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The Government of Canada and the Government of the
Republic of Chile, desiring to conclude a Convention 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:
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This Convention shall apply to persons who are residents of
one or both of the Contracting States.
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1. This Convention shall apply to taxes on income and on
capital imposed on behalf of each Contracting State, irrespective
of the manner in which they are levied.
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2. There shall be regarded as taxes on income and on capital
all taxes imposed on total income, on total capital, or on elements
of income or of capital, including taxes on gains from the
alienation of movable or immovable property, taxes on the total
amount of wages or salaries paid by enterprises, as well as taxes
on capital appreciation.
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3. The existing taxes to which the Convention shall apply are,
in particular:
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(a) in the case of Canada, the taxes imposed by the
Government of Canada under the Income Tax Act (hereinafter
referred to as ``Canadian tax''); and
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(b) in the case of Chile, the taxes imposed under the Income
Tax Act, ``Ley sobre Impuesto a la Renta'' (hereinafter referred
to as ``Chilean tax'').
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4. The Convention shall apply also to any identical or
substantially similar taxes and to taxes on capital which 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 each other of any significant
changes which have been made in their respective taxation laws.
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1. For the purposes of this Convention, unless the context
otherwise requires:
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(a) the terms ``a Contracting State'' and ``the other
Contracting State'' mean, as the context requires, Canada or
the Republic of Chile;
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(b) the term ``person'' includes an individual, a company a
trust and any other body of persons;
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(c) the term ``company'' means any body corporate or any
entity which is treated as a body corporate for tax purposes;
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(d) the terms ``enterprise of a Contracting State'' and
``enterprise of the other Contracting State'' mean respectively
an enterprise carried on by a resident of a Contracting State
and an enterprise carried on by a resident of the other
Contracting State;
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(e) the term ``international traffic'' means any transport by a
ship or aircraft operated by an enterprise of a Contracting
State, except when the principal purpose is to transport
passengers or property between places within the other
Contracting State;
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(f) the term ``competent authority'' means:
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(i) in the case of Canada, the Minister of National Revenue
or the Minister's authorised representative, and
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(ii) in the case of Chile, the Minister of Finance or the
Minister's authorised representative;
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(g) the term ``national'' means:
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(i) any individual possessing the nationality of a
Contracting State; or
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(ii) any legal person, partnership or association constituted
in accordance with the laws in force in a Contracting State.
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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 purposes of the taxes to
which the Convention applies.
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1. For the purposes of this Convention, the term ``resident of
a Contracting State'' means any person who, under the laws of
that State, is liable to tax therein by reason of the person's
domicile, residence, place of management, place of
incorporation or any other criterion of a similar nature and also
includes that State and any political subdivision or local
authority thereof or any agency or instrumentality of any such
government, subdivision or authority. This term, however, does
not include any person who is liable to tax in that State in respect
only of income from sources in that State.
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2. Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, then the
individual's status shall be determined as follows:
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(a) the individual shall be deemed to be a resident only of the
State in which the individual has a permanent home available
and if the individual has a permanent home available in both
States, the individual shall be deemed to be a resident only of
the State with which the individual's personal and economic
relations are closer (centre of vital interests);
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(b) if the State in which the individual's centre of vital interests
cannot be determined, or if there is not a permanent home
available to the individual in either State, the individual shall
be deemed to be a resident only of the State in which the
individual has an habitual abode;
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(c) if the individual has an habitual abode in both States or in
neither of them, the individual shall be deemed to be a resident
only of the State of which the individual is a national;
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(d) if the individual is a national of both States or of neither of
them, the competent authorities of the Contracting States shall
settle the question by mutual agreement.
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3. Where by reason of the provisions of paragraph 1 a
company is a resident of both Contracting States, it shall be
deemed to be a resident only of the State of which it is a national.
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4. Where by reason of the provisions of paragraph 1 a person
other than an individual or a company, to which paragraph 3
applies, is a resident of both Contracting States, the competent
authorities of the Contracting States shall by mutual agreement
endeavour to settle the question and to determine the mode of
application of the Convention to the person. In the absence of a
mutual agreement by the competent authorities of the
Contracting States, the person shall not be entitled to claim any
relief or exemption from tax provided by the Convention.
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1. For the purposes of this Convention, the term ``permanent
establishment'' means a fixed place of business through which
the business of an enterprise is wholly or partly carried on.
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2. The term ``permanent establishment'' includes especially:
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(a) a place of management;
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(f) a mine, an oil or gas well, a quarry or any other place
relating to the exploration for or the exploitation of natural
resources.
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3. The term ``permanent establishment'' shall also include:
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(a) a building site or construction or installation project and
the supervisory activities in connection therewith, but only if
such building site, construction or activity lasts more than six
months; and
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(b) the furnishing of services, including consultancy services,
by an enterprise through employees or other individuals
engaged by the enterprise for such purposes, but only where
activities of that nature continue within the country for a
period or periods aggregating more than 183 days within any
twelve month period.
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For the purposes of computing the time limits in this paragraph,
activities carried on by an enterprise associated with another
enterprise within the meaning of Article 9 shall be aggregated
with the period during which activities are carried on by the
enterprise if the activities between the associated enterprises are
connected.
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4. Notwithstanding the preceding provisions of this Article,
the term ``permanent establishment'' shall be deemed not to
include:
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(a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to the
enterprise;
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(b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage,
display or delivery;
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(c) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of
processing by another enterprise;
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(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;
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(e) the maintenance of a fixed place of business solely for the
purpose of advertising, supplying information or scientific
research for the enterprise, if such activity is of a preparatory
or auxiliary character.
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5. Notwithstanding the provisions of paragraphs 1 and 2,
where a person (other than an agent of an independent status to
whom paragraph 7 applies) is acting on behalf of an enterprise
and has, and habitually exercises, in a Contracting State an
authority to conclude contracts on behalf of the enterprise, that
enterprise shall be deemed to have a permanent establishment in
that State in respect of any activities which that person undertakes
for the enterprise unless the activities of such person are limited
to those mentioned in paragraph 4 which, if exercised through a
fixed place of business, would not make this fixed place of
business a permanent establishment under the provisions of that
paragraph.
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6. However, an insurance company resident of a Contracting
State shall, except in the case of reinsurance, be deemed to have
a permanent establishment in the other Contracting State if it
collects premiums in the territory of that other State or if it insures
risks situated therein through a representative other than an agent
of independent status to whom paragraph 7 applies.
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7. An enterprise shall not be deemed to have a permanent
establishment in a Contracting State merely because it carries on
business in that State through a broker, general commission
agent or any other agent of an independent status, provided that
such persons are acting in the ordinary course of their business.
However, when such agents are acting wholly or almost wholly
on behalf of the enterprise they shall not be considered agents of
an independent status within the meaning of this paragraph.
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8. The fact that a company which is a resident of a Contracting
State controls or is controlled by a company which is a resident
of the other Contracting State, or which carries on business in that
other State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a
permanent establishment of the other.
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1. Income derived by a resident of a Contracting State from
immovable property (including income from agriculture or
forestry) situated in the other Contracting State may be taxed in
that other State.
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2. For the purposes of this Convention, the term ``immovable
property'' shall have the meaning which it has for the purposes
of the relevant tax law of the Contracting State in which the
property in question is situated. The term shall in any case include
property accessory to immovable property, livestock and
equipment used in agriculture and forestry, rights to which the
provisions of general law respecting landed property apply,
usufruct of immovable property and rights to variable or fixed
payments as consideration for the working of, or the right to
work, mineral deposits, sources and other natural resources.
Ships and aircraft shall not be regarded as immovable property.
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3. The provisions of paragraph 1 shall apply to income derived
from the direct use, letting, or use in any other form of immovable
property and to income from the alienation of such property.
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4. The provisions of paragraphs 1 and 3 shall also apply to the
income from immovable property of an enterprise and to income
from immovable property used for the performance of
independent personal services.
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1. The profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on business
in the other Contracting State through a permanent establishment
situated therein. If the enterprise carries on or has carried on
business as aforesaid, the profits of the enterprise may be taxed
in the other State but only so much of them as is attributable to
that permanent establishment.
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2. Subject to the provisions of paragraph 3, where an
enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated
therein, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might be expected
to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions
and dealing wholly independently with the enterprise of which
it is a permanent establishment and with all other persons.
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3. In the determination of the profits of a permanent
establishment, there shall be allowed those deductible expenses
which are incurred for the purposes of the permanent
establishment including executive and general administrative
expenses, whether incurred in the State in which the permanent
establishment is situated or elsewhere. However, no such
deduction shall be allowed in respect of amounts, if any, paid
(otherwise than as a reimbursement of actual expenses) by the
permanent establishment to the head office of the enterprise or
any of its other offices, by way of royalties, fees or other similar
payments in return for the use of patents, know-how or other
rights, or by way of commission or other charges, for specific
services performed or for management, or, except in the case of
a banking enterprise, by way of interest on moneys lent to the
permanent establishment.
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4. No profits shall be attributed to a permanent establishment
by reason of the mere purchase by that permanent establishment
of goods or merchandise for the enterprise.
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5. For the purposes of the preceding paragraphs, the profits to
be attributed to the permanent establishment shall be determined
by the same method year by year unless there is good and
sufficient reason to the contrary.
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6. Where profits include items of income which are dealt with
separately in other Articles of this Convention, then the
provisions of those Articles shall not be affected by the
provisions of this Article.
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1. Profits derived by an enterprise of a Contracting State from
the operation of ships or aircraft in international traffic shall be
taxable only in that State.
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2. Notwithstanding the provisions of paragraph 1 and of
Article 7, profits derived from the operation of ships or aircraft
where the principal purpose is to transport passengers or property
between places in a Contracting State may be taxed in that State.
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3. The provisions of paragraphs 1 and 2 shall also apply to
profits from the participation in a pool, a joint business or an
international operating agency.
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4. For the purposes of this Article:
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(a) the term ``profits'' includes gross revenues derived directly
from the operation of ships or aircraft in international traffic;
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(b) the term ``operation of ships or aircraft'' by an enterprise,
includes
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(i) the charter or rental of ships or aircraft,
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(ii) the rental of containers and related equipment, and
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(iii) the alienation of ships, aircraft, containers and related
equipment
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by that enterprise if that charter, rental or alienation is
incidental to the operation by that enterprise of ships or aircraft
in international traffic.
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1. Where
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(a) an enterprise of a Contracting State participates directly or
indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
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(b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting
State,
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and in either case conditions are made or imposed between the
two enterprises in their commercial or financial relations that
differ from those that would be made between independent
enterprises, then any income which would, but for those
conditions, have accrued to one of the enterprises, but, by reason
of those conditions, has not so accrued, may be included in the
income of that enterprise and taxed accordingly.
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2. Where a Contracting State includes in the income of an
enterprise of that State - and taxes accordingly - income on
which an enterprise of the other Contracting State has been
charged to tax in that other State and the income so included is
income that would have accrued to the enterprise of the
first-mentioned State if the conditions made between the two
enterprises had been those that would have been made between
independent enterprises, then that other State, if it agrees, shall
make an appropriate adjustment to the amount of tax charged
therein on that income. In determining such adjustment, due
regard shall be had to the other provisions of this Convention and
the competent authorities of the Contracting States shall if
necessary consult each other.
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3. A Contracting State shall not change the income of an
enterprise in the circumstances referred to in paragraph 1 after the
expiry of the time limits provided in its national laws and, in any
case, after five years from the end of the year in which the income
that would be subject to such change would, but for the
conditions referred to in paragraph 1, have accrued to that
enterprise.
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4. The provisions of paragraphs 2 and 3 shall not apply in the
case of fraud, wilful default or neglect.
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1. Dividends paid by a company that is a resident of a
Contracting State to a resident of the other Contracting State may
be taxed in that other State.
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2. However, such dividends may also be taxed in the
Contracting State of which the company paying the dividends is
a resident and according to the laws of that State, but if the
beneficial owner of the dividends is a resident of the other
Contracting State, the tax so charged shall not exceed
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(a) 10 per cent of the gross amount of the dividends if the
beneficial owner is a company that controls directly or
indirectly at least 25 per cent of the voting power in the
company paying the dividends, and
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(b) 15 per cent of the gross amount of the dividends, in all
other cases.
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The provisions of this paragraph shall not affect the taxation of
the company in respect of the profits out of which the dividends
are paid. For the purposes of this paragraph, the term ``taxation
of the company'' means, in the case of Chile, taxation under both
the first category tax and the additional tax as long as the first
category tax is deductible in computing the additional tax.
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3. The term ``dividends'' as used in this Article means income
from shares or other rights, not being debt-claims, participating
in profits, as well as income from other 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.
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4. The provisions of paragraph 2 shall not apply if the
beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting
State of which the company paying the dividends is a resident,
through a permanent establishment situated therein, or performs
in that other State independent personal services from a fixed
base situated therein, and the holding in respect of which the
dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article
7 or Article 14, as the case may be, shall apply.
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5. Where a company that is a resident of a Contracting State
derives profits or income from the other Contracting State, that
other State may not impose any tax on the dividends paid by the
company, except insofar as such dividends are paid to a resident
of that other State or insofar as the holding in respect of which the
dividends are paid is effectively connected with a permanent
establishment or a fixed base situated in that other State, nor
subject the company's undistributed profits to a tax on
undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income
arising in such other State.
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1. A person that is a resident of a Contracting State may be
subject in the other Contracting State to a tax in addition to the
tax chargeable on:
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(a) income or gains from the alienation of immovable
property situated in that other State by an enterprise carrying
on a trade in immovable property or,
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(b) the earnings, including any gains, of a person attributable
to a permanent establishment situated in that other State.
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However, the rate of the ``tax in addition'' shall not exceed the
percentage limitation provided for under subparagraph (a) of
paragraph 2 of Article 10.
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2. For the purposes of this Article, the term ``tax chargeable''
means, in the case of Chile, taxation under both the first category
tax and the additional tax as long as the first category tax is
deductible in computing the additional tax.
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1. Interest arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State.
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2. However, such interest may also be taxed in the Contracting
State in which it arises and according to the laws of that State, but
if the beneficial owner of the interest is a resident of the other
Contracting State, the tax so charged shall not exceed 15 per cent
of the gross amount of the interest.
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3. The term ``interest'' as used in this Article means income
from debt-claims of every kind, whether or not secured by
mortgage, and in particular, income from government securities
and income from bonds or debentures, as well as income which
is subjected to the same taxation treatment as income from
money lent by the laws of the State in which the income arises.
However, the term ``interest'' does not include income dealt with
in Article 10.
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4. The provisions of paragraph 2 shall not apply if the
beneficial owner of the interest, being a resident of a Contracting
State, carries on business in the other Contracting State in which
the interest arises through a permanent establishment situated
therein, or performs in that other State independent personal
services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with
such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14, as the case may be, shall
apply.
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5. Interest shall be deemed to arise in a Contracting State when
the payer is a resident of that State. Where, however, the person
paying the interest, whether the payer is a resident of a
Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment or fixed base,
then such interest shall be deemed to arise in the State in which
the permanent establishment or fixed base is situated.
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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 interest, having regard to the
debt-claim for which it is paid, exceeds the amount that would
have been agreed upon by the payer and the beneficial owner in
the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the
excess part of the payments shall remain taxable according to the
laws of each Contracting State, due regard being had to the other
provisions of this Convention.
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7. The provisions of this Article shall not apply if it was the
main purpose or one of the main purposes of any person
concerned with the creation or assignment of the debt-claim in
respect of which the interest is paid to take advantage of this
Article by means of that creation or assignment.
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1. Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other
State.
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2. However, such royalties may also be taxed in the
Contracting State in which they arise and according to the laws
of that State, but if the beneficial owner of the royalties is a
resident of the other Contracting State, the tax so charged shall
not exceed 15 per cent of the gross amount of the royalties.
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3. The term ``royalties'' as used in this Article means payments
of any kind received as a consideration for the use of, or the right
to use, any copyright of literary, dramatic, musical, artistic or
scientific work, including cinematographic films or films, tapes
and other means or image or sound reproduction, patent, trade
mark, design or model, plan, secret formula or process or other
intangible property, or for the use of, or the right to use, industrial,
commercial or scientific equipment, or for information
concerning industrial, commercial or scientific experience.
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4. The provisions of paragraph 2 shall not apply if the
beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting
State in which the royalties arise, through a permanent
establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein,
and the right or property in respect of which the royalties are paid
is effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or Article 14,
as the case may be, shall apply.
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5. Royalties shall be deemed to arise in a Contracting State
when the payer is a resident of that State. Where, however, the
person paying the royalties, whether the payer 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
obligation to pay the royalties was incurred, and such royalties
are borne by such permanent establishment or fixed base, then
such royalties shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
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6. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the royalties, having regard to the
use, right or information for which they are paid, exceeds the
amount that would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of this Convention.
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7. The provisions of this Article shall not apply if it was the
main purpose or one of the main purposes of any person
concerned with the creation or assignment of the rights in respect
of which the royalties are paid to take advantage of this Article
by means of that creation or assignment.
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1. Gains derived by a resident of a Contracting State from the
alienation of immovable property situated in the other
Contracting State may be taxed in that other State.
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2. Gains from the alienation of movable property forming part
of the business property of a permanent establishment that 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 a
fixed base, may be taxed in that other State.
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3. Gains from the alienation of ships or aircraft operated in
international traffic or from movable property pertaining to the
operation of such ships or aircraft shall be taxable only in the
Contracting State of which the alienator is a resident.
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4. Where an individual who ceases to be a resident of a
Contracting State, and immediately thereafter becomes a resident
of the other Contracting State, is treated for the purposes of
taxation in the first-mentioned State as having alienated a
property and is taxed in that State by reason thereof, the
individual may elect to be treated for the purposes of taxation in
the other State as if the individual had, immediately before
becoming a resident of that State, sold and repurchased the
property for an amount equal to its fair market value at that time.
However, the individual may not make the election in respect of
property situated in either Contracting State.
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5. Nothing in this Convention shall affect the application of a
law of the Contracting States relating to the taxation of gains of
a capital nature derived from the alienation of any property other
than that to which any of the preceding paragraphs of this Article
apply.
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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 performed in the other
Contracting State may be taxed in that other State but the tax so
charged shall not exceed 10 per cent of the gross amount of that
income unless the individual has a fixed base regularly available
in that other State for the purpose of performing the activities. If
the individual has or had such a fixed base, the income may be
taxed in the other State in accordance with the law of that State,
but only so much of it as is attributable to that fixed base.
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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.
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1. Subject to the provisions of Articles 16, 18 and 19, salaries,
wages and other remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable
only in that State unless the employment is exercised in the other
Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other
State.
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2. Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting
State shall be taxable only in the first-mentioned State if:
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(a) the recipient is present in the other State for a period or
periods not exceeding in the aggregate 183 days in any twelve
month period commencing or ending in the calendar year
concerned, and
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(b) the remuneration is paid by, or on behalf of, a person who
is not a resident of the other State, and
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(c) the remuneration is not borne by a permanent
establishment or a fixed base that the person has in the other
State.
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3. Notwithstanding the preceding provisions of this Article,
remuneration in respect of an employment exercised aboard a
ship or aircraft operated in international traffic by an enterprise
of a Contracting State shall be taxable only in that State unless the
remuneration is derived by a resident of the other Contracting
State.
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Directors' fees and other similar payments derived by a
resident of a Contracting State in that resident's capacity as a
member of the board of directors or a similar organ of a company
which is a resident of the other Contracting State may be taxed
in that other State.
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1. Notwithstanding the provisions of Articles 14 and 15,
income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or television
artiste, or a musician, or as a sportsperson, from that resident's
personal activities as such exercised in the other Contracting
State, may be taxed in that other State.
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2. Where income in respect of personal activities exercised by
an entertainer or a sportsperson in that individual's capacity as
such accrues not to the entertainer or sportsperson personally but
to another person, that income may, notwithstanding the
provisions of Articles 7, 14 and 15, be taxed in the Contracting
State in which the activities of the entertainer or sportsperson are
exercised.
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3. The provisions of paragraph 2 shall not apply if it is
established that neither the entertainer or the sportsperson nor
persons related thereto participate directly or indirectly in the
profits of the person referred to in that paragraph.
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1. Pensions arising in a Contracting State and paid to a resident
of the other Contracting State shall be taxable only in the
Contracting State in which they arise.
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2. Annuities arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other
State. Annuities arising in a Contracting State and paid to a
resident of the other Contracting State may also be taxed in the
State in which they arise and according to the law of that State,
but the tax so charged shall not exceed 15 per cent of the portion
thereof that is subject to tax in that State. However, this limitation
does not apply to lump-sum payments arising on the surrender,
cancellation, redemption, sale or other alienation of an annuity,
or to payments of any kind under an annuity contract the cost of
which was deductible, in whole or in part, in computing the
income of any person who acquired the contract.
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3. Notwithstanding anything in this Convention, alimony and
other similar payments arising in a Contracting State and paid to
a resident of the other Contracting State who is subject to tax
therein in respect thereof shall be taxable only in that other State,
but the amount taxable in that other State shall not exceed the
amount that would be taxable in the first-mentioned State if the
recipient were a resident thereof.
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1. (a) Salaries, wages and other remuneration, other than a
pension, paid by a Contracting State or a political subdivision or
a local authority thereof to an individual in respect of services
rendered to that State or subdivision or authority shall be taxable
only in that State.
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(b) However, such salaries, wages and other remuneration
shall be taxable only in the other Contracting State if the
services are rendered in that State and the individual is a
resident of that State who
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(i) is a national of that State; or
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(ii) did not become a resident of that State solely for the
purpose of rendering the services.
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2. The provisions of Articles 15, 16, 17 and 18 shall apply to
salaries, wages and other remuneration in respect of services
rendered in connection with a business carried on by a
Contracting State or a political subdivision or a local authority
thereof.
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Payments which a student, apprentice or business trainee 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 that individual's
education or training receives for the purpose of that individual's
maintenance, education or training shall not be taxed in that
State, if such payments arise from sources outside that State.
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1. Items of income not dealt with in the foregoing Articles of
this Convention may be taxed in both Contracting States.
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2. However, where such income is income from an estate or a
trust, other than a trust to which contributions were deductible,
the tax so charged in Canada shall, if that income is taxable in
Chile, not exceed 15 per cent of the gross amount of the income.
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1. Capital represented by immovable property owned by a
resident of a Contracting State and situated in the other
Contracting State may be taxed in that other State.
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2. Capital represented by movable property forming part of
the business property of a permanent establishment that an
enterprise of a Contracting State has in the other Contracting
State, or by movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services,
may be taxed in that other State.
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1. In the case of Canada, double taxation shall be avoided as
follows:
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(a) subject to the existing provisions of the law of Canada
regarding the deduction from tax payable in Canada of tax
paid in a territory outside Canada and to any subsequent
modification of those provisions - which shall not affect the
general principle hereof - and unless a greater deduction or
relief is provided under the laws of Canada, tax payable in
Chile on profits, income or gains arising in Chile shall be
deducted from any Canadian tax payable in respect of such
profits, income or gains;
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(b) subject to the existing provisions of the law of Canada
regarding the taxation of income from a foreign affiliate and
to any subsequent modification of those provisions - which
shall not affect the general principle hereof - for the purpose
of computing Canadian tax, a company that is a resident of
Canada shall be allowed to deduct in computing its taxable
income any dividend received by it out of the exempt surplus
of a foreign affiliate that is a resident of Chile; and
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(c) where, in accordance with any provision of the
Convention, income derived or capital owned by a resident of
Canada is exempt from tax in Canada, Canada may
nevertheless, in calculating the amount of tax on other income
or capital, take into account the exempted income or capital.
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2. In the case of Chile, double taxation shall be avoided as
follows:
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(a) Residents in Chile, obtaining income which may, in
accordance with the provisions of this Convention be subject
to taxation in Canada, may credit the tax so paid against any
Chilean tax payable in respect of the same income, subject to
the applicable provisions of the law of Chile. This paragraph
shall also apply to income referred to in Articles 6 and 11.
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(b) where, in accordance with any provision of the
Convention, income derived or capital owned by a resident of
Chile is exempt from tax in Chile, Chile may nevertheless, in
calculating the amount of tax on other income or capital, take
into account the exempted income or capital.
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3. For the purposes of this Article, profits, income or gains of
a resident of a Contracting State that may be taxed in the other
Contracting State in accordance with this Convention shall be
deemed to arise from sources in that other State.
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1. Nationals of a Contracting State shall not be subjected in the
other Contracting State to any taxation or any requirement
connected therewith, which is other or more burdensome than
the taxation and connected requirements to which nationals of
that other State in the same circumstances, in particular with
respect to residence, are or may be subjected.
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2. The taxation on a permanent establishment that an
enterprise of a Contracting State has in the other Contracting
State shall not be less favourably levied in that other State than
the taxation levied on enterprises of that other State carrying on
the same activities.
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3. Nothing in this Article shall be construed as obliging a
Contracting State to grant to residents of the other Contracting
State any personal allowances, reliefs and reductions for taxation
purposes on account of civil status or family responsibilities that
it grants to its own residents.
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4. Companies which are residents 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 that is more
burdensome than the taxation and connected requirements to
which other similar companies that are residents of the
first-mentioned State, the capital of which is wholly or partly
owned or controlled, directly or indirectly, by one or more
residents of a third State, are or may be subjected.
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5. In this Article, the term ``taxation'' means taxes that are the
subject of this Convention.
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1. Where a person considers that the actions of one or both of
the Contracting States result or will result for that person in
taxation not in accordance with the provisions of this
Convention, that person may, irrespective of the remedies
provided by the domestic law of those States, address to the
competent authority of the Contracting State of which that
person is a resident or, if that person's case comes under
paragraph 1 of Article 24, to that of the Contracting State of
which that person is a national, an application in writing stating
the grounds for claiming the revision of such taxation.
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2. The competent authority shall endeavour, if the objection
appears to it to be justified and if it is not itself able to arrive at a
satisfactory solution, to resolve the case by mutual agreement
with the competent authority of the other Contracting State, with
a view to the avoidance of taxation not in accordance with the
Convention.
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3. The competent authorities of the Contracting States shall
endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the
Convention.
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4. The competent authorities of the Contracting States may
communicate with each other directly for the purpose of reaching
an agreement in the sense of the preceding paragraphs.
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5. If any difficulty or doubt arising as to the interpretation or
application of the Convention cannot be resolved by the
competent authorities the case may, if the competent authorities
of both Contracting States so agree, be submitted for arbitration.
The procedure shall be agreed upon and shall be established
between the Contracting States by notes to be exchanged through
diplomatic channels.
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1. The competent authorities of the Contracting States shall
exchange such information as is relevant for carrying out the
provisions of this Convention or of the domestic laws in the
Contracting States concerning taxes covered by the 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) involved in the assessment or collection of, the
enforcement in respect of, or the determination of appeals in
relation to taxes. Such persons or authorities shall use the
information only for such purposes. They may disclose the
information in public court proceedings or in judicial decisions.
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2. In no case shall the provisions of paragraph 1 be construed
so as to impose on a Contracting State the obligation
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(a) to carry out administrative measures at variance with the
laws and the administrative practice of that or of the other
Contracting State;
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(b) to supply information that is not obtainable under the laws
or in the normal course of the administration of that or of the
other Contracting State;
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(c) to supply information which would disclose any trade,
business, industrial, commercial or professional secret or trade
process, or information, the disclosure of which would be
contrary to public policy (ordre public).
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3. If information is requested by a Contracting State in
accordance with this Article, the other Contracting State shall
endeavour to obtain the information to which the request relates
in the same way as if its own taxation were involved even though
the other State does not, at that time, need such information. If
specifically requested by the competent authority of a
Contracting State, the competent authority of the other
Contracting State shall endeavour to provide information under
this Article in the form requested, such as depositions of
witnesses and copies of unedited original documents (including
books, papers, statements, records, accounts or writings), to the
same extent such depositions and documents can be obtained
under the laws and administrative practices of that other State
with respect to its own taxes.
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Nothing in this Convention shall affect the fiscal privileges of
members of diplomatic missions or consular posts under the
general rules of international law or under the provisions of
special agreements.
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1. The provisions of this Convention shall not be construed to
restrict in any manner any exemption, allowance, credit or other
deduction accorded
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(a) by the laws of a Contracting State in the determination of
the tax imposed by that State; or
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(b) by any other agreement entered into by a Contracting
State.
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2. Nothing in the Convention shall be construed as preventing
a Contracting State from imposing a tax on amounts included in
the income of a resident of that State with respect to a partnership,
trust, or controlled foreign affiliate, in which that resident has an
interest.
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3. Nothing in this Convention shall prevent the application of
the domestic law of a Contracting State concerning taxation of
income, profits, dividends, gains or remittance of institutional
investors, funds of any kind including investment funds and
pension funds, or their participants, that are residents of the other
Contracting State.
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4. Nothing in this Convention shall be construed as preventing
either Contracting State from imposing a tax referred to in Article
10A.
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5. The Convention shall not apply to any company, trust or
partnership that is a resident of a Contracting State and is
beneficially owned or controlled, directly or indirectly, by one or
more persons who are not residents of that State, if the amount of
the tax imposed on the income or capital of the company, trust or
partnership by that State is substantially lower than the amount
that would be imposed by that State if all of the shares of the
capital stock of the company or all of the interests in the trust or
partnership, as the case may be, were beneficially owned by one
or more individuals who were residents of that State.
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6. For the purposes of paragraph 3 of Article XXII
(Consultation) of the General Agreement on Trade in Services,
the Contracting States agree that, notwithstanding that
paragraph, any dispute between them as to whether a measure
falls within the scope of this Convention may be brought before
the Council for Trade in Services, as provided by that paragraph,
only with the consent of both Contracting States. Any doubt as
to the interpretation of this paragraph shall be resolved under
paragraph 3 of Article 25 or, failing agreement under that
procedure, pursuant to any other procedure agreed to by both
Contracting States.
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7. Contributions in a year in respect of services rendered in that
year paid by, or on behalf of, an individual who is a resident of
a Contracting State or who is temporarily present in that State to
a pension plan that is recognized for tax purposes in the other
Contracting State shall, during a period not exceeding in the
aggregate 60 months, be treated in the same way for tax purposes
in the first-mentioned State as a contribution paid to a pension
plan that is recognised for tax purposes in that first-mentioned
State, if
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(a) such individual was contributing on a regular basis to the
pension plan for a period ending immediately before that
individual became a resident of or temporarily present in the
first-mentioned State; and
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(b) the competent authority of the first-mentioned State agrees
that the pension plan generally corresponds to a pension plan
recognised for tax purposes by that State.
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For the purposes of this paragraph, ``pension plan'' includes a
pension plan created under the social security system in a
Contracting State.
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8. Nothing in this Convention shall affect the application of
the existing provisions of the Chilean legislation DL 600 as they
are in force at the time of signature of this Convention and as they
may be amended from time to time without changing the general
principle hereof.
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1. Each of the Contracting States shall notify the other through
diplomatic channels of the completion of the procedures required
by law for the bringing into force of this Convention. The
Convention shall enter into force on the date of the later of these
notifications and its provisions shall thereupon have effect:
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(i) in respect of tax withheld at the source on amounts paid
or credited to non-residents, on or after the first day of
January of the calendar year immediately following that in
which the Convention enters into force, and
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(ii) in respect of other Canadian tax for taxation years,
beginning on or after the first day of January of the calendar
year immediately following that in which the Convention
enters into force; and
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(b) in Chile, in respect of taxes on income and amounts paid,
credited to an account, made at the disposal or accounted as an
expense, on or after the first day of January of the calendar year
immediately following that in which the Convention enters
into force.
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2. The existing agreement between Canada and the Republic
of Chile for the avoidance of double taxation of income derived
from the operation of ships or aircraft in international traffic
signed on July 30, 1992, shall terminate upon the entry into force
of the Convention. However, the provisions of the said
agreement shall continue in effect until the provisions of the
Convention, in accordance with the provisions of paragraph 1,
shall have effect.
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This Convention shall continue in effect indefinitely but either
Contracting State may, on or before June 30 of any calendar year
after the year in which the Convention enters into force, give to
the other Contracting State a notice of termination in writing
through diplomatic channels. In such event, the Convention shall
cease to have effect:
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(i) in respect of tax withheld at the source on amounts paid
or credited to non-residents, on or after the first day of
January of the next following calendar year, and
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(ii) in respect of other Canadian tax for taxation years,
beginning on or after the first day of January of the next
following calendar year;
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(b) in Chile, in respect of taxes on income and amounts paid,
credited to an account, made at the disposal or accounted as an
expense, on or after the first day of January of the next
following calendar year.
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IN WITNESS WHEREOF the undersigned, duly authorised to
that effect, have signed this Convention.
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DONE in duplicate at Santiago, this 21st day of January 1998, in
the English, French and Spanish languages, each version being
equally authentic.
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FOR THE GOVERNMENT FOR THE
GOVERNMENT OF OF CANADA: THE REPUBLIC OF
CHILE:
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Hon. Sergio Marchi Eduardo Aninat Ureta
Minister for Minister of Finance International Trade
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At the moment of signing the Convention for the avoidance
of double taxation and the prevention of fiscal evasion with
respect to taxes on income and on capital between the
Government of Canada and the Government of the Republic of
Chile, the signatories have agreed that the following provisions
shall form an integral part of the Convention:
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1. In the event that pursuant to an Agreement or Convention
concluded with a country that is a member of the Organisation for
Economic Co-operation and Development after the date of
signature of this Convention, Chile agrees to a rate of tax on
dividends referred to in subparagraph (a) of paragraph 2 of
Article 10 that is lower than 10 per cent or on interest or royalties
that is lower than 15 per cent, then such lower rate (but not in any
event a rate below 5 per cent in the case of dividends and 10 per
cent in the case of interest and royalties) shall apply for the
purpose of subparagraph (a) of paragraph 2 of Article 10 with
respect to dividends, of paragraph 2 of Article 11 with respect to
interest or paragraph 2 of Article 12 with respect to royalties, such
new rates shall automatically apply for the purposes of this
Convention when the provisions of the first-mentioned
Agreement or Convention become applicable, as the case may
be. However, the 10 per cent limitation shall not apply in the case
of copyright royalties and other like payments in respect of the
production or reproduction of any literary, dramatic, musical or
artistic work (but not including royalties in respect of motion
picture films nor royalties in respect of works on film or
videotape or other means of reproduction for use in connection
with television broadcasting), nor to royalties for the use of, or
the right to use, computer software or any patent or for
information concerning industrial, commercial or scientific
experiences (but not including any such information provided
under a rental or franchise agreement).
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2. In the event that pursuant to an Agreement or Convention
concluded with a country that is a member of the Organisation for
Economic Co-operation and Development after the date of
signature of this Convention, Chile agrees to limit the taxation in
the country of source of payments for independent personal
services performed in the absence of a fixed base referred to in
paragraph 1 of Article 14, to a rate that is lower than that provided
for in this Convention, the lower rate (including an exemption)
shall automatically apply for the purposes of this Convention
from the date when the relevant provision of the first-mentioned
Agreement or Convention becomes applicable.
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3. Considering that the main aim of the Convention is to avoid
international double taxation, the Contracting States agree that,
in the event the provisions of the Convention are used in such a
manner as to provide benefits not contemplated or not intended,
the competent authorities of the Contracting States shall, under
the mutual agreement procedure of Article 25, recommend
specific amendments to be made to the Convention. The
Contracting States further agree that any such recommendation
will be considered and discussed in an expeditious manner with
a view to amending the Convention, where necessary.
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IN WITNESS WHEREOF the undersigned, duly authorised to
that effect, have signed this Protocol.
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DONE in duplicate at Santiago, this 21st day of January 1998, in
the English, French and Spanish languages, each version being
equally authentic.
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FOR THE GOVERNMENT FOR THE
GOVERNMENT OF OF CANADA: THE REPUBLIC OF
CHILE:
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Hon. Sergio Marchi Eduardo Aninat Ureta
Minister for Minister of Finance International Trade
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