belgiquelex.be - Carrefour Bank of Legislation

5 MARCH 1999. - An Act to assent to the Convention between Mongolia and the Kingdom of Belgium to avoid double taxation and to prevent tax evasion in respect of income and property taxes, made in Brussels on 26 September 1995 (1) (2) (2)

ALBERT II, King of the Belgians,
To all, present and to come, Hi.
The Chambers adopted and We sanction the following:
Article 1^er. This Act regulates a matter referred to in Article 77 of the Constitution.
Art. 2. The Convention between the Kingdom of Belgium and Mongolia to avoid double taxation and to prevent tax evasion in respect of taxes on income and on fortune, signed in Brussels on 26 September 1995, will come out its full and complete effect.
Promulgate this Act, order that it be coated with the Seal of the State and published by the Belgian Monitor.
Given in Brussels on 5 March 1999.
ALBERT
By the King:
Minister of Foreign Affairs,
E. DERYCKE
Minister for Foreign Trade,
E. DI RUPO
Minister of Finance,
J.-J. VISEUR
Seen and sealed the state seal:
Minister of Justice,
T. VAN PARYS

(1) Session 1997-1998.
Senate.
Documents. - Bill, tabled on 8 October 1998, n°1-1108/1.
Session 1998-1999.
Report, no. 1-1108/2. - Text adopted by the Commission, No. 1-1108/3.
Annales parliamentarians. - Discussion, meeting of 10 December 1998.
Room.
Session 1998-1999.
Documents. Project transmitted by the Senate, No. 49-1894/1. - Text adopted in plenary and subject to Royal Assent, No. 49-1894/2.
Annales parliamentarians. - Discussion, meeting of 18 December 1998. - Vote, meeting of 28 January 1999.
(2) In accordance with the provisions of article 29 of the Convention, the Convention entered into force on 30 March 2000.

AGREEMENT BETWEEN THE KINGDOM OF BELGIUM AND MONGOLIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL
THE GOVERNMENT OF THE KINGTON OF BELGIUM
AND
THE GOVERNMENT OF MONGOLIA,
Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, have agreed as follows:
CHAPTER I. - Scope of the agreement
Personel scope
Article 1. This Agreement shall apply to persons who are residents of one or both of the Contracting States.
Taxes covered
Art. 2. § 1. This Agreement shall apply to taxes on income and on capital 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 and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, 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 in particular :
(a) in the case of Mongolia:
1° the individual income tax;
2° the corporate income tax, including the withholding taxes, (hereinafter referred to as "Mongolian tax").
(b) in the case of Belgium:
1° the individual income tax;
2° the corporate income tax;
3° the income tax on legal entities;
4° the income tax on non-residents;
5° the special levy assimilated to the individual income tax;
6° the supplementary crisis contribution, including the prepayments, the surcharges on these taxes and prepayments, and the supplements to the individual income tax, (hereinafter referred to as "Belgian tax");
§ 4. The Agreement shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws within a reasonable period of time after such changes.
CHAPTER II. - Definitions
General definitions
Art. 3. § 1. For the purposes of this Agreement, unless the context otherwise requires:
a) 1° the term "Mongolia" means, when used in a geographical sense, the territory of Mongolia and any area in which the tax law of Mongolia is in force insofar as Mongolia exercises in such area, in conformity with international law, sovereign rights to exploit natural resources;
2° the term "Belgiurn" means, when used in a geographical sense, the territory of the Kingdom of Belgium, including the territorial sea and any other area within which the Kingdom of Belgium, in accordance with international law, exercises sovereign rights or its jurisdiction;
b) the terms "a Contracting State" and "the other Contracting State" mean Belgium or Mongolia as the context requires;
(c) the term "person" includes an individual, a company and any other body of persons;
d) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;
e) 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;
(f) the term "intemational traffic" means any transport by a ship, aircraft or road or railway vehicle operated by an enterprise which has its place of effective management in a Contracting State, except when the ship, aircraft or road or railway vehicle is operated solely between places in the other Contracting State;
(g) the term "competent authority" means in the case of both Contracting States, the Minister of Finance or his authorised representative;
(h) the term "national of a Contracting State" means:
1° any individual possessing the nationality of that Contracting State;
2° any legal person, partnership or association deriving its status as such from the laws in force in that Contracting State.
§ 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.
Resident
Art. 4. § 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 tax therein by reason of his domicile, residence, 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 or capital situated therein.
§ 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 pemmanent 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 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 States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.
Permanent establishment
Art. 5. § 1. For the purposes of this Agreement, the temm "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, and
(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
§ 3. A building site or construction or installation project constitutes a permanent establishment only if it lasts more than six months.
§ 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, 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 carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs 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.
§ 5. Notwithstanding the provisions of paragraphs I and 2, where a person - other than an agent of an independent status to whom paragraph 6 applies - is acting on behalf of an 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 of any activities which undertake that person establishment that enterprise, unless the activities of such person are limited to those mentioned in paragraph 4
§ 6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that 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 on behalf of that, this agent shall not be considered to be 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.
CHAPTER III. - Taxation of income
Income from immovable property
Art. 6. § 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, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the consideration right to work, mineral deposits, sources and other natural resources; ships, aircraft, road and railway vehicles 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.
Business profits
Art. 7. § 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 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.
§ 3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes 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.
§ 4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an contributionionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an contributionionment as may be cllstomafy; the method of contributionionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
§ 5. 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.
§ 6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment be determined by the same method year by year unless there is good and sufficient reason to the contrary.
§ 7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
International transport
Art. 8. § 1. Profits from the operation of ships, aircraft or road or railway vehicles in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
§ 2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.
§ 3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a j oint business or an international operating agency.
Associated enterprises
Art. 9. 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 increased to one of the enterprises, but, by reason of those conditions, have not so increased profits, may be included
Dividends
Art. 10. § 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 beneficial owner of the dividends is a resident of the other Contracting State the tax so charged shall not exceed :
a) j per cent of the gross amount of the dividends if the beneficial owner is a company which holds directly or indirectly at least 10 per cent of the capital of the company paying the dividends;
(b) 15 per cent of the gross amount of the dividends in all other cases. This paragraph shall not affect the 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, "jouissance" shares or "jouissance" rights, mining shares, founders' shares or other rights, not being debt-claims, participating in profits, as well as income - even paid in the form of interest - which is treated as income from shares by the internal tax legislation of the State of which the paying company is a resident. This term means also profits distributed to their partners by joint ventures incorporated under Mongolian law.
§ 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 pemmanent 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 company or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the dividend's undistributed
Interest
Art. 11. § 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 beneficial owner of the interest is a resident of the other Contracting State 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 shall be exempted from tax in the Contracting State in which it arises if it is:
a) interest on commercial debt-claims -including debt-claims represented by commercial paper resulting from deferred payments for goods, goods or services supplied by an enterprise;
b) interest paid in respect of a loan made, guaranteed or insured or a credit extended, guaranteed or insured by public entities the purpose of which is to promote the export;
c) interest on loans of any nature - not represented by bearer instruments - granted by a banking enterprise;
(d) interest on deposits - not represented by bearer instruments - with a banking;
e) interest paid to the other Contracting State, a political subdivision or a local authority thereof.
§ 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. However, the term "interest" shall not include for the purpose of this Article penalty charges for late payment nor interest regarded as dividends under the first sentence of paragraph 3 of Article 10.
§ 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 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 pay 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 bome 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 pay and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debtclaim for which it is paid, exceeds the amount which would have been agreed upon by the pay 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 in the
Contracting State in which the interest arises according to the laws of that State.
Royalties
Art. 12. § 1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable 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 beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 5 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 television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, 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 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 pay 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 pay 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 pay 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 in the Contracting State in which the royalties arise, according to the laws of that State.
Capital gains
Art. 13. § 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 may be taxed in that other State.
§ 2. Gains from the 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 he taxed in
§ 3. Gains from the alienation of ships, aircraft or road or railway vehicles operated in international traffic or movable property pertaining to the operation of such ships, aircraft or road or railway vehicles shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
§ 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.
Independent personal services
Art. 14. § 1. Income derived by 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. However, in the following circumstances such income may also be taxed in the other Contracting State:
a) if that resident has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; gold
(b) if his stay in the other Contracting State is for a period or periods exceeding in the aggregate 183 days within any twelve-month period; in that case, only so much of the income as is derived from his activities performed in that other Contracting State may be taxed in that other 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.
Dependent personal services
Art. 15. § 1. Subject to the provisions of Articles 16, 18, 19 and 20, 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 State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the taxable period concerned, and
b) the remuneration is paid by, or on behalf of an employer who is not a resident of the other State, and
c) the remuneration is not home by a permanent establishment or a fixed base which the employer has in the other State.
§ 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship, aircraft or road or railway vehicle operated in
international traffic, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
Company managers
Art. 16. § 1. 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 or a similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.
§ 2. Remuneration derived by a person referred to in paragraph I from the company in respect of the discharge of day-to-day functions of a managerial or technical nature and remuneration received by a resident of a Contracting State in respect of his personal activity as a partner of a company, other than a company with share capital, which is a resident of the other Contracting State, may be taxed in accordance with the provisions of Article 15, as if such remuneration were remuneration derived by an employee in respect
Artists and sportsmen
Art. 17. § 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 artist, 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 increaseds 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. The provisions of paragraphs I and 2 shall not apply if the activities exercised by an entertainer in a Contracting State are substantially supported from public funds of the other Contracting State or a political subdivision or a local authority thereof In such case, income derived from such activities shall be taxable only in that other Contracting State.
Pensions
Art. 18. § 1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.
§ 2. However, pensions and other allowances, periodic or non periodic, paid under the social security legislation of a Contracting State may be taxed in that State. This provision also applies to pensions and allowances paid under a public scheme organised by a Contracting State in order to supplement the benefits of that legislation.
Government service
Art. 19. § 1. (a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or 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 State and the individual is a resident of that State who:
1° is a national of that State : or
2° did not become a resident of that State solely for the purpose of rendering the services.
§ 2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
§ 3. 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 or a political subdivision or a local authority thereof.
§ 4. The provisions of paragraph I shall also apply to remuneration paid by a Contracting State to an individual in respect of an activity exercised in the other Contracting State within the framework of cooperation agreements concluded between both Contracting States.
Professors and students
Art. 20. § 1. Any remuneration paid to professors and other teachers who are residents of a Contracting State and who are present in the other Contracting State for the purpose of teaching or carrying on scientific research at a university or other officially recognized educational institution shall be exempt from tax in that other State for a period not exceeding two years from the date of arrival of these persons in that other State.
§ 2. A student, business apprentice or trainee who is, or was immediately before visiting a Contracting State, a resident of the other Contracting State and who is temporarily present in the firstmentioned State solely for the purpose of his education or training shall be exempt in that State on the following payments or income received or derived by him for the purpose of his maintenance, education or training :
(a) payments which he receives from sources outside the first-mentioned State;
(b) grants, scholarships or awards which he receives from the Government or a scientific, educational or cultural organization of a Contracting State;
c) remuneration which he derives from an employment exercised in the first-mentioned State in connection with his education or training and during the normal duration of this education or training, if such remuneration does not exceed in any calendar year 120,000 Belgian francs or the equivalent of that amount in the currency of Mongolia at the official exchange rate.
Other income
Art. 21. § 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in
the foregoing Articles of this Agreement shall be taxable only in that State.
§ 2. The provisions Of paragraph I 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 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.
§ 3. Notwithstanding the provisions of paragraphs I and 2. items of income of a resident of a Contracting State not deak-[]ith in the foregoing articles of the Agreement and arising in the other Contracting State may also be taxed in that other State.
CHAPTER IV. - Taxation of capital
Capital
Art. 22. § 1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.
§ 2. Capital represented by 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 by 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, may be taxed in that other State.
§ 3. Capital represented by ships, aircraft and road or railway vehicles operated in international traffic, and by movable property pertaining to the operation of such ships, aircraft or road or railway vehicles, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
§ 4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.
CHAPTER V. - Methods for elimination of double taxation
Art. 23. § 1. In the case of Mongolia, double taxation shall be avoided as follows:
(a) Where a resident of Mongolia derives income or owns capital which, in accordance with the provisions of this Agreement, may be taxed in Belgium, Mongolia shall allow:
1° as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in Belgium;
2° as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in Belgium. Such deduction in either case shall not, however, exceed that part of income tax or capital tax, as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital which may be taxed in Belgium.
(b) Where a company which is a resident of Mongolia derives dividends from a company which is a resident of Belgium and the Mongolian company owns directly or indirectly at least 10 per cent of the capital of the Belgian company, the deduction mentioned in 1° of sub-paragraph;
a) shall take into account, in addition to the Belgian tax on such dividends, the Belgian corporate income tax due in respect of the profits out of which the dividends were paid.
§ 2. In the case of Belgium, double taxation shall be avoided as follows:
(a) Where a resident of Belgium derives income or owns elements of capital which are taxed in Mongolia in accordance with the provisions of the Agreement, other than those of paragraph 2 of Article 10, of paragraphs 2 and 7 of Article 11 and of paragraphs 2 and 6 of Article 12,
Belgium shall exempt such income or such elements of capital from tax but may. in calculating the amount of tax on the remaining income or capital of that resident, apply the rate of tax which would have been applicable if such income or elements of capital had not been exempted.
(b) Subject to the provisions of Belgian law regarding the deduction from Belgian tax of taxes paid abroad, where a resident of Belgium derives items of his aggregate income for Belgian tax purposes which are dividends taxable in accordance with paragraph 2 of Article 10, and not exempt from Belgian tax according to subparagraph c) hereinafter, interest taxable in accordance with paragraph 2 or 7 of Article 11, or royalties taxable in accordance with paragraphs 2 or 6 of Article 12, the Mongolian income taxed Belgium shall also allow against its tax a credit with respect to dividends and interest which are derived from investment directly connected with development projects in Mongolia and which are included in the aggregate income for Belgian tax purposes of its residents, when these items of income may be taxed in Mongolia according to the provisions of the Agreement and the general law of Mongolia but are exempted under special and temporary measures designed to promote the economic development of Mongolia and agreed upon by the competent authorities of both Contracting States. Such credit shall amount to 10 per cent of the gross amount of the dividends or the interest but in either case shall not exceed that part of the Belgian income tax, as computed before the credit is given, which is attributable to these items of income taxable in Belgium and shall only apply for the first ten years for which the Agreement is effective. However, the competent authorities of the Contracting States may consult each other to determine whether this period shall be extended or not.
(c) Dividends within the meaning of paragraph 3 of Article 10, derived by a company which is a resident of Belgium from a company which is a resident of Mongolia, shall be exempt from the corporate income tax in Belgium under the conditions and within the limits provided for in Belgian law.
(d) Where, in accordance with Belgian law, losses incurred by an enterprise carried on by a resident of Belgium in a permanent establishment situated in Mongolia, have been effectively deducted from the profits of that enterprise for its taxation in Belgium, the exemption provided for in subparagraph a) shall not apply in Belgium to the profits of other taxable periods attributable to that establishment to the extent that those profits have also been exempted from tax in Mongolia by reason of compensation for the said losses.
CHAPTER VI. - Special provisions
Non-discrimination
Art. 24. § 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, in particular with respect to residence, 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 vhich 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. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
§ 3. Except where the provisions 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 Statetu, 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 taxable capital 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 preventing Belgium :
a) from taxing the profits attributable to a permanent establishment in Belgium of a company which is a resident of Mongolia at the rate of tax provided by the Belgian law, provided that this rate does not exceed the maximum rate applicable to the profits of companies which are residents of Belgium;
b) from imposing its withholding tax on dividends derived from a holding which is effectively connected with a permanent establishment maintained in Belgium by a company which is a resident of Mongolia.
§ 6. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
Mutual agreement procedure
Art. 25. § 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 Agreement, he may, irrespective of the remedies provided by the domestic law 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 Agreement.
§ 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 Agreement.
§ 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 Agreement.
§ 4. The competent authorities of the Contracting States shall agree on administrative measures necessary to carry out the provisions of the Agreement and particularly on the proofs to be famished by residents of either Contracting State in order to benefit in the other State from the exemptions or reductions in tax provided for in the Agreement.
§ 5. The competent authorities of the Contracting States shall communicate directly with each other for the application of the Agreement.
Exchange of information
Art. 26. § 1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement insofar as the taxation thereunder is not contrary to the Agreement, in particular for the prevention of fraud or evasion of such taxes. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret 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 Agreement. 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).
Aid in recovery
Art. 27. § 1. Each of the Contracting States shall endeavour to collect, as if it were its own tax, any tax referred to in Article 2, which has been imposed by the other Contracting State and the collection of which is necessary to ensure that any exemption or reduction of tax granted under this Agreement by that other State shall not be enjoyed by persons not entitled to such benefits.
§ 2. The provisions of this Article shall in no case be construed so as to impose on the requested State the obligation to apply any means of enforcement which are not authorised by its laws or by those of the other Contracting State or to take measures which would be contrary to public policy (ordre public).
Members of diplomatic missions and consular posts
Art. 28. Nothing in this Agreement shall affect the fiscal privileges of members of a diplomatic mission or consular post under the general rules of international law or under the provisions of special agreements.
CHAPTER VII. - Final provisions
Entry into force
Art. 29. § 1. This Agreement shall be ratified and the instruments of ratification shall be exchanged at Ulaanbaatar as soon as possible.
§ 2. The Agreement shall enter into force on the fifteenth day after the date of the exchange of the instruments of ratification and its provisions shall have effect :
a) respect to taxes due at source on income credited or payable on or after January 1 of the year next following the year in which the instruments of ratification have been exchanged;
b) respect to other taxes charged on income of taxable periods beginning on or after January 1 of the year next following the year in which the instruments of ratification have been exchanged;
c) with respect to taxes on capital charged on elements of capital existing on January I of any year following the year in which the instruments of ratification have been exchanged.
Termination
Art. 30. This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving to the other Contracting State, written notice of termination not later than the 30th June of any year calendar from the fifth year following that in which the instruments of ratification have been exchanged. In the event of termination before July I of such year, the Agreement shall cease to have effect :
a) with respect to taxes due at source on income credited or payable on or after January 1 of the year next following the year in which the notice of termination is given;
b) with respect to other taxes charged on income of taxable periods beginning on or after January 1 of the year next following the year in which the notice of termination is given;
c) with respect to taxes on capital charged on elements of capital existing on January 1 of any year following the year in which the notice of termination is given.
In witness whereof the undersigned, being duly authorised thereto by their respective Governments, have signed this Agreement.
Done in duplicate at Brussels, this 26 th of September, in the English language.
For the Government of the Kingdom of Belgium :
Minister of Finance,
Ph. MAYSTADT
For the Government of Mongolia:
Minister of Extemal Affairs,
TS. GOMBOSUREN

CONVENTION AGAINST THE MONGOLIA AND THE BELGIUM ROYATING TO THE IMPOSAL DOUBLES AND FIRST THE FISCALE EVASION D'IMPOTS SUR LE REVENU ET SUR LA FORTUNE
THE GOVERNMENT OF MONGOLIA
AND
THE GOVERNMENT OF THE BELGIUM ROYAUME,
Desiring to conclude a Convention to avoid double taxation and to prevent tax evasion in respect of income and property taxes, have agreed on the following provisions:
CHAPTER I. - Scope of the convention
Article 1^er
Target persons
This Convention applies to persons who are residents of a Contracting State or both Contracting States.
Article 2
Taxes
§ 1^er. This Convention applies to taxes on income and on property collected on behalf of a Contracting State, its political subdivisions or local authorities, irrespective of the system of perception.
§ 2. Taxes on total income, total property or income or property, including taxes on earnings from the alienation of movable or real estate property, taxes on the total amount of wages paid by companies, as well as taxes on surplus-values, are considered as income and property taxes.
§ 3. Current taxes to which the Convention applies include:
(a) Mongolia:
1° Personal tax (the individual income tax);
2° corporate tax (the corporate income tax); including deductions at source, (hereinafter referred to as "Mongol tax").
(b) with regard to Belgium:
1° the tax of natural persons;
2° corporate tax;
3° the tax of legal persons;
4° the non-resident tax;
5° the special contribution assimilated to the tax of natural persons;
6° the complementary contribution of crisis; including pre-payments, additional centimes to such taxes and pre-payments and additional taxes to the tax of natural persons, (hereinafter referred to as "Belgian tax". )
§ 4. The Convention also applies to taxes of an identical nature to the analog that would be established after the date of signing of the Convention and that would be added to or replace existing taxes. The competent authorities of the Contracting States shall, within a reasonable time, communicate the significant changes to their respective tax laws.
CHAPTER II. - Definitions
Article 3
General definitions
§ 1^er. For the purposes of this Convention, unless the context requires a different interpretation:
(a) 1° the term "Mongolia", used in a geographical sense, means the territory of Mongolia and the areas in which Mongolia's tax legislation is in force to the extent that Mongolia exercises sovereign rights in those areas, in accordance with international law, for the purposes of the exploitation of natural resources;
2° the term "Belgium", used in a geographical sense, means the territory of the Kingdom of Belgium, including the territorial sea and the areas on which, in accordance with international law, the Kingdom of Belgium exercises sovereign rights or its jurisdiction;
(b) the terms "a Contracting State" and "the other Contracting State" shall, in accordance with the context, designate Belgium or Mongolia;
(c) the term "person" includes natural persons, societies and all other groups of persons;
(d) the term "society" means any corporation or entity that is considered to be a corporation for taxation purposes;
(e) the terms "company of a Contracting State" and "company of the other Contracting State" shall, respectively, designate a business operated by a resident of a Contracting State and a business operated by a resident of the other Contracting State;
(f) the term "international traffic" means any carriage by a ship, aircraft or road or rail vehicle operated by a company whose effective steering seat is located in a Contracting State, except where the ship, aircraft or road vehicle to the railway is operated only between points in the other Contracting State;
(g) the term "competent authority" means, with respect to both: Contracting States, the Minister of Finance or its authorized representative;
(h) The term "national of a Contracting State" means:
(1) any natural person who has the nationality of that Contracting State;
2. any legal person, partnership or association incorporated in accordance with the legislation in force in that Contracting State.
§ 2. For the purposes of the Convention by a Contracting State, any expression not defined therein shall have the meaning assigned to it by the law of that State concerning the taxes to which the Convention applies, unless the context requires a different interpretation.
Article 4
Resident
§1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is subject to tax in that State, because of his domicile, residence, management seat or any other similar criterion. However, this term does not include persons who are subject to tax in that State only for income from sources located in that State or for the property located therein.
§ 2. Where, according to the provisions of paragraph ler, a natural person is a resident of the two Contracting States, his or her situation shall be settled as follows:
(a) that person is considered to be a resident of the State where the person has a permanent home; if it has a permanent home in both states, it is considered to be a resident of the State with which its personal and economic ties are the narrowest (centre of vital interests);
(b) if the State where that person has the centre of its vital interests cannot be determined, or if it does not have a permanent home in any of the States, it is considered to be a resident of the State where he or she stays from ordinary fachos;
(c) if the person normally stays in both States or if he or she does not normally stay in any of them, he or she is considered to be a resident of the State of which he or she is a national;
(d) if the person possesses the nationality of the two States or has no nationality of any of them, the competent authorities of the Contracting States shall decide the question by mutual agreement.
§ 3. When. paragraph 1^era person other than a natural person is a resident of the two Contracting States and is considered to be a resident of the State where his or her effective management seat is located.
Article 5
Stable establishment
§ 1^er. For the purposes of this Convention, the term "stable establishment" means a fixed business facility through which a company operates all or part of its business.
§ 2. The term "stable establishment" includes:
(a) a steering seat;
(b) a branch;
(c) an office;
(d) A factory;
(e) a workshop, and
(f) a mine, oil or gas well, a career or any other place of extraction of natural resources.
§ 3. A construction or construction site is a permanent establishment only if its duration exceeds six months.
§ 4. Notwithstanding the preceding provisions of this article, it is considered that there is no "stable establishment" if:
(a) the use of facilities for the sole purpose of storage, exposure or delivery of goods owned by the company;
(b) goods belonging to the undertaking are stored for storage, exposure or delivery purposes only;
(c) goods belonging to the enterprise are stored for the sole purpose of processing by another company;
(d) a fixed business facility is used for the sole purpose of purchasing goods or collecting information for the company;
(e) a fixed business facility is used for the sole purpose of carrying out any other preparatory or auxiliary activity for the enterprise;
(f) a fixed business facility shall be used only for the purpose of the cumulative year of activities referred to in subparagraphs (a) to (e), provided that the overall activity of the fixed business facility resulting from this accumulated business shall be preparatory or auxiliary.
§ 5. Notwithstanding the provisions of paragraphs 1^er and 2, where a person - other than an agent enjoying an independent status to which paragraph 6 applies - shall act on behalf of a business and shall, in a Contracting State, have powers that it normally exercises in it to enter into contracts on behalf of the enterprise, that undertaking shall be deemed to have a permanent establishment in that State for all the activities that the person carries on for the enterprise, unless the activities of that person are limited to those
§ 6. A business is not considered to have a permanent establishment in a Contracting State solely because it operates in it through a broker, a general commissioner or any other agent with an independent status, provided that such persons act within the ordinary framework of their business. However, where the activities of such an agent are carried out exclusively on behalf of that business, that agent is not considered an independent agent within the meaning of this paragraph.
§ 7. The fact that a corporation that is a resident of a Contracting State controls or is controlled by a corporation that is a resident of the other Contracting State or that operates therein (either through a permanent establishment or not) is not sufficient in itself to make any of these companies a permanent establishment of the other.
CHAPTER III. - Income tax
Article 6
Real estate income
§ 1^er. The income that a resident of a Contracting State derives from real property (including income from farms or forestry) located in the other Contracting State, is taxable in that other State.
§ 2. The term "real property" has the meaning assigned to it by the law of the Contracting State in which the property is located. The term includes, in any case, accessories, dead or alive livestock of farms and forests, the rights to which the provisions of private law apply in respect of land ownership, the usufruct of real property and the rights to variable or fixed payments for the exploitation or concession of the exploitation of mineral deposits, sources and other natural resources; vessels, aircraft, road and rail vehicles are not considered real property.
§ 3. The provisions of paragraph 1^er applies to income derived from direct exploitation or enjoyment, lease or charter, as well as any other form of exploitation of real property.
§ 4. The provisions of paragraphs 1^er and 3 also apply to income from real property of a business as well as to income from real property used in the exercise of an independent profession.
Article 7
Business benefits
§ 1^er. 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 located therein. If the company operates in such a way, the profits of the company are taxable to the other State but only to the extent that they are attributable to that permanent establishment.
§ 2. Subject to the provisions of paragraph 3, where a business of a Contracting State carries on business in the other Contracting State through a permanent establishment located therein, it shall be charged, in each Contracting State, to that permanent establishment the profits that it could have realized if it had constituted a separate undertaking carrying out identical or similar activities under identical or similar conditions and acting independently.
§ 3. To determine the profits of a permanent establishment, deductions are made of the expenses set out for the purposes of this permanent establishment, including the executive expenses and general administrative expenses so exposed, either in the State where the permanent establishment is located or elsewhere.
§ 4. If it is customary in a Contracting State to determine the profits attributable to a permanent establishment on the basis of a distribution of the total profits of the enterprise between its various parties, no provision in paragraph 2 shall prevent that Contracting State from determining the taxable profits according to the distribution in use; However, the method of distribution adopted must be such that the result obtained is consistent with the principles contained in this article.
§ 5. No profit is charged to a permanent establishment because it simply purchased goods for the company.
§ 6. For the purposes of the preceding paragraphs, the benefits to be charged to the permanent establishment are determined annually on the same basis, unless there are valid and sufficient grounds to proceed otherwise.
§ 7. Where profits include income elements treated separately in other articles of this Convention, the provisions of these articles are not affected by the provisions of this article.
Article 8
International transport
§ 1^er. The profits derived from the operation, in international traffic, of ships, aircraft or road or rail vehicles shall be taxable only in the Contracting State where the effective management seat of the enterprise is located.
§ 2. If the effective management seat of a marine navigation company is on board a vessel, that seat shall be considered to be located in the Contracting State where the vessel's port of attachment is located, or if the vessel is not carrying the vessel, in the Contracting State of which the vessel operator is a resident.
§ 3. The provisions of paragraph 1^er also applies to benefits derived from participation in a pool, a joint operation or an international operating organization.
Article 9
Associated companies
When:
(a) a business of a Contracting State directly participates in the direction, control or capital of a business of the other Contracting State, or
(b) the cods involved directly or indirectly in the direction, control or capital of a business of a Contracting State and a business of the other Contracting State,
and that, in both cases, the two companies are, in their commercial or financial relations, disposed of by agreed or imposed conditions, which differ from those that would be agreed between independent companies, the profits that, without these conditions, would have been realized by one of the companies but could not be in fact because of these conditions, may be included in the profits of that company and imposed accordingly.
Article 10
Dividends
§ 1^er. Dividends paid by a corporation that is a resident of a Contracting State to a resident of the other Contracting State shall be taxable in that other State.
§ 2. However, such dividends may also be taxed in the Contracting State of which the corporation paying the dividends is a resident, and according to that legislation of that State, but if the beneficial owner of the dividends is A resident of the other Contracting State, the tax so charged shall not exceed:
(a) 5 per cent of the gross amount of dividends if the beneficial owner is a corporation that holds directly or indirectly at least 10 per cent of the capital of the corporation that pays the dividends;
(b) 15 per cent of the gross amount of dividends in all other cases.
This subsection does not affect the corporation's taxation of profits that are used to pay dividends.
§ 3. The term "dividends" used in this article refers to income derived from shares, shares or benefits, shares of mine, share of founder or other share of beneficiaries with the exception of receivables, as well as incomes - even attributed in the form of interest - subject to the same tax regime as income from shares by the law of the State whose debiting society is a resident. This term also refers to the benefits that joint enterprises incorporated in accordance with Mongolian legislation distribute to their partners.
§ 4. The provisions of paragraphs 1^er and 2 shall not apply where the beneficial owner of the dividends, a resident of a Contracting State, exercises in the other Contracting State whose dividend-paying corporation is a resident, either an industrial or commercial activity through a permanent establishment located therein, or an independent occupation by means of a fixed base located therein, and that the dividend-generating interest is effectively connected to it. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
§ 5. Where a corporation that is a resident of a Contracting State derives from the profits or income of the other Contracting State, that other State may not collect any tax on the dividends paid by the corporation, except to the extent that such dividends are paid to a resident of that other State or to the extent that the dividend-generating interest is effectively connected to a permanent establishment or to a fixed base located in that other State, or prelever any
Article 11
Interest
§ 1^er. Interest arising from a Contracting State and paid to a resident of the other Contracting State shall be taxable in that other State.
§ 2. However, these interests are also taxable in the Contracting State of where they arise and according to the law of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, 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 shall be exempted from tax in the Contracting State from which it arises when it is:
(a) interest in commercial receivables - including those represented by commercial effects - resulting from the payment of goods, goods or services by companies in the future;
(b) interest paid on the basis of a loan made, guaranteed or insured, or credit granted, guaranteed or insured by public bodies whose purpose is to promote exports;
(c) interest in loans of any kind not represented by bearer securities and granted by bank companies;
(d) interest in deposits of amounts of money not represented by holder securities and carried out in banking enterprises;
(e) interest paid to the other Contracting State or to any of its political subdivisions or local authorities.
§ 4. The term "interest" used in this section refers to the income of receivables of any kind, whether or not accompanied by mortgage guarantees or an interest clause in the debtor's profits, including income from public funds and borrowing obligations, including premiums and lots attached to these securities. However, this term does not include, within the meaning of this article, penalties for late payment or interest treated as dividends under the first sentence of Article 10, paragraph 3.
§ 5. The provisions of paragraphs 1^er, 2 and 3 shall not apply where the beneficial owner of the interest, a resident of a Contracting State, exercises in the other Contracting State in which the interests arise, either an industrial or commercial activity through a permanent establishment located therein or an independent occupation by means of a fixed base located therein, and that the interest-generating debt is effectively connected to it In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
§ 6. Interest shall be deemed to arise from a Contracting State where the debtor is that State itself, a political subdivision, a local authority or a resident of that State. However, where the debtor of interest, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment, or a fixed base, for which the debt giving rise to the payment of interest has been contracted and which bears the burden of such interests, these shall be deemed to be from the State or the permanent establishment, or the fixed base, is located.
§ 7. Where, because of special relations between the debtor and the beneficial owner or between the debtor and the other person maintain with third persons, the amount of interest, taking into account the debt for which they are paid, exceeds the amount agreed upon by the debtor and the beneficial owner in the absence of such relations, the provisions of this Article shall apply only to the latter amount. In this case, the surplus portion of the payments shall remain taxable, in accordance with its legislation, in the Contracting State from which the interest arises.
Article 12
Claims
§ 1^er. Royalties from a Contracting State and paid to a resident of the other Contracting State shall be taxable in that other State.
§ 2. However, these royalties are also taxable in the Contracting State in which they arise and according to the law of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the royalties.
§ 3. The term "debtedness" used in this article means the remuneration of any kind paid for the use or concession of the use of a copyright on a literary, artistic or scientific work, including film films and films or tapes registered for radio or television, a patent, a trademark or trade mark, a drawing or a model, a plan, a business line
§ 4. The provisions of paragraphs 1^er and 2 shall not apply where the beneficial owner of the royalties, a resident of a Contracting State, carries out in the other Contracting State in which the royalties arise, either an industrial or commercial activity through a permanent establishment located therein or an independent occupation by means of a fixed base located therein, and that the right or property generating the royalties is effectively connected to it. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
§ 5. The royalties shall be deemed to come from a Contracting State when the debtor is that State itself, a political subdivision, a local authority or a resident of that State. However, where the debtor of royalties, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment, or a fixed base, for which the contract giving rise to the payment of royalties has been concluded and which bears the charge of such royalties, these shall be deemed to be from the State where the permanent establishment or fixed base is located.
§ 6. Where, because of special relations between the debtor and the beneficial owner or between the debtor and the other person maintain with third persons, the amount of royalties, taking into account the benefit for which they are paid, exceeds the amount agreed upon by the debtor and the beneficial owner in the absence of such relations, the provisions of this section apply only to the latter amount. In this case, the surplus portion of the payments shall remain taxable, in accordance with its legislation, in the Contracting State from which royalties arise.
Article 13
Capital gains
§ 1^er. The gains derived by a resident of a Contracting State from the alienation of real property referred to in Article 6 and situated in the other Contracting State shall be taxable in that other State.
§ 2. The gains from the alienation of movable property that are part of the assets of a permanent establishment that a business of a Contracting State has in the other Contracting State, or of movable property that belong to a fixed base of which a resident of a Contracting State disposes in the other Contracting State for the exercise of an independent profession, including such gains from the alienation of that permanent establishment (ully or with
§ 3. The gains from the alienation of ships, aircraft or road or rail vehicles operated in international traffic or of movable property assigned to the operation of such vessels, aircraft or road or rail vehicles shall be taxable only in the Contracting State where the effective management seat of the enterprise is located.
§ 4. Gains from the alienation of all property other than those referred to in paragraphs 1^er, 2 and 3 shall be taxable only in the Contracting State of which the assignor is a resident.
Article 14
Independent occupations
§ 1^er. The income derived by a resident of a Contracting State from a liberal profession or other independent activities shall be taxable only in that State.
However, such income is also taxable in the other Contracting State in the following cases:
(a) if the resident has, in the other Contracting State, a fixed basis for the exercise of his or her activities; in such case, only the fraction of the income attributable to the fixed base shall be taxable in the other Contracting State; or
(b) if the stay in the other Contracting State extends over a period or periods exceeding a total of 183 days in any period of twelve months; in that case, only the fraction of the income derived from the activities carried out in that other Contracting State shall be taxable in that other State.
§ 2. The term "professional liberal" includes independent scientific, literary, artistic, educational or educational activities, as well as independent activities of doctors, lawyers, engineers, architects, dentists and accountants.
Article 15
Dependent professions
§ 1^er. Subject to the provisions of Articles 16, 18, 19 and 20, wages, salaries and other similar remuneration that a resident of a Contracting State receives under an employee employment shall be taxable only in that State, unless employment is exercised in the other Contracting State. If the employment is exercised, the remuneration received as such is taxable in that other State.
§ 2. Notwithstanding the provisions of paragraph 1^erthe remuneration of a resident of a Contracting State in respect of an employee employed in the other Contracting State shall be taxable only in the first State if:
(a) the beneficiary stays in the other State for a period or periods not exceeding a total of 183 days during any period of twelve months beginning or ending during the tax period under review, and
(b) compensation shall be paid by an employer or on behalf of an employer who is not a resident of the other State, and
(c) the payroll is not supported by a permanent establishment or a fixed basis that the employer has in the other State
§ 3. Notwithstanding the preceding provisions of this Article, remuneration received for an employee employed on board a ship, aircraft or road or rail vehicle operated in international traffic shall be taxable in the Contracting State where the effective management seat of the enterprise is located.
Article 16
Corporate managers
§ 1^er. The fortieth, attendance and other similar remuneration that a resident of a Contracting State receives as a member of the board of directors or of a similar body of a corporation that is a resident of the other Contracting State may be taxed in that other State.
§ 2. The remuneration that a person referred to in paragraph 1 shall receive from the corporation as a result of the exercise of a day-to-day direction or technical activity, and the remuneration that a resident of a Contracting State derives from his or her personal activity as a member in a corporation other than a corporation, that is a resident of the other Contracting State, shall be taxable in accordance with the provisions of Article 15, as if the employee is
Article 17
Artists and athletes
§ 1^er. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State from his or her personal activities carried out in the other Contracting State as an artist of the spectacle, such as a theatre, cinema, radio or television artist, or a musician, or as a sportsman, may be taxed in that other State
§ 2. Where the income of activities that an entertainer or a sportsperson exercises personally and in this capacity is attributed not to the artist or to the athlete himself but to another person, such income shall be taxable, notwithstanding the provisions of Articles 7, 14 and 15, in the Contracting State where the activities of the artist or athlete are carried out.
§ 3. The provisions of paragraphs 1^er and 2 shall not apply if the activities carried out by an artist of the show in A Contracting State are financed largely by public funds of the other Contracting State or one of its political subdivisions or local authorities. In this case, income derived from these activities shall be taxable only in that other Contracting State.
Article 18
Pensions
§ 1^er. Subject to the provisions of Article 19, paragraph 2, pensions and other similar remuneration, paid to a resident of a Contracting State for an earlier employment, shall be taxable only in that State
§ 2. However, pensions and other allowances, periodic where no, paid in accordance with the social legislation of a Contracting State are taxable in that State. This provision also applies to pensions and allowances paid under a general regime organized by that Contracting State to supplement the benefits provided by that legislation.
Article 19
Public functions
§ 1^er. (a) Compensation, other than pensions, paid by a Contracting State or any of its political subdivisions to the local authorities to a natural person, for services rendered to that State or subdivision or community, 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 State and if the natural person is a resident of that State who:
1° has the nationality of that State, or
2° did not become a resident of that State for the sole purpose of rendering the services
§ 2. (a) Pensions paid by a Contracting State or any of its political subdivisions or local authorities, either directly or by debiting from funds that they have constituted, to a natural person, for services rendered to that State or to that subdivision or community, shall be taxable only in that State.
(b) However, such pensions shall be taxable only in the other Contracting State if the natural person is a resident of that State and has its nationality.
§ 3. The provisions of Articles 15, 16 and 18 apply to remuneration and pensions paid for services rendered in an industrial or commercial activity carried out by a Contracting State or one of its political subdivisions or local authorities.
§ 4. The provisions of paragraph 1^er shall also apply to remuneration paid by a Contracting State to a natural person under an activity in the other Contracting State in the framework of cooperation agreements between the two Contracting States.
Rule 20
Teachers and students
§ 1^er. Any remuneration of teachers and other members of the teaching staff, residents of a Contracting State, who reside in the other Contracting State to teach or undertake scientific research in a university or other officially recognized educational institution, shall be exempted from tax in that other State for a period not exceeding two years from the date of arrival of such persons in that other State
§ 2. A student, trainee or apprentice who is, or who was immediately before going to a Contracting State, a resident of the other Contracting State and who temporarily resides in the first State for the sole purpose of pursuing his or her studies or training, is exempted in that State from the following amounts or revenues that he or she receives to cover his or her maintenance, education or training expenses:
(a) amounts received from sources outside the first State;
(b) scholarships, allowances or awards received from the Government or from a scientific, educational or cultural organization of a Contracting State;
(c) on remuneration received in respect of an employee employment exercised in the first State in connection with its education or training and during the normal period of such employment, if such remuneration does not exceed the case, by calendar year 120,000 Belgian francs or the equivalent of that amount in Mongolian currency during the official exchange.
Article 21
Other income
§ 1^er. The income elements of a resident of a Contracting State, wherever they arise, which are not dealt with in the preceding articles of this Convention shall be taxable only in that State.
§ 2. The provisions of paragraph 1^er shall not apply to income other than income derived from real property as defined in Article 6, paragraph 2, where the beneficiary of such income, resident of a Contracting State, carries on in the other Contracting State, either an industrial or commercial activity through a permanent establishment located therein, or an independent occupation by means of a fixed base located therein, and that the right or property actually connected therein. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
§ 3. Notwithstanding the provisions of paragraphs 1 and 2, the income elements of a resident of a Contracting State that are not dealt with in the preceding articles of the Convention and that come from the other Contracting State shall also be taxable in that other State.
CHAPTER IV. - Imposition of fortune
Article 22
Fortune
§ 1^er. The property constituted by real property referred to in Article 6, which is owned by a resident of a Contracting State and situated in the other Contracting State, is taxable in that other State.
§ 2. The property constituted by movable property that is part of the asset of a permanent establishment that a business of a Contracting State has in the other Contracting State, or by movable property that is owned by a fixed base of which a resident of a Contracting State has in the other Contracting State for the exercise of an independent profession, is taxable in that other State.
§ 3. Assets made by vessels, aircraft and road or rail vehicles operated in international traffic, as well as by movable property assigned to the operation of these vessels, aircraft or road or rail vehicles, are taxable only in the Contracting State where the effective management seat of the enterprise is located.
§ 4. All other assets of a resident of a Contracting State shall be taxable only in that State.
CHAPTER V. - Methods to eliminate double taxation
Article 23
§ 1^er. With regard to Mongolia, double taxation is avoided as follows:
(a) When a Mongolian resident receives income or has property that, in accordance with the provisions of this Convention, is taxable in Belgium, Mongolia grants:
1° on the tax it receives on the income of that resident, a deduction of an amount equal to the income tax paid in Belgium;
2° on the tax it receives on the fortune of this resident, a deduction of an amount equal to the tax on fortune paid in Belgium.
In either case, however, this deduction may not exceed the fraction of income tax or capital tax, calculated before deduction, corresponding to the taxable income or fortune in Belgium.
(b) When a corporation that is a resident of Mongolia receives dividends from a corporation that is a resident of Belgium and that the Mongolian company holds directly or indirectly at least 10 percent of the capital of the Belgian company, the deduction referred to in (a), 1°, takes into account, in addition to the Belgian tax on these dividends, the Belgian tax of companies due on the profits that are used to pay dividends.
§ 2. With regard to Belgium, double taxation is avoided as follows:
(a) When a Belgian resident receives income or owns assets that are taxed in Mongolia in accordance with the provisions of the Convention, with the exception of those of articles 10, paragraph 2, 11, paragraphs 2 and 7, and 12, paragraphs 2 and 6, Belgium exempts from tax these incomes or assets, but it may, in order to calculate the amount of its taxes on the rest of the income or fortune of that resident, apply the same rate as if the assets were exempted
(b) Subject to the provisions of Belgian law relating to the imputation on Belgian tax of taxes paid abroad, where a Belgian resident receives income elements that are included in his or her total income subject to Belgian tax and that consist of taxable dividends in accordance with Article 10, paragraph 2, and not exempted from Belgian tax under (c) below, in taxable interest in accordance with Article 11, paragraphs 2 or 7,
Belgium also grants an imputation on its tax due to dividends and interest derived from investments directly related to development projects in Mongolia, which are included in the total income subject to Belgian tax by its residents, when these income elements are taxable in Mongolia in accordance with the provisions of the Convention and the general provisions of Mongolian legislation, but are exempted under special and temporary measures to promote the economic development of Mongolia and on which two competent contracting States are entitled This charge amounts to 10 per cent of the gross amount of dividends or interest, but in both cases it cannot exceed the fraction of the Belgian income tax, calculated before deduction, corresponding to these taxable income elements in Belgium and will only apply for the first ten years for which the Convention is applicable. However, the competent authorities of the Contracting States may consult to decide whether or not this period will be extended.
(c) Dividends within the meaning of Article 10, paragraph 3, that a corporation that is a resident of Belgium receives from a company that is a resident of Mongolia are exempted from the corporate tax in Belgium, under the conditions and limits provided for in Belgian law.
(d) Where, in accordance with Belgian law, losses incurred by a company operated by a resident of Belgium in a permanent establishment located in Mongolia were effectively deducted from the profits of that undertaking for its taxation in Belgium, the exemption provided for in (a) does not apply in Belgium to the profits of other taxable periods attributable to that establishment, to the extent that such profits were also exempted from tax in Mongolia due to their compensation with
CHAPTER Vl. - Special provisions
Article 24
Non-discrimination
§ 1^er. Nationals of a Contracting State shall not be subject in the other Contracting State to any taxation or obligation relating thereto, which is other or heavier than those to which nationals of that other Contracting State are or may be subject to the same situation, particularly in respect of the residence. This provision also applies, notwithstanding the provisions of section 1^erpersons who are not residents of a Contracting State or both Contracting States.
§ 2. The imposition of a permanent establishment that a business of a Contracting State has in the other Contracting State is not established in that other State in a less favourable manner than the taxation of the enterprises of that other State that exercise the same activity. This provision shall not be construed as requiring a Contracting State to grant personal deductions, deductions and tax reductions to the residents of the other Contracting State on the basis of the situation or family expenses that it grants to its own residents.
§ 3. Unless the provisions of Article 9, Article 11, paragraph 7 or Article 12, paragraph 6, are applicable, interest, royalties and other expenses paid by an enterprise of a Contracting State to a resident of the other Contracting State shall be deductible, for the determination of the taxable profits of that undertaking, under the same conditions as if they had been paid to a resident of the first Contracting State. Similarly, the debts of an enterprise of a Contracting State to a resident of the other Contracting State shall be deductible, for the determination of the taxable fortune of that undertaking, on the same basis as if they had been contracted to a resident of the first Contracting State.
§ 4. The undertakings of a Contracting State, whose capital is wholly or partly, directly or indirectly, held or controlled by one or more residents of the other Contracting State, shall not be subject in the first State to any taxation or obligation relating thereto, which is other or heavier than those to which other similar enterprises of the first Contracting State are or may be subject
§ 5. Nothing in this article shall be construed as preventing Belgium:
(a) to impose at the rate prescribed by Belgian legislation the benefits of a permanent Belgian establishment of a company that is a resident of the Mongobe, provided that the above-mentioned rate does not exceed the maximum rate applicable to the profits of the companies that are residents of Belgium;
(b) to withdraw its deduction from the source on the dividends associated with an effective interest in a stable establishment in Belgium that is a resident of Mongolia.
§ 6. The provisions of this section shall apply notwithstanding the provisions of section 2, to taxes of any kind or denomination.
Rule 25
Friendly procedure
§ 1^er. Where a person considers that the measures taken by a Contracting State or by the two Contracting States shall result in or result in taxation not in accordance with the provisions of this Convention, the person may, independently of the remedies provided by the domestic law of those States, submit his case to the competent authority of the Contracting State of which the person is a resident or, if the case falls under Article 24, paragraph 1^erto that of the Contracting State of which it has nationality. The case shall be submitted within three years after the first notification of the measure that results in taxation not in conformity with the provisions of the Convention.
§ 2. The competent authority shall endeavour, if the request seems to it to be founded and if it is not itself able to provide a satisfactory solution to it, to resolve the case by amicable agreement with the competent authority of the other Contracting State, with a view to avoiding taxation not in conformity with the Convention.
§ 3. The competent authorities of the Contracting States shall endeavour, by mutual agreement, to resolve the difficulties or to dispel the doubts to which the interpretation or application of the Convention may take place.
§ 4. The competent authorities of the Contracting States shall agree on the administrative measures necessary for the implementation of the provisions of the Convention and in particular on the justifications to be provided by the residents of each Contracting State for the benefit in the other State of the exemptions or tax reductions provided for in this Convention.
§ 5. The competent authorities of the Contracting States shall communicate directly with each other for the purposes of the Convention.
Rule 26
Exchange of information
§ 1^er. The competent authorities of the Contracting States shall exchange the information necessary to implement the provisions of this Convention or those of the domestic legislation of the Contracting States relating to the taxes covered by the Convention to the extent that the taxation it provides is not contrary to the Convention, and in particular to prevent fraud or escape in respect of such taxes. The exchange of information is not restricted by section ler. The information received by a Contracting State shall be kept secret in the same manner as the information obtained under the domestic legislation of that State and shall only be communicated to the persons or authorities (including the courts and administrative bodies) concerned by the establishment or collection of the taxes referred to in the Convention, by the procedures or prosecutions relating to such taxes, or by the decisions on remedies relating to such taxes. These individuals or authorities only use this information for these purposes. They may report this information at public court hearings or in judgments.
§ 2. In no case shall the provisions of paragraph ler be construed as imposing on a Contracting State the obligation:
(a) take administrative measures derogating from its legislation, administrative practice or those of the other Contracting State;
(b) provide information that could not be obtained on the basis of its legislation or in the course of its normal administrative practice or those of the other Contracting State;
(c) provide information that would reveal a commercial, industrial, professional or commercial secret or information that would be contrary to public order.
Rule 27
Recovery assistance
§ 1^er. Each Contracting State shall endeavour to recover, as it was its own taxes, any tax referred to in Article 2, which has been alienated by the other Contracting State and whose recovery is necessary for the benefit of the exemption or the tax reduction granted by that other State under this Convention to be obtained by persons who are not entitled to it.
§ 2. The provisions of this Article shall in no case be construed as imposing on the requested State the obligation to specify means of enforcement which are not authorized by its law or by that of the other Contracting State or to take measures that would be contrary to public order.
Rule 28
Members of diplomatic missions and consular posts
The provisions of this Convention shall not affect the tax privileges enjoyed by members of a diplomatic mission or consular post under either the general rules of human rights or the provisions of special agreements.
CHAPTER VII. - Final provisions
Rule 29
Entry into force
§ 1^er. This Convention will be ratified and the instruments of ratification will be exchanged in Beijing as soon as possible.
§ 2. The Convention shall enter into force on the fifteenth day after the date of exchange of instruments of ratification and its provisions shall apply:
(a) taxes due to the source on income awarded or paid from 1^er January of the year immediately following that of the exchange of instruments of ratification;
(b) other taxes on taxable period income starting from 1^er January of the year immediately following that of the exchange of instruments of ratification;
(c) capital taxes on assets existing as at 1^er January of any year after that of the exchange of instruments of ratification
Rule 30
Denunciation
This Convention shall remain in force until it has been denounced by a Contracting State. Each Contracting State may, until 30 June inclusive of any calendar year from the fifth year following the exchange of instruments of ratification, denounce it, in writing and through diplomatic channels, to the other Contracting State. In case of denunciation before 1^er July of such a year, the convention will cease to apply:
(a) taxes due to the source on income awarded or paid from 1^er January of the year immediately following the denunciation;
(b) other taxes on taxable period income starting from 1^er January of the year immediately following the denunciation;
(c) capital taxes on assets existing as at 1^er January of any year after the denunciation.
In faith, the undersigned, duly authorized by their respective Governments, have signed this Convention.
Done in Brussels on 26 September 1995, in duplicate, in the English language.
For the Government of Mongolia:
Minister of Foreign Affairs,
TS. GOMBOSUREN
For the Government of the Kingdom of Belgium:
Minister of Finance,
Ph. MAYSTADT