The Saeima has adopted and the President promulgated the following laws: For the Government of the Republic of Latvia and the Government of the State of Israel, of the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital article 1. 2006. on 20 February, the Jerusalem signed by the Government of the Republic of Latvia and the Government of the State of Israel Convention on the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital (hereinafter the Convention) and its 2006 20 February Jerusalem signed the Protocol (hereinafter referred to as the Protocol) with this law is adopted and approved.  2. article. The Convention and the Protocol shall enter into force in article 28 of the Convention within the time and in order, and the Ministry of Foreign Affairs shall notify the newspaper "journal". 3. article. The law shall enter into force on the day following its promulgation. With the law put the Convention and Protocol in English and Latvian. The law adopted by the Parliament of 22 June 2006. State v. President Vaira Vīķe-Freiberga in Riga, July 4, 2006, the Government of the Republic of Latvia and the GOVERNMENT of the State of Israel Convention on the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital the Government of the Republic of Latvia and the Government of the State of Israel, reaffirming willingness to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital, agree: article 1 persons covered this Convention shall apply to persons Convention that is one or both of the Contracting State party to the country resident.   Article 2 taxes covered by the Convention (1) this Convention shall apply to taxes on income and capital, charged by the Contracting State or of its local authorities, irrespective of the good this tax collection. 2. On the income and capital taxes, regarded all taxes imposed on total income, total capital or income or capital, including taxes on the capital gains of the moveable and immovable property seizures, taxes on the total enterprise paid the wages or salary amount and taxes on capital appreciation. 3. The existing taxes to which this Convention applies, in particular, is: (a)): (i) corporate income tax; (ii) the individual income tax; (iii) tax on immovable property; (hereinafter referred to as the Latvian tax); b) Israel: (i) income tax and company tax (including capital gains tax); (ii) the tax on immovable property alienation in earned income in accordance with the law on the real property taxation; (hereinafter referred to as the Israeli taxes). 4. the Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention to supplement or replace the existing taxes. Both the competent authorities of the Contracting States inform each other of any significant amendments to this country in the relevant tax legislation.   Article 3 General definitions 1. If it is not apparent from the context, otherwise in this Convention: (a)) (i) the term "Latvia" means the Republic of Latvia, and, used in a geographical sense, it represents the territory of the Republic of Latvia and any other Latvian territorial waters adjacent to the territories in which, in accordance with the laws of Latvia and international law are implemented in Latvia of rights on land and sea depths and natural resources contained therein; (ii) the term "Israel" means the State of Israel, and, used in a geographical sense, it means the territory in which the Israeli Government implement the taxation rights, territorial sea the territorial sea as well as the adjacent sea areas, land and sea depths for which the State of Israel in accordance with international law and the laws of the State of Israel to exercise sovereign rights, other rights and jurisdiction; (b)) the terms "Contracting State" and "the other Contracting State" mean depending on the context of Latvia or Israel; (c)) the term "person" means a natural person, company, or any other Association of persons; (d)), the term "company" means any person, association or corporate or any entity which, for the purposes of taxation is considered a corporate Association of persons; e) the terms "Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise run by a resident of a Contracting State and the company, run by a resident of the other Contracting State; f) the term "international traffic" means any carriage by sea or air, by a company of a Contracting State, except when the sea or air transport to move only in the other Contracting State; (g)) the term "competent authority" means: (i) in Latvia, the Ministry of finance or its authorised representative; (ii) Israel, the Minister of finance or his authorised representative; (h)), the term "national" means: (i) any natural person who has the nationality of a Contracting State; (ii) any legal person, partnership or association whose status stems from a Contracting State applicable regulatory enactments. 2. for the application of this Convention at any time Contracting State will use any term which is not defined here, if not apparent from the context, otherwise only in the sense that it used during the relevant period of this Contracting State laws relating to taxes covered by this Convention, and any explanation of the term in accordance with applicable tax laws and regulations will have precedence over this explanation of the term under other laws of that State.   Article 4 resident 1. In this Convention, the term "resident of a Contracting State" means any person who, under the laws of this State is subject to taxation on the basis of the place of residence, residence, location management, place of incorporation (registration) or under any other criteria like this, and also includes that State and local governments. However, this term does not include those individuals in this country is taxable only in relation to their income from this country to the existing sources of profits or capital located there. 2. Where, in accordance with the provisions of part 1 the natural person is a resident of both Contracting States, its status will be determined as follows: (a)) this person will be considered a resident only of the State in which its residence; If you are habitually resident in two countries, this person will be considered only for residents of the State, with which it has closer personal and economic relations (Centre of vital interests); (b)) if it is not possible to determine the country in which that person is a vibrant centre of interests, or if it is not a permanent residence in one of the two countries, that person will be considered only for residents of the State that it is customary in the home; c) if that person normally home in both countries or none of them, it will be considered only for residents of the country, of which this person; (d)) if that person is a national of both States or no citizen of this country, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3. Where, in accordance with the provisions of part 1, a person other than a natural person, is a resident of both Contracting States, the competent authorities of the Contracting States may resolve the matter by mutual agreement. In the absence of such agreement, the application of this Convention, that person will not be entitled to claim any relief granted in accordance with this Convention.   Article 5 permanent establishment 1. In this Convention, the term "permanent establishment" means a fixed place of business of which is wholly or partly carried on business. 2. The term "permanent establishment" includes: (a) the management of the company); b) branch; c) Office; (d) a factory;) e) workshop; and (f)) mine shaft, oil or gas extraction sites, quarries or any other place of extraction of natural resources. 3. a building site, a construction,) the Assembly or installation project or supervisory activities associated with them, will be considered for the permanent representation, if those works, project or activity occurs for more than twelve months; b) Contracting State the actions associated with the State of the sea and Earth Science natural resource exploration or mining, will be considered as carried out through the permanent representation in that country, if any twelve-month period such transactions are made during a period or periods exceeding in the aggregate 30 days. 4. Notwithstanding the provisions of the preceding subparagraph, the term "permanent establishment" shall not include: (a) the use of buildings and equipment) only and exclusively the goods belonging to, or for the storage of the products demonstrated or supplies; (b) goods belonging to the company) or article items intended solely for storage, demonstration or delivery; (c) the goods belonging to the company) or article items intended exclusively for processing in the other company. d) permanent site designed exclusively for the purchase of goods or products to your company's needs or the collection of information for the company's needs; e) permanent site designed exclusively for company needs any other preparatory or ancillary activities; f) permanent site designed solely to deal with (a) to (e))) the following, in any combination thereof, if the total activity is preparatory or auxiliary character. 5. Notwithstanding paragraph 1 and 2 of the regulations, if a person who is not referred to in part 6 status of independent agent, running your business, and it is empowered to enter into contracts on behalf of the company, and the State typically used these powers, then it is considered that this company used permanent representation in that Contracting State in respect of any of the person's business activities, except if that person take part in 4 steps that a permanent place of business, this site cannot be considered a permanent establishment under the provisions of part 4. 6. it will be considered that the company does not have permanent representation in the Contracting State where the undertaking is established in that country, only through brokers, sales agent or any other agent of an independent status, provided that such persons perform their normal business activities. 7. the fact that the company is a resident of a Contracting State-controlled company that is a resident of the other Contracting State, or which carries on business in that other State through a permanent establishment or in any other way, or is subject to the control of such undertaking itself does not turn into one of those companies on the other company's permanent representation.   Article 6 Income from real property 1. income which a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State, may be taxing in that other country. 2. The term "immovable property" have the meaning it has its laws and regulations of a Contracting State in which the property concerned is located. In any case, this term covers property which belongs to real estate property, livestock and equipment used in agriculture and forestry, rights to which the land property law general rules, any purchase of real property rights of use or similar right to acquire real estate, real estate usage rights and rights to variable or fixed payments as consideration for the mineral deposits, natural ore and other natural resources, or the right to use , the right to property, which may be caused by a marine and Earth Science natural resource exploration and exploitation, including the right to participation in the ownership or profit, you can get this property. Vessels, barges and air transport will not be regarded as immovable property. 3. the provisions of part 1 shall be applied in respect of income from real estate direct use, letting or use in any other way. 4.1 and part 3 rules will be applied also with regard to the income from immovable property of the company, as well as income from real property used for independent individual services.   Article 7 business profits 1. Contracting State company profits will be taxed only in that State unless the enterprise carries on business in the other Contracting State through a permanent representation of the existing there. If the enterprise carries on business in that way, the company's profits can be taxing in the other country, but only the profit that can be attributed to this continuing representation. 2. in accordance with the provisions of part 3, if the Contracting State is established in the other Contracting State through a permanent establishment there, existing in each Contracting State to the permanent representations should the amount of profit, it would benefit if the individual is clearly the company that performs the same or similar business activities under the same or similar conditions and acts completely independently of the undertaking, which uses the permanent representations. 3. in determining the profits of a permanent representation in that Contracting State, will be allowed to deduct the expenses incurred for the purposes of the standing representative offices located in the country or elsewhere, including operational and general administrative costs. 4. where a Contracting State the profits attributable to the permanent establishment shall be determined by dividing the company's total profit in proportion between its divisions, part 2 does not prohibit Contracting State as usual after this principle to determine the profit for tax purposes; However, the method of distribution must be such that the result matches the principles contained in this article. 5. On the permanent representation will not be applied the earnings just because it has purchased the goods or products for the company, which is the permanent representation. 6. for the purposes of applying the provisions of the preceding paragraph, the profits attributed to the permanent representations, each year is determined by the same method, except if there is sufficient reason to do otherwise. 7. If the profit is included in the other articles of this Convention see income separately, this article shall not affect the other provisions of this article.   Article 8 shipping and air transport 1. Contracting State company profits from the sea or air transport use in international traffic will be taxed only in the country. 2. the provisions of part 1 shall also apply to profits from the participation in a pool, joint business or international traffic transport agency.   Article 9 Associated enterprises 1. If: (a) the Contracting State) directly or indirectly participating in the other Contracting State, the company's management or control or it owns part of the company's capital; or (b)) the same persons directly or indirectly participating in the enterprise of a Contracting State in the other Contracting State and the company's management or control or they own part of the company's capital, and in any of these cases, these two companies in commercial or financial relations or established by rules different from those provisions that the force between two independent enterprises, then any profits What would one of the companies, but the above provisions do not affect the Oscars can be included in the profits of this company, and it may be appropriate to impose taxes. 2. where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on it, in respect of which no other country in the other Contracting State, the company has been taxed, and this included the profit is the profit that would have been the first company of a Contracting State, if the relationship between the two companies would have been as exist between two independent companies, the other countries have to make appropriate adjustment for the size of the tax What are the gains of the other country. In determining this adjustment, take into consideration other provisions of this Convention and, if necessary, the competent authorities of the Contracting States for consultations.   Article 10 dividends 1-dividends, a company of a Contracting State a resident of the other Contracting State paid to a resident, can be taxing in that other country. 2. However, such dividends may also be taxing under the national laws of the Contracting State of which the resident is a company that pays dividends, but if this true owner of dividends is resident of the other Contracting State, the tax shall not exceed: a 5 per cent of the dividend) total, if real owner of dividends is a company (other than a partnership) which directly manage at least 10 percent of the company capital that paid dividends; (b)) (a)) regardless of the provisions of paragraph — 10 per cent of the gross amount of the dividends if the dividends are the true owner of the company who directly manage at least 10 percent of the company capital, which paid dividends when dividends are paid out of profits in accordance with the Israeli investment promotion Act is exempt from tax, or tax is imposed at a rate lower than the normal tax rate of Israel; c) 15 per cent of the total dividends in all other cases. This part does not affect the taxation of the company in respect of the profits out of which the dividend is paid. 3. The term "dividends" in this article means income from shares, "jouissanc" shares (entitled to part of the property of the public in the event of liquidation) or "jouissanc" (right to participate in company profits, not on the obligations of response), mining shares, founders ' shares or other rights to participate in profits, which is not a debt, as well as income from other rights which, in accordance with its national laws and regulations where the resident is a company that performs the distribution of profits, subject to the same taxation treatment as income from shares. 4. parts 1 and 2 shall not apply if the true owner of dividends, which is a resident of a Contracting State, carries on business in the other Contracting State of which the resident is a company that paid dividends, with the existing permanent representation there, or give independent individual services in that other State through a permanent base located there, and where participation, which is paid out in dividends, is actually related to the permanent representations, or permanent base. In this case, depending on the circumstances, apply article 7 or 14. 5. If the company — a resident of a Contracting State derives profits or income in the other Contracting State, that other State may not impose any taxes or these companies paid dividends, except where the dividends are paid to a resident of the other State, or if the participation of which is paid out in dividends, is actually related to the permanent representation or permanent base in another country; nor to impose a duty of retained earnings retained earnings of the company, even if the dividends paid or retained earnings consists in whole or in part from the other country of profit or income.   Article 11 interest 1. interest arising in a Contracting State and paid to a resident of the other Contracting State, may be taxing in that other country. 2. However, such interest may also be taxing in accordance with national laws or regulations of the Contracting State in which they arise, but, if the interest owner is implemented on the territory of the other Contracting State, a resident of the tax shall not exceed: a 5 per cent of the percentage) of the total, if the interest incurred in the Contracting State and is paid on any kind of a loan granted by the bank of the other Contracting State; b) 10 per cent of the total interest in all other cases. 3. Regardless of the parts 1 and 2: (a)) percent, occurring in Latvia will be only charged tax in Israel, if the interest is paid on loans granted by or, in the case of loans, claims, or to qualify for credit, or insure: (i) the Government of the State of Israel, or its local authorities; or (ii) the Central Bank of Israel; or (iii) any institution of external trade transactions of insurance or financing, which fully owns the State of Israel; (b)) percent, occurring in Israel, taxes will be imposed only if the interest is paid on loans granted by or, in the case of loans, claims, or to qualify for credit, or insure: (i) the Government of Latvia or its local authorities; or (ii) the Bank of Latvia; or (iii) any institution of external trade transactions of insurance or financing, which fully owns the Republic of Latvia; (c)) percent, which arise in the Contracting State, be taxable only in the other Contracting State if the recipient of the interest is a resident of the other State, the other Contracting State who is the rightful owner of the interest, and interest is paid on the debt obligations that emerged when the company sells the first company of that State any goods or manufacturing, commercial or scientific equipment, except when such sales or debt obligations is developed between the related parties. 4. for the purposes of this article, the term "interest" means income from debt claims of every kind, whether or not secured by mortgage and whether or not they have the 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, which belong to these securities, bonds or debentures. The term "interest" does not include any income which is treated as a dividend under the provisions of article 10. Interest received on payments made during, not be regarded as interest for the application of the provisions of this article. 5.1, 2 and 3 shall not be applied, if the true owner of the interest, which is a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent representation of the existing there, or give independent individual services in that other State through a permanent base located therein, and of claims on the basis of which the interest is paid is effectively connected with such permanent establishment or fixed base. In this case, depending on the circumstances, apply article 7 or 14. 6. If the payer of the interest is a resident of a Contracting State, it will be deemed that the interest generated in this country. If, however, the person paying the interest, whether that person is a resident of a Contracting State or not, used in the Contracting State of the existing permanent representation or permanent base located there, which incurred debt obligations, for which you pay interest, and this interest is paid (bear) permanent establishment or fixed base, will be considered that the interest incurred in the State in which the permanent establishment or fixed base. 7. If, on the basis of the special relationship between the payer and the interest percentage implemented owner or between both of them and some other person, the amount of interest that relate to debt claims, for which it is paid, exceeds the amount that would have been able to agree to the interest payer and the interest owner will, if implemented, they would not have this special relationship, then the provisions of this article shall be applied only to the last-mentioned amount. In this case, the payment of the part which exceeds this amount, taxes are levied according to each Contracting State laws and regulations, taking into consideration other provisions of this Convention.   Article 12 Royalties (1) Royalties arising in a Contracting State and paid to a resident of the other Contracting State, may be taxed in that other State taxes. 2. However, such royalties may also impose taxes according to national regulations of the Contracting State in which it arises, but if the true owner of the royalties is a resident of the other Contracting State, the tax shall not exceed 5 per cent of the total amount of the royalties. 3. The term "royalties" in this article means payments of any kind received as a compensation for the use of any copyright or rights to use any copyright on literary, artistic or scientific work, including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process, or for the use of rights of use, or for the production, commercial, or scientific equipment, or for the right to use them , or for information concerning industrial, commercial or scientific experience. 4. parts 1 and 2 shall not be applied, if the true owner of the royalties, which is a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent representation of the existing there, or give independent individual services in that other State through a permanent base located there, and if the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In this case, depending on the circumstances, apply article 7 or 14. 5. If the payer of the royalties is a resident of a Contracting State, it will be considered that royalties arising in that State. If, however, the person paying the royalties, whether or not that person is a resident of a Contracting State or not, used in the Contracting State of the existing permanent representation or permanent base located there, which is actually related to the right or property in respect of which the royalties are paid, and if the payment of the royalties (bear) permanent establishment or fixed base, will be deemed to arise in the State in royalties in which the permanent establishment or fixed base. 6. If, on the basis of the special relationship between the payer of royalties and royalties shall implement the owner or between both of them and some other person, the amount of the remuneration of the author, which relate to the use, right or information for which it is paid, exceeds the amount of royalties that would have been able to implement a single payer and the owner if they would not have this special relationship, then the provisions of this article shall be applied only to the last-mentioned amount. In this case, the portion of the payment that exceeds this amount of taxes imposed on the respective national laws and regulations, taking into consideration other provisions of this Convention.   Article 13 capital gains 1. Capital gains, by a resident of a Contracting State derives, the disposal referred to in article 6, in the other Contracting State the existing real property, may be subject to taxes in the other country. 2. Capital gains, by a resident of a Contracting State derives disposes of shares or comparable interests in any form more than 50 per cent of the value of the derived directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State taxes. 3. Capital gains that accrued, disposing of property, which is part of the company of a Contracting State to the permanent representation in business property in the other Contracting State, or disposing of property that belongs to a resident of a Contracting State a permanent base in the other Contracting State, which created the independent personal services, including capital gains from such permanent missions (alone or with the whole enterprise) or of such a permanent disposal base disposal can impose taxes in the other Contracting State. 4. Capital gains by the public company, which uses the sea or air means of transport in international traffic, shall forfeit the use in international traffic, marine or air transport or disposal of the property, which belongs to the use of such vehicles shall be taxable only in that State. 5. Capital gains that accrued, disposes of any property which is different from 1, 2, 3 and 4, part estate, will be subject to tax only in the Contracting State of which the resident is the seizure of property, if the resident is that capital gains the true owner.   Article 14 independent personal services 1. Contracting State residents — physical persons income earned by providing professional services or other independent activities, will be taxed only in the country, except if that person needs their activities using it regularly available permanent base in the other State. If you are using the following permanent base, income can be taxing in the other country, but only to the extent that they apply to this permanent base. The application of this article, if a resident of a Contracting State: a natural person resident in the other Contracting State for a period or periods exceeding in the aggregate 183 that days in any 12 month period commencing or ending in the taxation year will be considered that this person uses regular access to permanent base in the other Contracting State and the income that accrued on the second country made the above actions will be applied to this permanent base. 2. The term "professional activity" includes independent scientific, literary, artistic, educational or teaching activities as well as doctors, lawyers, engineers, architects, dentists and accountants of independent operation.   Article 15 Income for salaried work 1.16, 18 and article 19 of the regulations for the payment of wages and other similar remuneration, to which a resident of a Contracting State receives for paid employment, be taxable only in that State unless the paid work is not performed in the other Contracting State. If the salaried work is performed in the other Contracting State, the remuneration received for it can impose taxes in the other country. 2. Notwithstanding the provisions of part 1 the consideration that a resident of a Contracting State receives for paid work that is performed in the other Contracting State, be taxable only in the first mentioned State if: (a) the beneficiary) is found 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 taxation year; and (b) the remuneration is paid) an employer who is not a resident of the other State, or the other person the benefit of the employer; and (c) the remuneration is not paid) (bear) permanent representation or permanent base that the employer uses the second in the country. 3. Notwithstanding the previous paragraph of this article, the rules of remuneration received for paid work that is being done to a company of a Contracting State in international traffic used for sea or air transport, tax may be imposed in the country.   Article 16 Directors ' fees directors ' fees and other similar payments made by a resident of a Contracting State receives as a Board of directors or other similar institutions in society, which is a member of the other Contracting State, a resident may be taxed in that other State taxes.   Article 17 artists and athletes 1. articles 14 and 15 of the regulations to the income of a resident of a Contracting State as izpildītājmāksliniek, as theatre, film, radio or television artist, musician, or as an athlete on their individual activities in the other Contracting State may be taxed in that other State taxes. 2. If izpildītājmāksliniek or athlete's income on his individual activity in the area in question is paid rather than izpildītājmāksliniek or athlete himself but to another person, to the following income regardless of the 7, 14 and 15 the provisions of article 1 may be subject to taxes, the Contracting State in which izpildītājmāksliniek or athletes. 3. parts 1 and 2 shall not apply to income of a Contracting State or the izpildītājmāksliniek sportsman if the visit Contracting State is supported wholly or mainly from one or both of the Contracting States of the funds. In this case, depending on the circumstances, income taxes are levied in accordance with article 14 or 15.   Article 18 pensions 1. in accordance with article 19 of part 2 of the regulations for pensions and other similar remuneration, by a resident of a Contracting State receives for previous paid employment, be taxable only in that State. 2. Notwithstanding the provisions of part 1 and part 2 article 19 rules, pensions and other remuneration that is paid out in accordance with national social security legislation, taxes will be imposed only in that country.   Article 19 government service 1 a) for salaries, fees and other similar remuneration, other than a pension, and a natural person the cost of Contracting State or a local government for this country or services provided to the municipality will be taxable only in that State. (b) However, such salaries), fees and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who: (i) is a national of that State; or (ii) did not become a resident of that State solely to provide these services. 2. (a) to any pension to which) of the natural person the cost of Contracting State or a local government, or who is paid from the funds set up for services provided by that person in that State or municipality will be taxable only in that State. (b) However, such pension) will be taxable only in the other Contracting State if the individual is a resident of that other State and the citizen. 3.15, 16, 17, and article 18 shall apply to salaries, wages, other remuneration and pensions similar to that paid for services provided in respect of the Contracting State or of its local authorities carry out business.   Article 20 students payments which a residence, study or internship needs receives a student or apprentice who is, or immediately before the arrival of the State was the territory of the other Contracting State and who was the first resident in that country have come only for the purpose of study or internship, this country will not be taxed if such payments are from sources that are not in the country.   Article 21 other income 1. Other previous to this Convention because articles not specified for a resident of a Contracting State shall, whatever their income sources will be taxable only in that State. 2. the provisions of part 1 does not apply to income, other than income from article 6 defined in part 2 of the real property, if the income beneficiary who is a resident of a Contracting State, carries on business in the other Contracting State through a permanent representation of the existing there, or give independent personal services in the other State through a permanent base located there, and if the rights or property of which you receive this income is actually related to the permanent representations, or permanent base. In this case, depending on the circumstances of this Convention article 7 or 14.   Article 22 capital 1. Capital represented in article 6 that a resident of a Contracting State of the real estate, which is situated in the other Contracting State may be taxed in that other State taxes. 2. Capital represented by movable property forming part of the estate which the Contracting State the company's permanent representation used in business, or capital represented by movable property that belongs to a resident of a Contracting State a permanent base in the other Contracting State, which is used for independent personal services, may be taxed in that other State taxes. 3. Capital represented by sea and air vehicles that the company of a Contracting State in international traffic are used, as well as movable property belonging to the maritime or air transport means will be taxable only in that State. 4. all other Contracting State, a resident of the capital items will be taxable only in that State.   Article 23 avoidance of double taxation 1. In Latvia, double taxation shall be avoided as follows: (a) Where a resident of Latvia) derives income or owns capital which it in accordance with this Convention may impose taxes to Israel, then, unless national legislation is more favourable provisions, Latvia permission: (i) reduce the resident's income tax for an amount equal to the income tax paid in Israel; (ii) reduce the resident's capital tax on amount equal to the capital tax paid in Israel. These reductions, however, in no case, exceed the income tax or capital tax, part of which is calculated in Latvia before the application of this reduction and, depending on the circumstances of which is attributable to the income or the capital which may be taxed taxes in Israel. (b)) (a) (a) for the application of this paragraph, if the company) — a resident of Latvia receives a dividend from a company — resident of Israel, in which it owns at least 10 percent of shares with full voting rights, the tax paid in Israel will include not only the tax paid on the dividend, but also the appropriate portion of the tax paid on the profits of the company out of which the dividend was paid. 2. Israel double taxation will be avoided as follows: (a) where a resident of Israel) derives income or owns capital which it in accordance with this Convention may impose taxes in Latvia, then, in accordance with Israeli regulations for foreign tax deduction without affecting this part contains the General principles, Israel permission to reduce the resident's income tax or capital tax in the amount equal to the income paid in Latvia or the capital duty; (b) if that income is) a dividend, a company-paid Latvian resident company to a resident of Israel, who owns at least 25 percent equity in the company, which pays dividends, the tax reduction will include a tax that a company that pays dividends, has paid for income from which the dividend is paid. These reductions However, in no case, exceed the income tax or capital tax, part of which is calculated in Israel before this fall and depending on the circumstances, which is attributable to the income or the capital which may impose tax in Latvia. 3. where in accordance with any provision of the Convention Contracting State a resident of the income gained or capital owned in this country are exempt from taxation, then the calculation of the tax on the residents remaining income or capital of that country can take into account the exempted income or capital.   24. Article 1 of the prevention of Discrimination To nationals of a Contracting State in the other Contracting State shall not be subject to taxation or related requirements that are more burdensome than the taxation or the related requirements which, in the same circumstances, in particular with respect to residence, applies or may apply to the nationals of the other. This provision shall, notwithstanding the provisions of article 1, also apply to persons who are not party to one or both of the Contracting States of the residents. 2. The taxation of enterprise of a Contracting State to the permanent representation the other Contracting State may not be less favourable than those of other taxation public companies which perform the same operation. This provision should not be interpreted that it imposes on the Contracting State the obligation to grant the other Contracting State any personal relief to residents, discount and reduction in relation to taxation, which this country give its residents, in the light of their civil status or family responsibilities. 3. Except where the applicable part 1 of article 9, article 11 part 7 or article 12 part 6 rules, interest, royalties and other payments made by the enterprise of a Contracting State in the other Contracting State the cost of the resident, in determining the taxable profit of the company is to report by the same rules as if they are paid to a resident of the first mentioned State. Similarly, the enterprise of a Contracting State in the other Contracting State debt residents, establishing this company's taxable capital, is to be deducted by the same rules as if they would apply to the first residents of that State. 4. the Contracting State whose capital, in whole or in part, directly or indirectly, belongs to one or more residents of the other Contracting State or in full or in part, directly or indirectly control these residents, the first State may not be subject to any taxation or any requirements associated with it, which is different from the taxation and related requirements, which are or may be exposed to similar to the former State enterprises or which is more burdensome for them. 5. The provisions of this article independently of the provisions of article 2, apply to taxes of every kind and name.   25. Article 1 mutual consultation procedures. If a person believes that one or both of the Contracting State party to a national action in relation to this person causes or will cause the taxation which does not comply with the provisions of this Convention, that person may, irrespective of the country in national legislation that remedies to submit complaints to the competent authority of the country of which the person is resident, or if the complaint relates to article 24, part 1 — the competent authority of the country of which that person is. The complaint shall be submitted for review within three years of the first notification of the action which led to the provisions of this Convention do not appropriate taxation. 2. If the competent authority deems the complaint to be justified and even fail to reach a satisfactory solution, it will endeavour to agree with the other competent authority of a Contracting State to this Convention shall not prevent the adequate taxation. Any such agreement is reached is due irrespective of the Contracting State, national laws and the time limits laid down. 3. the national competent authorities should seek mutual agreement resolve any difficulties or eliminate doubts which may arise out of the interpretation or application of this Convention. They may also consult to avoid double taxation in cases not provided for in the Convention. 4. in order to reach agreement on these issues in the preceding subparagraph, the competent authorities of the Contracting States may communicate directly with one another, as well as following an exchange of views can take place with the competent authorities of the Contracting States of the representatives of the Commission.   Article 26 exchange of information 1. The competent authorities of the Contracting States shall exchange the information necessary for the carrying out of the provisions of this Convention or national law requirements on the taxes to which this Convention applies, in so far as these regulations do not conflict with the provisions of this Convention. Article 1 of the Convention does not restrict the exchange of information. Any information received by a Contracting State, should be considered as sensitive as information that is obtained in accordance with the laws of this State, and may be disclosed only to persons or authorities (including courts and administrative authorities) involved in the tax to which this Convention applies, in the calculation of the collection, the use of coercive measures, trials or appeals related to these taxes. Such persons or authorities, this information must be used only for the purposes mentioned above. They may disclose the information in public hearings or in judgements. 2. the provisions of part 1 should not be explained so that they bind the Contracting State the obligation: a to carry out administrative measures), which does not comply with one or other of the contracting national legislation and administrative practice; (b)) to provide information that is not available under one or the other national legislation or administrative practice generally applicable; (c)) to provide information that can reveal any trade, business, industrial, commercial or professional secret or process technology, or to provide information, the disclosure of which would be contrary to the public interest (ordre public).   Article 27 diplomatic and consular personnel, nothing in this Convention shall affect the diplomatic mission or consular staff of the fiscal the privileges granted to it by the General rules of international law or a special agreement.   Article 28 entry into force 1. Contracting Governments diplomatic channels in writing inform each other that have met the legal requirements necessary for the entry into force of this Convention. 2. this Convention shall enter into force by 1. referred to in the last statement date, and its provisions both of the Contracting States shall apply: (a)) in respect of taxes withheld at the time the cost-income that accrued in January of the calendar year or after the first day of the calendar year following the year in which the this Convention enters into force; (b)) in the case of other taxes, to taxes payable in any tax year, which begins in January of the calendar year or after the first day of the calendar year following the year in which this Convention enters into force.   Article 29 termination this Convention shall remain valid as long as the one Contracting State it shall be terminated. Each Contracting State may terminate this Convention, through diplomatic channels, submit written notice of termination at least six months before any end of the calendar year. In this case the Convention in both Contracting States shall cease: (a)) in respect of taxes withheld at the time the cost-income that accrued in January of the calendar year or after the first day of the calendar year following the year in which the notice of termination has been received; (b)) in the case of other taxes, to taxes payable in any tax year, which begins in January of the calendar year or after the first day of the calendar year following the year in which the notice of termination has been received. In witness thereof, the undersigned, being duly authorised, have signed this Convention. The Convention is drawn up in two copies in Jerusalem in 2006 20 February, which corresponds to the Hebrew calendar year 5766.22. ševat, Latvian, Hebrew, and English, in addition, all texts being equally authentic. Different case is decisive for the interpretation of the text in English.

The Republic of Latvia, on behalf of the Government of the State of Israel on behalf of the Government of Oscar Spurdziņš Cia Livni Protocol of the Government of the Republic of Latvia and the Government of the State of Israel to the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital signed at the time the parties have agreed that the following provisions are an integral part of the Convention. 1. as regards article 2, part 2, it is understood that the tax, which taxed the company paid total wages or pay, will also be treated as income taxes, but the social insurance contributions and any similar payments will not be treated as income taxes. 2. with regard to article 3, part 2, for Israel, the term "regulations" in article 3 includes part 2 of the rules, guidelines, administrative instructions and judicial decisions of the State of Israel. 3. as regards article 4 (a) of part 3) If a person who is not a natural person, is a resident of both Contracting States, and the competent authorities of the Contracting States shall endeavour to determine by mutual agreement the status of travel, the competent authorities should take into account such factors as the location of the actual management, incorporation or place of establishment and any other important factors. (b)) it is understood that the provisions of part 3 are applicable as long as Latvia in its national legislation on the residence criteria will not be considered for the determination of the actual location of the control. Once such a criterion is introduced, the competent authority shall inform the competent authority of Israel, and in the shortest possible time, which will be agreed between the competent authorities of the Contracting States, part 3 of the current version of the site will be the following: "3. If, in accordance with the provisions of part 1 a person other than an individual is a resident of both Contracting States, then it shall be considered that this person is a resident of the State in which its place of effective management." 4. with regard to article 5, part 6, it is understood that such agents can not be considered an agent of an independent status within the meaning of this subparagraph if his action completely or almost completely business is carried out. 5. with regard to article 6 of part 3 and part 1 of article 13, it is understood that all income and capital gains that accrued from article 6 of the said immovable property situated in the Contracting State, seizures, may be taxed in that State under the provisions of article 13. 6. with regard to article 7 of part 3 it is understood that this part does not apply to an expenditure that would not be deductible if the permanent establishment were a separate enterprise of the Contracting State in which it is located. 7. with regard to article 11 of part 3 it is understood that a) (iii) the institution has referred to Israel's export insurance company ' ASHR (ASHR ' A, the Israel export insurance Corp. Ltd). 8. with regard to article 12 part 3 it is understood that any copyright for literary, artistic or scientific work includes the copyright to the films or recordings and other image or sound reproduction, radio or television broadcasts. 9. with regard to article 16 it is understood that article 16 shall not apply to the remuneration paid by the Council referred to in this article or similar institutions in the Member receives in connection with any other of his actions, which is not a Council or similar bodies members. 10. Tax relief is understood that this Convention certain tax breaks for residents of a Contracting State in the other Contracting State, the tax authority will apply provided that the residence card is presented with the corresponding income and which is signed by the first Contracting State tax authority. 11. Tax evasion or tax avoidance of this Convention shall not prejudice the right of a Contracting State to apply its national legislation on tax evasion or tax avoidance. The Protocol is drawn up in two copies in Jerusalem in 2006 20 February, which corresponds to the Hebrew calendar year 5766.22. ševat, Latvian, Hebrew, and English, in addition, all texts being equally authentic. Different case is decisive for the interpretation of the text in English.  

The Republic of Latvia, on behalf of the Government of the State of Israel on behalf of the Government of Oscar Spurdziņš Cia Livni CONVENTION BETWEEN the Government OF the REPUBLIC OF Latvia AND The Government OF the State OF ISRAEL 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 Republic of Latvia and the Government of the State of Israel, to conclud a Convention (MENU RNGTON LINE4) 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: article 1 Persons covered this Convention shall apply to persons who are residents of one or both of the Contracting States.   Article 2 taxes covered 1. This Convention shall apply to taxes on income imposed on behalf of the Andean capital on (a) the Contracting State or of its local authorities, irrespectiv 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 immovabl property, taxes on the total wage or non of salar to paid by enterprises, as well as taxes on capital appreciation. 3. The existing taxes to which the Convention shall apply in particular to: (a)) in the United Kingdom: (i) the enterprise income tax (corporate income tax); (ii) the personal income tax (individual income tax); (iii) the immovabl property tax (estate tax); (hereinafter referred to as "Latvian tax"); (b)) in Israel: (i) the income tax and company tax (including tax on capital gain); (ii) the tax imposed on gains from the alienation of real property according to the Real Estate Taxation Law; (hereinafter referred to as "Israel in tax"). 4. The Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify the other of any each significant changes which have been made in their taxation laws of respectiv.   Article 3 General definition 1. For the purpose of this Convention, unless the context otherwise requires: (a)) (i) the term "United States" means the Republic of Latvia and, when used in the sense of location, means the territory of the Republic of Latvia and any other area adjacent to the territorial waters of the Republic of Latvia within which under the law of Latvia and in accordanc with international law the rights of Latvia may be exercised with respect to the sea bed and its subsoil and their natural resources; (ii) the term "Israel" means the State of Israel and when used in a sense the location of compris territory in which the Government of the State of Israel has taxation rights, including its territorial sea, as well as those maritime areas adjacent to the outer limit of the territorial sea, including the seabed and subsoil thereof over which the State of Israel , in accordanc with international law and the law of the State of Israel, it is the sovereign exercises or others rights and jurisdiction; (b)) the terms "a Contracting State" and "the other Contracting State" mean Latvia or Israel, 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 that is treated as a body corporate for tax purpose; (e) the term ") enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enter prise 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 "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; g) the term "competent authority" means: (i) in Latvia, the Ministry of finance or its authorised representative; (ii) in Israel, the Minister of finance or his authorised representative; h the term "national") means: (i) any individual possessing the nationality of a Contracting State; (ii) any legal person, partnership or association deriving its status as such from the law in force in a Contracting State. 2. As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purpose of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.   Article 4 resident 1. For the purpose of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is liabl to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature, and also includes that State and any local authority thereof. This term, however, does not include any person who is liabl 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 provision 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 only of the State in which he has a permanent home available to him; If he has a permanent home available to him in both States, he shall be deemed to be a resident only 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 only of the State in which he has an habitual abode; c if he has an habitual) abode in both States or in ither of them, he shall be deemed to be a resident only of the State of which he is a national; (d) if he is a national) of both States or of ither of them not, the competent authorities of the Contracting States shall settle the the question by mutual agreement. 3. Where by reason of the provision of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States the may settle the question by mutual agreement. In the absence of such agreement, for the purpose of the Convention, the person shall not be entitled to claim any benefits provided by this Convention.   Article 5 permanent establishment 1. For the purpose of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term "permanent establishment" includes especially: a a place of management); (b)) a branch; c) an Office; (d) a factory;) e a workshop, and f)) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources. 3. (a) A building site or construction), assembly or installation project or a supervisory activity connected therewith constitut a permanent establishment only if it lasts more than 12 months; b) activities carried on offshore in a Contracting State in connection with the exploration or exploitation of the sea bed and subsoil and their natural resources situated in that State shall be deemed to be carried on through a permanent establishment situated in that State, if such activities are carried on for a period or periods exceeding in the aggregate 30 days in any twelve-month period. 4. Notwithstanding the preceding provision of this article, the term "permanent establishment" shall be deemed not to include: a) the use of facilities solely for the purpose of storage, display or delivery of goods 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 features 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 features or auxiliary character. 5. Notwithstanding the provision of paragraph 1 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 conclud-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 that person undertak-for the enterprise , unless the activities of such person with limited it to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provision of that paragraph. 6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it to one business in the carr a 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. 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 carr to one business in that other State (whethers through a permanent establishment or otherwise), shall not of itself either company a permanent constitut establishment of the other.   Article 6 income from immovabl property 1. Income derived by a resident of a Contracting State from immovabl property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. 2. The term "immovabl 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 immovabl property, livestock and equip men to be used in agriculture and forestry, rights to which the provision of general law respecting landed property apply, any option or similar right to the immovabl property, usufruc acquir of immovabl property and rights to variable or fixed payments as considerations for the working of, or the right to work , mineral deposits, sources and other natural resources, rights to assets to be produced by the exploration or exploitation of the sea bed and subsoil and their natural resources, including rights to interests in or to the benefit of such assets; ships, boats and aircraft shall not be regarded as immovabl property. 3. The provision of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovabl property. 4. The provision of paragraphs 1 and 3 shall also apply to the income from the immovabl property of an enterprise and to income from the immovabl property used for the performance of independent personal services.   Article 7 business profits 1. The profits of an enterprise of a Contracting State shall be only in the taxabl that State unless the enterprise to one business in carr the other Contracting State through a permanent establishment situated therein. If the enterprise on business as aforesaid to carr, the profits of the enterprise may be taxed in the other State but only so much of them as is attributabl to that permanent establishment. 2. Subject to the provision of paragraph 3, where an enterprise of a Contracting State to one business in carr the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which It is a permanent establishment. 3. In determining the profits of a permanent establishment, there shall be allowed as a deduction in "of which the expense incurred for the purpose of the permanent establishment, including Executive and general administrative expense so incurred, whethers of in the State in which the permanent establishment is situated or elsewher. 4. Insofar as it has been customary in a Contracting State to determin the profits to be attributed to a permanent establish men on the basis of an apportionmen of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclud that Contracting State from determining the profits to be taxed by such an apportionmen as may be customary; the method of apportionmen, however, the adopted shall be such that the result shall be in accordanc with the principles led in this article. 5. From the 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 purpose of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7. Where profits include items of income which the deal with separately in other articles of this Convention, then the provision of those articles shall not be affected by the provision of this article.   Article 8 Shipping and air transport 1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxabl only in that State. 2. The provision of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an inter national operating agency.   Article 9 Associated enterprises 1. Where (a) an enterprise of a Contracting) State of directly or indirectly participat in the management, control or capital of an enter prise of the other Contracting State, or b) the same persons directly or indirectly the participat 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 enter Prisa, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2. Where a Contracting State includes in the profits of an enterprise of that State — and taxes accordingly — profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises , then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provision of this Convention and the competent authorities of the Contracting States shall if the cessary not consult each other.   Article 10 Dividends 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the law 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 (a) 12:5 per cent) of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividend; b) 10 per cent of the gross amount of the dividends, notwithstanding the provision of paragraph a) sub-, if the beneficial owner is a company which holds directly at least 10 per cent of the capital of the company paying the dividends where the dividend is paid out of the profits which by virtue of the provision in the Law of Israel of encouragement of investments in Israel are the main from tax or subject to tax at a rate that is lower than the normal rate of company tax in Israel; c) 15 per cent of the gross amount of the dividends in all other cases. This paragraph shall not be affec the taxation of the company in respect of the profits out of which the dividend is paid with. 3. The term "dividends" as used in this article means income from shares, "jouissanc", "jouissanc" shares or rights, mining shares, founder ' shares or other rights, not being debt claims, participating in profits, as well as income from other rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 4. The provision of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carr to one business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or perform in that other State independent personal services from a fixed base situated therein , and the holding in respect of which the dividend is paid is effectively connected with such permanent establishment or with a fixed base. In such case the provision 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 or of deriv profits income from the other Contracting State, that other State may not impost any tax on the dividends paid by the company, except insofar as such dividends to be paid to a resident of that other State or insofar as the holding in respect of which the dividend is paid is effectively connected with a permanent establishment or a fixed base situated in the a to get other State , nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits wholly or partly be consis of profits or income arising in such other State.   Article 11 interest 1-interest arising in a Contracting. The 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 «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 (a) 12:5 per cent) of the gross amount of the interest arising in a Contracting State and paid on any loan of whatever kind granted by a bank of the other Contracting State; b) 10 per cent of the gross amount of the interest in all other cases. 3. Notwithstanding the provision of paragraph 1 and 2, a) interest arising in Latvia shall be taxabl only in Israel if the interest is paid to or in respect of a loan, the debt claim or credit that is guaranteed or insured by: (i) the Government of the State of Israel or a local authority thereof; or (ii) the Central Bank of Israel; or (iii) any institution for insurance or financing of international trade transactions which is wholly owned by the State of Israel; (b) interest arising in Israel) shall be only in Latvia taxabl if the interest is paid to or in respect of a loan, the debt claim or credit that is guaranteed or insured by: (i) the Government of Latvia or a local authority thereof; or (ii) the Bank of Latvia; or (iii) any institution for insurance or financing of international trade transactions which is wholly owned by the Republic of Latvia; (c) interest arising in a Contracting) the State shall be the taxabl only in the other Contracting State if the recipient is a resident of that other State, and such recipient is an enterprise of that other State and is the beneficial owner of the interest, and the interest is paid with respect to the indebtednes arising on the sale on credit, by that enterprise , of any merchandise or industrial, commercial or scientific equipment to an enterprise of the first-mentioned State, except where the sale or indebtednes is between related persons. 4. The term "interest" as used in this article means income from debt claims of every kind, whethers or not secured by mortgage and whethers or not carrying a right to participat in the debtor's profits, and in particular, income from government securities and income from bonds or debentur, including premium and prizes attaching to such securities, bonds or debentur. The term "interest" shall not include any income which is treated as a dividend under the provision of article 10. Penalty charges for late payment shall not be regarded as interest for the purpose of this article. 5. The provision of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carr to one business in the other Contracting State in which the interest of «arise through a permanent establishment situated therein or perform in that other State independent personal services from a fixed base situated therein, and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provision of article 7 or article 14, as the case may be, shall apply. 6. Interest shall be deemed the «arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whethers 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 indebtednes on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed the «arise in the State in which the permanent establishment is situated. 7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds 100 for the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship , the provision of this article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain the taxabl according to the law of each Contracting State, due regard being had to the other provision of this Convention.   Article 12 to 1 to Royalt Royalt 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 may be taxed in royalt also in the Contracting State in which they «arise and according to the law of that State, but if the beneficial owner of the royalt to is a resident of the other Contracting State, the tax so charged shall not exceeds 100 5 per cent of the gross amount of the royalt. 3. The term "royalt" as used in this article means payments of any kind received as a considerations for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial , commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. 4. The provision of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalt, being a resident of a Contracting State, carr to one business in the other Contracting State in which the royalt to «arise through a permanent establishment situated therein, or perform in that other State independent personal services from a fixed base situated therein and the right or property in respect of which the royalt paid is effectively connected with such permanent establishment or with fixed base. In such case the provision of article 7 or article 14, as the case may be, shall apply. 5. you shall be deemed the Royalt «arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the whethers royalt, 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 incurred, and such was the royalt royalt with is borne by such permanent establishment or fixed base, then such shall be deemed to be the royalt «arise in the State in which the permanent establishment or fixed base is situated. 6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalt, having regard to the use, right or information for which they are paid, exceeds 100 for the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship , the provision of this article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain the taxabl according to the law of each Contracting State, due regard being had to the other provision of this Convention.   Article 13 Capital gains 1. Gains derived by a resident of a Contracting State from the alienation of property referred to immovabl in article 6 and situated in the other Contracting State may be taxed in that other State. 2. Gains derived by a resident of a Contracting State from the alienation of shares or of a comparabl interest of any kind deriving more than 50 per cent of their value directly or indirectly from immovabl property situated in the other Contracting State may be taxed in that other State. 3. 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 be taxed in that other State. 4. Gains derived by an enterprise of a Contracting State operating ships or aircraft in international traffic from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be only in the taxabl you state. 5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxabl only in the Contracting State of which the alienator is a resident, if that resident is the beneficial owner of such capital gain.   Article 14 independent Personal Services 1-income derived by an individual. who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be only in taxabl that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributabl to that fixed base. For this purpose, where an individual who is a resident of a Contracting State stay in the other State for a period or Contracting period exceeding in the aggregate 183 days in any twelve month period commencing in or ending in the fiscal year concerned, he shall be deemed to have a fixed base regularly available to him in that other State and the income that is derived from his activities referred to above that are performed in that other State shall be attributabl to that fixed base. 2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.   Article 15 income from employment 1. Subject to the provision of articles 16, 18 and 19, salar, WAGs and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxabl 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 therefrom may be taxed in that other State. 2. Notwithstanding the provision 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 the taxabl 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 the in any twelve month period commencing or ending in the fiscal year 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) borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provision of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State.   Article 16 directors ' fees directors ' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or any other similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.   Article 17 artistes and sportsmen 1. Notwithstanding the provision of articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman's, 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's in his capacity as such notes to the accru entertainer or sportsman's himself but to another person, that income may, notwithstanding the provision of articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsman's are exercised. 3. The provision of paragraphs 1 and 2 shall not apply to income derived from activities exercised in a Contracting State by an entertainer or sportsman's if the visit to that State is wholly or mainly supported by public funds of one or both of the Contracting States. In such a case, the income shall be taxabl in accordanc with the provision of article 14 or 15, as the case may be.   Article 18 Pension 1. Subject to the provision of paragraph 2 of article 18, the pension and other similar remuneration paid to a resident of a Contracting State in considerations of past employment shall be only in the taxabl you state. 2. Notwithstanding the provision of paragraph 1 of this article and paragraph 2 of article 19, the pension is paid remuneration and others under the social security legislation of a Contracting State shall be only in the taxabl you state.   Article 19 government service 1 a) and others of the Salar, WAGs similar remuneration, other than a pension, paid by a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority shall be only in the taxabl you state. (b) However, such, salar) WAGs and other similar remuneration shall be taxabl only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who: (i) is a national of that State; or (ii) did not become a resident of that State solely for the purpose of rendering the services. 2. a Any pension paid by, or) out of funds created by, a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority shall be only in the taxabl you state. (b) However, such pension shall be) taxabl only in the other Contracting State if the individual is a resident of, and a national of, that State. 3. The provision of articles 15, 16, 17 and 18 shall apply to such salar, WAGs, other similar remuneration and the pension in respect of services rendered in connection with a business carried on by a Contracting State or a local authority thereof.   Article 20 students payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first mentioned State solely? for the purpose of his education or training receive for the purpose of his maintenance, education or training shall not be taxed in that State , provided that such payments «arise from sources outside that State.   Article 21 Other income 1-items of income. of a resident of a Contracting State, wherever arising, not deal with in the foregoing articles of this Convention shall be only in the taxabl you state. 2. The provision of paragraph 1 shall not apply to income, other than income from property immovabl as defined in paragraph 2 of article 6, if the recipient of such income, being a resident of a Contracting State, carr to one business in the other Contracting State through a permanent establishment situated therein, or perform 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 provision of article 7 or article 14, as the case may be, shall apply.   Article 22 Capital 1. Capital represented by immovabl 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 enter prise 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 and aircraft operated in international traffic by an enterprise of a Contracting State and by movable property pertaining to the operation of such ships and aircraft, shall be only in the taxabl you state. 4. All other elements of capital of a resident of a Contracting State shall be only in the taxabl you state.   Article 23 Elimination of double taxation 1. In Latvia, double taxation shall be eliminated as follows: a where a resident of) Corporation's deriv income or own capital which, in accordanc with this Convention, may be taxed in the United States, unless a more favourabl treatment is provided in its domestic law, Latvia shall allow: (i) as a deduction in "from the tax on the income of that resident, an amount equal to the income tax paid thereon in Israel; (ii) as a deduction in "from the tax on the capital of that resident, an amount equal to the capital tax paid thereon in Israel. Such marbles in either case shall not, however, that about 12 of the income tax or capital tax in Latvia, as computed before the deduction in "is given, which is attributabl, as the case may be, to the income or the capital which may be taxed in Israel. (b)) For the purpose of sub-paragraph (a)), where a company that is a resident of Latvia receive a dividend from a company that is a resident of Israel in which it will own at least 10 per cent of its shares having full voting rights, the tax paid in Israel shall include not only the tax paid on the dividend, but also the appropriate portions of the tax paid on the underlying profits of the company out of which the dividend was paid. 2. In Israel shall be eliminated double taxation as follows: (a)) where a resident of Israel or of deriv income own capital which, in accordanc with the provision of this Convention, may be taxed in the United States, Israel shall (subject to the law of Israel regarding the allowance of a credit of foreign taxes, which shall not be the general principles of the affec led in this paragraph) allow a marbles from the tax on the income or the capital of that one resident , an amount equal to the income tax or the capital tax, respectively, paid in Latvia. (b)), where such income is a dividend paid by a company which is a resident of Latvia to a company which is a resident of Israel and which own not less than 25 per cent of the share capital of the company paying the dividend, the credit shall take into account the tax paid by that company in respect of its income out of which the dividends were distributed in. Such marbles in either case shall not, however, that about 12 of the income tax or capital tax, as computed before the deduction in "is given, which is attributabl, as the case may be, to the income or the capital which may be taxed in the United Kingdom. 3. Where in accordanc with any provision of the Convention income derived or capital owned by a resident of a Contracting State is a tax in the main from a State, such State may not vertheles, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.   Article 24 Non-discrimination 1-nationals of a Contracting. State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensom than the taxation and connected requirements to which nationals of that other State in the same, in particular with circumstanc respect their residence, may be subjected to or. This provision shall, notwithstanding the provision of article l, also apply to persons who are not residents of one or both of the Contracting States. 2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably levied in that other State than the taxation levied on enterprises of the 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 allowance, relief and reduction for taxation purpose on account of civil status or family responsibilities which it grants to its own residents. 3. Except where the provision of paragraph 1 of article 9, paragraph 7 of article 11, or paragraph 6 of article 12, apply, interest, and other disbursement royalt paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxabl profits of such enterprise, be-deductibl under the same conditions as if they had been paid to a resident of the first mentioned State. Similarly, any debt of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the capital of the taxabl such enterprise, be-deductibl 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 burden some than the taxation and connected requirements to which other similar enterprises of the first mentioned State may be subjected to or. 5. The provision of this article shall, notwithstanding the provision of article 2, apply to taxes of every kind and description.   Article 25 Mutual agreement procedure 1-where a person consider. that the actions of one or both of the Contracting States result or will result for him in taxation not in accordanc with the provision of this Convention, he may, irrespectiv 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 accordanc with the provision of the Convention. 2. The competent authority shall endeavor, if the objection to it appear 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 accordanc with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3. The competent authorities of the Contracting States shall the endeavor to resolve by mutual agreement any doubt arising as to the difficult or is it the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention. 4. The competent authorities of the Contracting States the may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs.   Article 26 exchange of information 1. The competent authorities of the Contracting the States shall exchange such information as is not cessary for carrying out the provision of this Convention or of the domestic laws of the Contracting States concerning taxes covered by this Convention insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by article 1. Any information received by a Contracting State shall be treated as 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) concerned with the assessment or collection of, the enforcement or prosecution in respect of , or the determination of appeal in relations to the taxes covered by the Convention. Such persons or authorities shall use the information only for such purpose. They may be published by the information in disclos court proceedings or in judicial decisions. 2. In no case shall the provision of of paragraph 1 be construed so as to impost on a Contracting State the obligation: a to carry out administrative) measure the at variance with the laws and the administrative practice of that or of the other Contracting State; (b) to supply information which is not) obtainabl is 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 disclos) 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).   Article 27 members of diplomatic missions and consular posts Nothing in this Convention shall be affec the fiscal privileges of members of diplomatic missions and consular posts under the general rules of international law or under the provision of special agreements.   Article 28 Entry into force 1. The Governments of the Contracting States shall notify each other in writing, through diplomatic channels, that the procedures required by their law for the entry into force of this Convention have been satisfied. 2. The Convention shall enter into force on the date of the later of the notifications referred to in paragraph 1 and its provision shall have effect in both Contracting States: a in a) in respect of taxes withheld at source, on income derived on or after the first day of January of the calendar year following the year in which this Convention enter into force; (b)) in respect of other taxes, for taxes for any fiscal year beginning chargeabl on or after the first day of January of the calendar year following the year in which this Convention will enter into force.   Article 29 Termination this Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination in writing at least six months before the end of any calendar year. In such event, the Convention shall cease to the have effect in both Contracting States: a in respect of taxes) withheld at source, on income derived on or after the first day of January of the calendar year following the year in which the notice has been given; (b)) in respect of other taxes, for taxes for any fiscal year beginning chargeabl on or after the first day of January of the calendar year following the year in which the notice has been given. In WITNESS WHEREOF, the undersigned, duly authorized by the theret, have signed this Convention. Done in duplicate at Jerusalem the day of 20 February 2006 which correspond to the 22 day of shevat 5766, of the Hebrew Calendar, in the Latvian, Hebrew and English languages, all texts being equally authentic. In the case of the divergenc of interpretation, the English text shall prevails.  

For the For the Government of the Republic of Latvia: the Government of the State of Israel: Oscar Spurdzin for Tzipi Livni PROTOCOL of Latvia and the Government of the State of Israel for the avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income and Capital, the undersigned have agreed that the following provision shall form an integral part of the of the Convention 1. Ad article 2 paragraph 2 It is understood that taxes on total non of WAGs or salar to paid by enterprises shall also be regarded as taxes on income, but social security charges or any other similar charges shall not be regarded as taxes on income. 2. Ad article 3 paragraph 2 With respect to Israel, the term "law" in paragraph 2 of article 3 includes rules, regulations, directives and administrative court decision of the State of Israel. 3. Ad article 4 paragraph 3 (a)) where a person other than an individual is a resident of both Contracting States and the competent authorities to be trying to settle the question by mutual agreement, they shall have regard to such factors as the place of effective management, the place where it was incorporated or otherwise constituted and any other relevant factors. (b)) It is understood that the provision of paragraph 3 with the applicable as long as the place of effective management criterion for the determination of residence is not used under the domestic legislation of Latvia. In the case of implementation of such criterion the competent authority shall be informed of the Corporation the competent authority of Israel as soon as such criteria is implemented, and the following shall be applicable instead of the provision of the provision of paragraph 3 from the earlies to possible data as determined by the competent authorities of the Contracting States: "Mayweather 3. Where by reason of the provision 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. " 4. Ad article 5 paragraph 6 It is understood that when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph. 5. Ad article 6, paragraph 3 and article 13 paragraph 1 It is understood that all income and gains from the alienation of property referred to immovabl in article 6 and situated in a Contracting State may be taxed in that State in accordanc with the provision of article 13.6. Ad article 7 paragraph 3 It is understood that the provision of this paragraph do not apply to the expense which would not be deductibl if the permanent establishment were a separate enterprise of the Contracting State in which the is located. 7. Ad article 11 paragraph 3 It is understood that ' A — the ASHR Israel export insurance Corp. Ltd. is the institutions referred to in sub-paragraph (a) (iii)). 8. Ad article 12 paragraph 3 It is understood that any copyright of literary, artistic or scientific works encompass the copyright of films or tapes and other means of image or sound reproduction for radio or television broad-casting. 9. Ad article 16 It is understood that article 16 shall not apply to any remuneration paid to a member of any board or organ referred to in this article in connection with his performance of any function other than his function as a member of such a body or organ. 10. Tax relief Relief provided in this Convention to a resident of a Contacting State by the tax authorities of the other Contracting State, shall be conditioned upon the presentation of a certificate of residence indicating the relevant income, signed by the tax authorities of the first Contracting State. 11. Prevention of tax evasion or tax avoidance this Convention shall not prevent a Contracting State from applying its domestic law on the prevention of tax evasion or tax avoidance. Done in duplicate at Jerusalem the day of 20 February 2006 which correspond to the 22 day of shevat 5766, of the Hebrew Calendar, in the Latvian, Hebrew and English languages, all texts being equally authentic. In the case of the divergenc of interpretation, the English text shall prevails.

For the For the Government of the Republic of Latvia: the Government of the State of Israel: Oscar Spurdzin Tzipi Livni