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The Government of Canada and the Government of the Republic
of Lebanon, desiring to conclude a Convention for the
avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income, 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 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 all taxes
imposed on total income or on elements of income, including
taxes on gains from the alienation of movable or immovable
property, as well as taxes on capital appreciation.
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3. The existing taxes to which this Convention shall apply are
in particular:
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(a) in the case of Canada:
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the income taxes imposed by the Government of Canada
under the Income Tax Act, (hereinafter referred to as
``Canadian tax'');
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(b) in the case of Lebanon:
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(i) the tax on the profits of industrial, commercial and
non-commercial professions;
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(ii) the tax on salaries, wages and pensions;
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(iii) the tax on income derived from movable capital;
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(iv) the tax on income from built property;
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(hereinafter referred to as ``Lebanese tax'').
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4. The Convention shall apply also to any identical or
substantially similar taxes which are imposed after the date of
signature of the Convention in addition to, or in place of, the
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 term ``Canada'', used in a geographical sense, means
the territory of Canada, including:
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(i) any area beyond the territorial sea of Canada which, in
accordance with international law and the laws of Canada,
is an area within which Canada may exercise rights with
respect to the seabed and subsoil and their natural
resources;
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(ii) the sea and airspace above every area referred to in
clause (i) in respect of any activity carried on in connection
with the exploration for or the exploitation of the natural
resources referred to therein;
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(b) the term ``Lebanon'' means the territory of the Lebanese
Republic including its territorial sea as well as the exclusive
economic zone over which Lebanon exercises sovereignty,
sovereign rights and jurisdiction in accordance with its
internal law and with international law, concerning the
exploration and the exploitation of the natural, biological, and
mineral resources existing in the sea waters, seabed and
subsoil of these waters;
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(c) the terms ``a Contracting State'' and ``the other Contracting
State'' mean, as the context requires, Canada or Lebanon;
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(d) the term ``person'' includes an individual, a trust, a
company, a partnership and any other body of persons;
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(e) the term ``company'' means any body corporate or any
entity which is treated as a body corporate for tax purposes;
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(f) the terms ``enterprise of a Contracting State'' and
``enterprise of the other Contracting State'' mean respectively
an enterprise carried on by a resident of a Contracting State
and an enterprise carried on by a resident of the other
Contracting State;
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(g) the term ``competent authority'' means:
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(i) in the case of Canada, the Minister of National Revenue
or the Minister's authorized representative;
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(ii) in the case of Lebanon, the Minister of Finance or the
Minister's authorized representative;
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(h) the term ``national'' means:
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(i) any individual possessing the nationality of a
Contracting State;
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(ii) any legal person, partnership or association deriving its
status as such from the laws in force in a Contracting State;
and
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(i) the term ``international traffic'' means any transport by a
ship or aircraft operated by an enterprise of a Contracting State
except when the transport is effected solely between places in
the other 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:
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(a) 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 or any other criterion of a similar nature; 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; and
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(b) the Government of that State or a political subdivi-sion or
local authority thereof or any agency or instrumentality of any
such government, subdivision or authority.
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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;
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; and
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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 person
other than an individual 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 such
person. In the absence of such agreement, such 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 farm or a plantation; and
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(g) 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 includes:
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(a) a building site, a construction, installation or assembly
project or supervisory activities in connection therewith, but
only if such site, project or activity continues for a period of
more than nine months within any twelve month period; and
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(b) the furnishing of services, including consultancy services,
by an enterprise of a Contracting State through employees or
other personnel engaged for such purposes in the other
Contracting State, provided that such activities continue for
the same project or a connected project for a period or periods
aggregating more than nine months within any twelve month
period.
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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 sale of goods or merchandise belonging to the
enterprise displayed in the frame of an occasional temporary
fair or exhibition after the closing of the said fair or exhibition;
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(e) 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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(f) the maintenance of a fixed place of business solely for the
purpose of carrying on, for the enterprise, any other activity of
a preparatory or auxiliary character; and
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(g) the maintenance of a fixed place of business solely for any
combination of activities mentioned in subparagraphs (a) to
(f) provided that the overall activity of the fixed place of
business resulting from this combination 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. Notwithstanding the preceding provisions of this Article,
an insurance enterprise of a Contracting State shall, except with
regard to reinsurance, be deemed to have a permanent
establishment in the other Contracting State if it collects
premiums on the territory of the other State or it insures risks
situated therein through a person, other than an agent of an
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.
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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 determining 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 as are in accordance with
the provisions of and subject to the limitations of the taxation
laws of that State.
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4. Insofar as it has been customary in a Contracting State to
determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits
of the enterprise to its various parts, nothing in paragraph 2 shall
preclude that Contracting State from determining the profits to be
taxed by such an apportionment as may be customary; the
method of apportionment adopted shall, however, be such that
the result shall be in accordance with the principles contained in
this Article.
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5. No profits shall be attributed to a permanent establishment
by reason of the mere purchase by that permanent establishment
of goods or merchandise for the enterprise.
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6. 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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7. 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 by an enterprise of a Contracting State
from a voyage of a ship or aircraft where the principal purpose of
the voyage is to transport passengers or property between places
in the other Contracting State may be taxed in that other 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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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 which
differ from those which would be made between independent
enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason
of those conditions, have not so accrued, may be included in the
profits of that enterprise and taxed accordingly.
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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, if the
time limits for making an adjustment provided in the national
laws of that other State have not expired, make an appropriate
adjustment to the amount of tax charged therein on those profits.
In determining such adjustment, due regard shall be had to the
other provisions of this Convention and the competent
authorities of the Contracting States shall if necessary consult
each other.
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3. The provisions of paragraph 2 shall not apply in the case of
fraud, wilful default or neglect.
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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.
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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) except in the case of dividends paid by a
non-resident-owned investment corporation that is a resident
of Canada, 5 per cent of the gross amount of the dividends if
the beneficial owner is a company that controls directly or
indirectly at least 10 per cent of the voting power in the
company paying the dividends;
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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.
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3. The term ``dividends'' as used in this Article means income
from shares, ``jouissance'' shares or ``jouissance'' rights, mining
shares, founders' shares or other rights, not being debt-claims,
participating in profits, as well as income 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 which is a resident of a Contracting State
derives profits or income from the other Contracting State, that
other State may not impose any tax on the dividends paid by the
company, except insofar as such dividends are paid to a resident
of that other State or insofar as the holding in respect of which the
dividends are paid is effectively connected with a permanent
establishment or a fixed 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. 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 10 per cent
of the gross amount of the interest.
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3. Notwithstanding the provisions of paragraph 2, interest
arising in a Contracting State and paid in respect of indebtedness
of the government of that State or of a political subdivision or
local authority thereof shall, provided that the interest is
beneficially owned by a resident of the other Contracting State,
be taxable only in that other State.
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4. 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, including premiums and
prizes attaching to such securities, 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. Penalty charges for late payment
shall not be regarded as interest for the purpose of this Article.
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5. 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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6. 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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7. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would
have been agreed upon by the payer and the beneficial owner in
the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the
excess part of the payments shall remain taxable according to the
laws of each Contracting State, due regard being had to the other
provisions of this Convention.
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8. 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:
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(a) 5 per cent of the gross amount of the royalties if they are
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(i) copyright royalties and other like payments in respect of
the production or reproduction of any literary, dramatic,
musical or other 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), or
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(ii) where the payer and the beneficial owner of the royalties
are not related persons, royalties for the use of, or the right
to use, computer software or patent or for information
concerning industrial, commercial or scientific experience
(but not including any such information provided in
connection with a rental or franchise agreement); and
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(b) 10 per cent of the gross amount of the royalties in all other
cases.
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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, 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, and includes payments of any kind in
respect of motion picture films and works on film, videotape or
other means of reproduction for use in connection with
television.
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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 which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of this Convention.
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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 right 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 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 a
fixed base may be taxed in that other State.
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3. Gains derived by an enterprise of a Contracting State from
the alienation of ships or aircraft operated in international traffic
or movable property pertaining to the operation of such ships or
aircraft, shall be taxable only in that State.
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4. Gains from the alienation of any property, other than that
referred to in paragraphs 1, 2 and 3 shall be taxable only in the
Contracting State of which the alienator is a resident.
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1. Income derived by an individual who is a resident of a
Contracting State in respect of professional or similar services of
an independent character shall be taxable only in that State.
However, in the following circumstances such income may be
taxed in the other Contracting State, that is to say:
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(a) if the individual has or had such a fixed base regularly
available for the purposes of performing the services; in that
case, only so much of the income as is attributable to that fixed
base may be taxed in that other Contracting State, or
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(b) if the individual is present in the other Contracting State for
a period or periods amounting to or exceeding in the aggregate
183 days in any twelve month period commencing or ending
in the calendar year concerned; in that case, only so much of
the income as is derived from the individual's activities
performed during the period in which the individual was
present in the other State may be taxed in that other State.
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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,
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(b) the remuneration is paid by, or on behalf of, an employer
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 which the employer 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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4. The provisions of paragraphs 1 and 2 shall not apply to
income derived from activities performed in a Contracting State
by a resident of the other Contracting State in the context of a visit
in the first-mentioned State of a non-profit organization of the
other State, provided the visit is substantially supported by
public funds.
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1. Pensions 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. Pensions 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. However,
in the case of periodic pension payments, other than payments
under the social security legislation in a Contracting State, the tax
so charged shall not exceed 15 per cent of the gross amount of the
payment.
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3. Notwithstanding anything in this Convention:
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(a) war pensions and allowances (including pensions and
allowances paid to war veterans or paid as a consequence of
damages or injuries suffered as a consequence of a war) arising
in a Contracting State and paid to a resident of the other
Contracting State shall be exempt from tax in that other State
to the extent that they would be exempt from tax if received
by a resident of the first-mentioned State; and
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(b) benefits under the social security legislation in a
Contracting State paid to a resident of the other Contracting
State shall be taxable only in the first-mentioned State; and
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(c) 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; and
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(d) pensions paid by, or out of funds created by, Lebanon or
a political subdivision or a local authority thereof to an
individual in respect of services rendered to Lebanon or a
subdivision or authority thereof shall be taxable only in
Lebanon.
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1. (a) Salaries, wages and other similar 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 similar
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 paragraph 1 shall not apply to salaries,
wages and other similar 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, provided that such payments arise from sources outside
that State.
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1. Subject to the provisions of paragraph 2, items of income
of a resident of a Contracting State, wherever arising, not dealt
with in the foregoing Articles of this Convention shall be taxable
only in that State.
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2. However, if such income is derived by a resident of a
Contracting State from sources in the other Contracting State,
such income may also be taxed in the State in which it arises and
according to the law of that State.
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3. The provisions of paragraph 1 shall not apply to income,
other than income from immovable property, if the recipient of
the income, being a resident of a Contracting State, carries on
business in the other Contracting State through a permanent
establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein,
and the right or property in respect of which the income is paid
is effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or Article 14,
as the case may be, shall apply.
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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
Lebanon on profits, income or gains arising in Lebanon shall
be deducted from any Canadian tax payable in respect of such
profits, income or gains; and
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(b) where in accordance with any provision of the Convention
income derived by a resident of Canada is exempt from tax in
Canada, Canada may nevertheless, in calculating the amount
of tax on other income, take into account the exempted
income.
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2. In the case of Lebanon, double taxation shall be avoided as
follows:
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(a) where a resident of Lebanon derives income or items of
income referred to in Articles 10, 11 or 12, or profits or gains
which under the law of Canada and in accordance with this
Convention may be taxed in Canada, Lebanon shall allow as
a credit against its tax on the income, items of income, profits
or gains an amount equal to the tax paid in Canada;
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(b) the amount of the credit, however, shall not exceed the
amount of Lebanese tax on that income, items of income,
profits or gains computed in accordance with the taxation laws
and regulations of Lebanon.
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3. For the purposes of this Article, profits, income or gains of
a resident of a Contracting State which 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. This provision
shall, notwithstanding the provisions of Article 1, also apply to
persons who are not residents of one or both of the Contracting
States.
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2. Stateless persons who are residents of a Contracting State
shall not be subjected in either 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 the State concerned in the same
circumstances, in particular with respect to residence, are or may
be subjected.
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3. The taxation on a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State shall not be less favourably levied in that other State than
the taxation levied on enterprises of that other State carrying on
the same activities.
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4. 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
which it grants to its own residents.
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5. Except where the provisions of Article 9, paragraph 7 of
Article 11, or paragraph 6 of Article 12 apply, interest, royalties
and other disbursements paid by an enterprise of a Contracting
State to a resident of the other Contracting State shall, for the
purposes of determining the taxable profits of such enterprise, be
deductible under the same conditions as if they had been paid to
a resident of the first-mentioned State.
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6. The provisions of paragraph 5 shall not affect the operation
of any provision of the taxation laws of a Contracting State:
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(a) relating to the deductibility of interest and which is in force
on the date of signature of this Convention (including any
subsequent modification of such provisions that does not
change the general nature thereof); or
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(b) adopted after such date by a Contracting State and which
is designed to ensure that a person who is not a resident of that
State does not enjoy, under the laws of that State, a tax
treatment that is more favourable than that enjoyed by
residents of that State.
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7. 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 more burdensome
than the taxation and connected requirements to which other
similar enterprises which 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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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 an application in writing stating the grounds
for claiming the revision of such taxation. To be admissible, the
said application must be submitted within two years from the first
notification of the action resulting in taxation not in accordance
with the provisions of the Convention.
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2. The competent authority referred to in paragraph 1 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
consult together for the elimination of double taxation in cases
not provided for in the Convention and may communicate with
each other directly for the purpose of applying the Convention.
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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, especially in order to prevent fraud or evasion in
respect of such taxes. The exchange of information is not
restricted by Article 1. Any information received by a
Contracting State shall be treated as secret in the same manner as
information obtained under the domestic laws of that State and
shall be disclosed only to persons or authorities (including courts
and administrative bodies) involved in the assessment or
collection of, the enforcement in respect of, or the determination
of appeals in relation to, the taxes covered by the Convention.
Such persons or authorities shall use the information only for
such purposes. They may disclose the information in public court
proceedings or in judicial decisions.
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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 which 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
notwithstanding the fact that the other State does not, at that time,
need such information.
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1. 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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2. Notwithstanding the provisions of Article 4, an individual
who is a member of a diplomatic mission, consular post or
permanent mission of a Contracting State which is situated in the
other Contracting State or in a third State shall be deemed for the
purposes of the Convention to be a resident of the sending State
if that individual is liable in the sending State to the same
obligations in relation to tax on total income as are residents of
that sending State.
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3. The Convention shall not apply to international
organizations, to organs or officials thereof and to persons who
are members of a diplomatic mission, consular post or permanent
mission of a third State or group of States, being present in a
Contracting State and who are not liable in either Contracting
State to the same obligations in relation to tax on their total
income as are residents thereof.
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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. The provisions of Articles 6 to 22 of the Convention shall
not apply to any entity enjoying income tax benefits under
Lebanese Decree-Laws No. 45 and No. 46 of June 24, 1983, or
under any other law providing similar income tax benefits, or
which does not subject an entity to tax under the ordinarily rules
of Lebanon income tax law. Such provisions shall also not apply
either to income derived by a resident of Canada from such
entities nor to shares or other rights in the capital of such entities
owned by such person.
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4. Where an enterprise of a Contracting State that is exempt
from tax in that State on the profits of its permanent
establishments which are not situated in that State derives income
from the other Contracting State, and that income is attributable
to a permanent establishment which that enterprise has in a third
jurisdiction, the tax benefits that would otherwise apply under
the other provisions of the Convention will not apply to any item
of income on which the combined tax in the first-mentioned State
and in the third jurisdiction is less than 60 per cent of the tax that
would be imposed in the first-mentioned State if the income were
earned or received in that State by the enterprise and were not
attributable to the permanent establishment in the third
jurisdiction. Any dividends, interest, or royalties to which the
provisions of this paragraph apply shall be subject to tax in the
other State at a rate not exceeding 25 per cent of the gross amount
thereof. Any other income to which the provisions of this
paragraph apply shall be subject to tax under the provisions of the
domestic law of the other State, notwithstanding any other
provision of the Convention. The preceding provisions of this
paragraph shall not apply:
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(a) if the income derived from the other State is in connection
with or incidental to the active conduct of a trade or business
carried on by the permanent establishment in the third
jurisdiction (other than the business of making or managing
investments unless these activities are banking or insurance
activities carried on by a bank or insurance company);
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(b) when Lebanon is the first-mentioned State, to income
taxed by Canada according to Section 91 of the Income Tax
Act, as it may be amended without changing the general
principle hereof.
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Each of the Contracting States shall notify the other through
the diplomatic channel the completion of the procedures required
by law for the bringing into force of this Convention. The
Convention shall enter into force on the 30th day after the date
of the later of these notifications and its provision shall thereupon
have effect:
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(a) in the case of Canada
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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 in the calendar year next following that in which
the Convention enters into force, and
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(ii) in respect of other taxes, for taxation years beginning on
or after the first day of January in the calendar year next
following that in which the Convention enters into force;
and
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(b) in the case of Lebanon
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(i) in respect of taxes withheld at the source to the income
derived on or after the first day of January in the calendar
year next following the year in which the Convention
enters into force, and
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(ii) in respect of other taxes on profit or income derived on
or after the first day of January in the calendar year next
following the year in which the Convention enters into
force.
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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
beginning after the expiration of a period of five years from the
year of the entry into force of the Convention, give to the other
Contracting State a notice of termination in writing through the
diplomatic channel; in such event, the Convention shall cease to
have effect:
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(a) in the case of Canada
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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 in the calendar year next following the year in
which the notice is given, and
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(ii) in respect of other taxes, for taxation years beginning on
or after the first day of January in the calendar year next
following the year in which the notice is given; and
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(b) in the case of Lebanon
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(i) in respect of taxes withheld at the source to the income
derived on or after the first day of January in the calendar
year next following the year in which the notice is given,
and
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(ii) in respect of other taxes on profit or income derived on
or after the first day of January in the calendar year next
following the year in which the notice is given.
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IN WITNESS WHEREOF the undersigned, duly authorized
to that effect, have signed this Convention.
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DONE in duplicate at Beirut, this 29th day of December 1998,
in the English, French and Arabic languages, each version being
equally authentic.
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FOR THE GOVERNMENT FOR THE
GOVERNMENT OF CANADA: OF THE R
EPUBLIC OF LEBANON: Haig Sarafian Ge
orge Corm
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At the moment of signing the Convention this day concluded
between Canada and Lebanon for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes
on income, the undersigned have agreed upon the following
provisions which shall be an integral part of the Convention.
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1. It is understood that the term ``taxes imposed on total
income'' includes taxes levied on salaries and other similar
remuneration.
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2. Nothing in the Convention shall be construed as preventing
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(a) Canada from imposing on the alienation of immovable
property situated in Canada by a company carrying on a trade
in immovable property or on the earnings of a company
attributable to a permanent establishment in Canada, a tax in
addition to the tax which would be chargeable on the earnings
of a company which is a national of Canada, provided that any
additional tax so imposed shall not exceed 5 per cent of the
amount of such earnings which have not been subjected to
such additional tax in previous taxation years. For the purpose
of this provision, the term ``earnings'' means the earnings
attributable to the alienation of such immovable property
situated in Canada as may be taxed by Canada under the
provisions of Article 6 or of paragraph 1 of Article 13, and the
profits, including any gains, attributable to a permanent
establishment in Canada in a year and previous years after
deducting therefrom all taxes, other than the additional tax
referred to herein, imposed on such profits in Canada; and
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(b) Lebanon from imposing a tax on a company's
undistributed profits according to Decree-Law No. 144 dated
June 12, 1959.
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3. The provisions of paragraph 4 of Article 13 shall not
prevent Canada from taxing gains derived by a resident of
Lebanon from the alienation of
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(a) shares (other than shares listed on an approved stock
exchange in Canada) forming part of a substantial interest in
the capital stock of a company the value of which shares is
derived principally from immovable property situated in
Canada; or
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(b) a substantial interest in a partnership or trust, the value of
which is derived principally from immovable property
situated in Canada.
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For the purposes of this paragraph, the term ``immovable
property'' includes the shares of a company referred to in
subparagraph (a) or an interest in a partnership or trust referred
to in subparagraph (b) but does not include any property, other
than rental property, in which the business of the company,
partnership or trust is carried on.
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4. The provisions of paragraph 4 of Article 13 shall not affect
the right of Canada to levy, according to its law, a tax on gains
from the alienation of any property derived by an individual who
is a resident of Lebanon if the gains accrued while the individual
was a resident of Canada.
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5. In the event that Lebanon enacts legislation the effect of
which is to subject any entity covered by paragraph 3 of Article
27 of the Convention to the ordinary rules of Lebanon income tax
law, it is understood that such entity would benefit from the
provisions of Articles 6 to 22 of the Convention.
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6. In the event that Lebanon becomes a member of the General
Agreement on Trade in Services, the following provisions shall
take effect from the date Lebanon becomes such a member:
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``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 24 or, failing
agreement under that procedure, pursuant to any other
procedure agreed to by both Contracting States.''
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IN WITNESS WHEREOF the undersigned, duly authorized
to that effect, have signed this Protocol.
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DONE in duplicate at Beirut, this 29th day of December 1998,
in the English, French and Arabic languages, each version being
equally authentic.
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FOR THE GOVERNMENT FOR THE
GOVERNMENT OF CANADA: OF THE R
EPUBLIC OF LEBANON: Haig Sarafian Ge
orge Corm
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