other Contracting State for a period or periods exceeding in the aggregate 183 days within any period of 12 months, but only so much thereof as is attributable to services performed in that State.

     (2) The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 15
Dependent personal services

     (1) Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived there from may be taxed in that other State.

     (2) Notwithstanding the provisions of paragraph 1), remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

     (a)      the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days within any period of 12 months; and

     (b)      the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Contracting State; and

     (c)      the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other Contracting State.

     (3) Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State.

ARTICLE 16
Directors' fees

     Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17
Entertainers and sportsmen

     (1) Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

     (2) Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.

     (3) Notwithstanding the provisions of paragraphs 1) and 2), income derived by an entertainer or sportsman from his personal activities as such shall be exempt from tax in the Contracting State in which these activities are exercised if the activities are exercised within the framework of a visit which is substantially supported by the other Contracting State, a political subdivision, a local authority or a public institution thereof.

ARTICLE 18
Pensions, annuities and similar payments

     (1) Pensions, annuities and similar payments paid from a Contracting State in consideration of past employment shall be taxable only in that State.

     (2) The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

ARTICLE 19
Government service

(1) (a)      Remuneration, other than a pension, paid by a Contracting State, a political subdivision or a local authority thereof to an individual in respect of services rendered to that State, political subdivision or local authority shall be taxable only in that State.

     (b)      However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the recipient is a resident of that State who:

            (i)       is a national of that State; or

           (ii)       did not become a resident of that State solely for the purpose of rendering the services.

     (2) The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State, a political subdivision or a local authority thereof.

ARTICLE 20
Professors, teachers, researchers and students

     (1) A Professor, a teacher or a researcher who makes a temporary visit to a Contracting State for the purpose of teaching or conducting research at a university, college, school, research institute or other similar establishment, recognised by the State itself, a political subdivision or local authority thereof, and who is, or immediately before such visit was, a resident of the other Contracting State, shall be exempt, for a period not exceeding two years, from tax in the first-mentioned Contracting State in respect of remuneration for such teaching or research, provided that such remuneration arise from sources outside that first-mentioned Contracting State.

     (2) The provision of paragraph 1) of this Article, shall not apply to remuneration if a research is undertaken not in the public interest but primarily for the private benefit of a specific person or persons.

     (3) Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.

ARTICLE 21
Management, consultancy and technical fees

     (1) Technical fees arising in a Contracting State which are derived by a resident of the other Contracting State may be taxed in that other State.

     (2) However, such technical fees may also be taxed in the Contracting State in which they arise, and according to the laws of that State; but where such technical fees are derived by a resident of the other Contracting State who is subject to tax in that State in respect thereof, the tax charged in the Contracting State in which the technical fees arise shall not exceed 10 per cent of the gross amount of such fees.

     (3) The term "technical fees" as used in this Article means payments of any kind from a person who is resident in one of the Contracting States to any person, other than to an employee of the person making the payments, in consideration of any services of an administrative, technical, managerial or consultancy nature performed outside that State.

     (4) The provisions of paragraphs 1) and 2) of this Article, shall not apply if the recipient of the technical fees, being a resident of a Contracting State, carries on business in the other Contracting State in which the technical fees arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the technical fees are effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

     (5) Technical fees shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority thereof or a resident of that State. Where, however, the person paying the technical fees, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or fixed base in connection with which the obligation to pay the technical fees was incurred, and such technical fees are borne by that permanent establishment or fixed base, then such technical fees shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

     (6) Where by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the technical fees paid exceeds, for whatever reason, 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 lastmentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

ARTICLE 22
Other Income

     (1) Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.

     (2) The provisions of paragraph 1) shall not apply to income, other than income from immovable property as defined in paragraph 2) of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

     (3) Notwithstanding the provisions of paragraph 1) and 2), items of income of resident of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in the other Contracting State may also be taxed in that other State.

     (4) Where, by reason of a special relationship between the person referred to in paragraph 1) and some other person, or between both of them and some third person, the amount of the income referred to in paragraph 1) exceeds the amount (if any) which would have been agreed upon between them in the absence of such a relationship, the provisions of this Article shall apply only to the last mentioned amount. In such a case, the excess part of the income shall remain taxable according to the laws of each Contracting State, due regard being had to the other applicable provisions of this convention.

ARTICLE 23
Elimination of double taxation

     Where a resident of a Contracting State derives income from the other Contracting State the amount of tax on that income payable in the other Contracting State in accordance with the provisions of this convention, may be credited against the tax imposed on that resident by the first-mentioned Contracting State. The amount of credit, however, shall not exceed the amount of tax imposed on that income by the first-mentioned Contracting State computed in accordance with its taxation laws and regulations.

ARTICLE 24
Non-discrimination

     (1) Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

     (2) The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.

     (3) Except where the provisions of paragraph 1) of Article 9, paragraph 7) of Article 11, or paragraph 6) of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the capital gains of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.

     (4) Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

     (5) Nothing contained in this Article shall be construed as obliging either Contracting State to grant to individuals not resident in that State any of the personal allowances, reliefs and reductions for tax purposes which are granted to individuals who are resident in that State.

     (6) The provisions of this Article shall apply to taxes which are the subject of this Convention.

ARTICLE 25
Mutual agreement procedure

     (1) Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic laws of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1) of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation, not in accordance with the provisions of the Convention.

     (2) The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic laws of the Contracting States.

     (3) The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.

     (4) The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

ARTICLE 26
Exchange of information

     (1) The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention, in particular for the prevention of fraud or evasion of such taxes, insofar as the taxation there under is not contrary to the Convention. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as confidential in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

     (2) In no case shall the provisions of paragraph 1) be construed so as to impose on a Contracting State the obligation:

     (a)      to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

     (b)      to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

     (c)      to supply information, which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

     (3) The competent authorities should, through consultation, develop appropriate conditions, methods and techniques concerning the matters respecting which such exchange of information should be made, as well as exchange information regarding tax avoidance where appropriate.

ARTICLE 27
Assistance in collection

     (1) The Contracting States undertake to lend assistance to each other in the collection of the taxes owed by a taxpayer to the extent that the amount thereof has been finally determined according to the laws of the Contracting State making the request for assistance.

     (2) In the case of a request by a Contracting State for the collection of taxes which has been accepted for collection by the other Contracting State, such taxes shall be collected by that other State in accordance with the laws applicable to the collection of its own taxes.

     (3) Any request for collection by a Contracting State shall be accompanied by such certificate as is required by the laws of that State to establish that the taxes owed by the taxpayer have been finally determined.

     (4) Where the tax claim of a Contracting State has not been finally determined by reason of it being subject to appeal or other proceedings, that State may, in order to protect its revenues, request the other Contracting State to take such interim measures for conservancy on its behalf as are available to the other State under the laws of that other State. If such request is accepted by the other State, such interim measures shall be taken by that other State as if the taxes owed to the first-mentioned State were the own taxes of that other State.

     (5) A request under paragraphs 3) or 4), shall only be made by a Contracting State to the extent that sufficient property of the taxpayer owing taxes is not available in that State for recovery of the taxes owed.

     (6) The Contracting State in which tax is recovered in accordance with the provisions of this Article shall forthwith remit to the Contracting State on behalf of which the tax was collected the amount so recovered minus where appropriate, the amount of extraordinary costs referred to in subparagraph 7) (b).

     (7) It is understood that unless otherwise agreed by the competent authorities of both Contracting States:

     (a)      ordinary costs incurred by a Contracting State in providing assistance shall be borne by that State;

     (b)      extraordinary costs incurred by a Contracting State in providing assistance shall be borne by the other State and shall be payable regardless of the amount collected on its behalf by that other State.

     (8) As soon as a Contracting State anticipates that extraordinary cost may be incurred, it shall so advise the other Contracting State and indicate the estimated amount of such costs.

     (9) In this Article, the term "taxes" means the taxes to which the Convention applies and includes any interest and penalties relating thereto.

ARTICLE 28
Diplomatic agents and consular officers

     Nothing in this Convention shall affect the fiscal privileges of diplomatic agents or consular officers under the rules of general international law or under the provisions of special agreements.

ARTICLE 29
Entry into force

     (1) Each of the Contracting States shall notify to the other the completion of the procedures required by its laws for the bringing into force of this Convention.

     (2) The Convention shall enter into force on the date of the later of these notifications and shall thereupon have effect:

     (a)      In Botswana, in respect of income tax, on taxable income derived on or after the first day of July of the year next following that of the entry into force of this Convention;

     (b)      In Russia:

            (i)       in respect of taxes withheld at source, to income arising on or after the first day of January in the calendar year next following the year in which this Convention enters into force;

           (ii)       in respect of other taxes on income, to taxes arising for any fiscal year beginning on or after the first day of January in the calendar year next following the year in which this Convention enters into force.

ARTICLE 30
Termination

     This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, by giving written notice of termination at least six months before the end of any calendar year after the expiration of a period of five years from the date of its entry into force. In such case, the Convention shall cease to have effect:

     (a)      In Botswana, in respect of income tax, on taxable income derived on or after the first day of July of the year next following that in which the notice of termination is given;

     (b)      In Russia:

            (i)       in respect of taxes withheld at source, to income arising on or after the first day of January in the calendar year next following in which the notice of termination is given;

           (ii)       in respect of other taxes on income, to taxes arising for any fiscal year beginning on or after the first day of January in the calendar year next following the year in which the notice of termination is given.

     Done at Gaborone, this 8th day of April, 2003 in duplicate in the English and Russian languages, both texts being equally authentic.

HON. BALEDZI GAOLATHE,

MR. SERGEI D. SHATALOV,

For the Government of
the Republic of Botswana

For the Government of
the Russian Federation