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The Government of Canada and the Government of the
Republic of Peru, desiring to conclude a Conven
tion 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, 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 Peru, the taxes imposed by the Government
of Peru under the Income Tax Act (Ley del Impuesto a la
Renta) and the Solidarity Extraordinary Tax (Impuesto
Extraordinario de Solidaridad) supported by an individual in
respect of independent personal services, hereinafter referred
to as ``Peruvian 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 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 that, in
accordance with international law and the laws of Canada,
is an area in respect of which Canada may exercise rights
with respect to the seabed and subsoil and their natural
resources, and
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(ii) the sea and airspace above every area referred to in
clause (i);
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(b) the term ``Peru'', used in a geographical sense, means the
territory of the Republic of Peru which includes, in addition
to the areas contained within its internationally recognized
land boundaries, the adjacent maritime zones and airspace
within which the Republic of Peru exercises sovereign rights
and jurisdiction in accordance with its legislation and
international law;
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(c) the terms ``a Contracting State'' and ``the other Contracting
State'' mean, as the context requires, Canada or Peru;
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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, and
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(ii) in the case of Peru, the Minister of Economy and
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, and
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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 voyage of a ship
or aircraft operated by an enterprise of a Contracting State to
transport passengers or property except where the principal
purpose of the voyage is to transport passengers or property
between places within 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 but 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) that State or a political subdivision or local authority
thereof or any agency or instrumentality of any such State,
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
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
is situated 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
company is a resident of both Contracting States, then its status
shall be determined as follows:
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(a) it shall be deemed to be a resident only of the State of which
it is a national;
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(b) if it is a national of neither of the 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 company. In
the absence of such agreement, the company shall not be
entitled to claim any relief or exemption from tax provided by
the Convention.
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4. Where by reason of the provisions of paragraph 1 a person
other than an individual or a company 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 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 but
only if such site, project continues for a period or periods
aggregating more than 183 days within any twelve-month
period; and
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(b) the furnishing of services, including consulting services,
by an enterprise of a Contracting State through employees or
other individuals engaged by the enterprise for such purposes
in the other Contracting State, but only where such activities
continue (for the same or a connected project) within that State
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 period or periods in this
paragraph, the duration of activities carried on by an enterprise
shall include activities carried on by associated enterprises,
within the meaning of Article 9, 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 carrying on
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. Notwithstanding the preceding provisions of this Article,
an insurance enterprise of a Contracting State shall, except in
regard to re-insurance, be deemed to have a permanent
establishment in the other Contracting State if it collects
premiums in the territory of that other State or insures risks
situated therein through a person 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 the activities of such an agent are devoted wholly
or almost wholly on behalf of that enterprise, the agent will not
be considered an agent 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.
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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 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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4. For the purposes of this Article,
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(a) the term ``profits'' includes
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(i) gross receipts and revenues derived directly from the
operation of ships or aircraft in international traffic, and
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(ii) interest that is incidental to the operation of ships or
aircraft in international traffic; and
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(b) the term ``operation of ships or aircraft in international
traffic'' by an enterprise, includes
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(i) the charter or rental of ships or aircraft, and
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(ii) the rental of containers and related equipment,
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by that enterprise if that charter or rental 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 that 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 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 domestic 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 been attributed 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 10 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.
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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 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 or has carried 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 or has performed 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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6. Nothing in this Convention shall be construed as preventing
a Contracting State from imposing on the earnings of a company
attributable to a permanent establishment in that State, or the
earnings attributable to the alienation of immovable property
situated in that State by a company carrying on a trade in
immovable property, a tax in addition to the tax that would be
chargeable on the earnings of a company that is a national of that
State, except that any additional tax so imposed shall not exceed
10 per cent of the amount of such earnings that 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 a Contracting State as may be taxed by that
State 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 a Contracting State in a year and
previous years, after deducting therefrom all taxes, other than the
additional tax referred to herein, imposed on such profits in that
State.
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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 shares or other
rights in respect of which the dividend is paid to take advantage
of this Article by means of that creation or assignment.
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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, 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 8 or 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 or has carried on business in the other
Contracting State in which the interest arises through a
permanent establishment situated therein, or performs or has
performed 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, 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 or has carried on business in the
other Contracting State in which the royalties arise, through a
permanent establishment situated therein, or performs or has
performed 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
another 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 or had in the other
Contracting State or of movable property pertaining to a fixed
base that is or was 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 from containers used in, or other movable property pertaining
to, the operation of such ships or aircraft shall be taxable only in
that State.
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4. Gains derived by a resident of a Contracting State from the
alienation of
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(a) shares, the value of which is derived principally from
immovable property situated in the other State; or
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(b) an interest in a partnership or trust, the value of which is
derived principally from immovable property situated in that
other State;
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may be taxed in that other State. For the purposes of this
paragraph, the term ``immovable property'' 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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5. Where a resident of a Contracting State alienates property
in the course of a corporate or other organization, reorganization,
amalgamation, division or similar transaction and profit, gain or
income with respect to such alienation is not recognized for the
purpose of taxation in that State, if requested to do so by the
person who acquires the property, the competent authority of the
other Contracting State may agree, in order to avoid double
taxation and subject to terms and conditions satisfactory to such
competent authority, to defer the recognition of the profit, gain
or income with respect to such property for the purpose of
taxation in that other State until such time and in such manner as
may be stipulated in the agreement.
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6. Gains from the alienation of any property, other than that
referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the
Contracting State of which the alienator is a resident.
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7. The provisions of paragraph 6 shall not affect the right of a
Contracting State to levy, according to its law, a tax on gains from
the alienation of any property (other than property to which the
provisions of paragraph 8 apply)derived by an individual who is
a resident of the other Contracting State and has been a resident
of the first-mentioned State at any time during the six years
immediately preceding the alienation of the property.
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8. 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 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, this
provision shall not apply to property which would give rise, if it
were alienated immediately before the individual became a
resident of that other State, to a gain which may be taxed in that
other State.
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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
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:
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(a) the income is attributable to a fixed base which the
individual has or had regularly available in that other State for
the purpose of performing the activities; or
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(b) such individual is present in that other State for a period or
periods exceeding in the aggregate 183 days in any
consecutive twelve month period.
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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 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 either
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(a) the total remuneration derived by the resident in respect of
all employment exercised in the other Contracting State in the
calendar year concerned does not exceed ten thousand
Canadian dollars ($10,000) or its equivalent in the currency of
Peru or such amounts as may be specified and agreed in letters
exchanged between the competent authorities of the
Contracting States; or
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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 such 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 derived 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 the 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 and annuities 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 laws of that State. However,
in the case of periodic pension payments the tax so charged shall
not exceed 15 per cent of the gross amount of the payment.
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3. 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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4. 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) 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 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, if 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. Where such income is income
from a trust, other than a trust to which contributions were
deductible, the tax so charged shall, if the income is taxable in the
Contracting State in which the beneficial owner is a resident, 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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3. Capital represented by ships and aircraft operated by an
enterprise of a Contracting State in international traffic and by
movable property pertaining to the operation of such ships and
aircraft shall be taxable only in that State.
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4. All other elements of capital of a resident of a Contracting
State shall be taxable only in that 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
Peru on profits, income or gains arising in Peru 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 allowance as a credit against Canadian tax of tax
payable in a territory outside Canada and to any subsequent
modification of those provisions - which shall not affect the
general principle hereof - where a company which is a
resident of Peru pays a dividend to a company which is a
resident of Canada and which controls directly or indirectly at
least 10 per cent of the voting power in the first-mentioned
company, the credit shall take into account the tax payable in
Peru by that first-mentioned company in respect of the profits
out of which such dividend is paid; 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 Peru, double taxation shall be avoided as
follows:
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(a) residents of Peru may credit against Peruvian tax on
income or capital arising in Canada the income tax paid in
Canada in an amount not exceeding the tax payable in Peru on
such income;
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(b) where a company which is a resident of Canada pays a
dividend to a person which is a resident of Peru that controls
directly or indirectly at least 10 per cent of the voting power
in the company, the credit shall take into account the tax
payable in Canada by the company in respect of the profits out
of which such dividend is paid but only to the extent that the
Peruvian tax exceeds the amount of the credit determined
without reference to this subparagraph;
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(c) for the purposes of this paragraph, the tax basis of a person
that is a resident of Peru shall be that person's income before
income tax paid by that person in Canada; and
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(d) where, in accordance with any provision of the
Convention, income derived or capital owned by a resident of
Peru is exempt from tax in Peru, Peru may nevertheless, in
calculating the amount of tax on the remaining 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 that is 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. 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 that is more burdensome than
the taxation and connected requirements to which other similar
enterprises 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 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. A Contracting State shall not, after the expiry of the time
limits provided in its domestic laws and, in any case, after five
years from the end of the taxable period to which the income
concerned was attributed, increase the tax base of a resident of
either of the Contracting States by including therein items of
income that have also been charged to tax in the other
Contracting State. This paragraph shall not apply in the case of
fraud, wilful default or neglect.
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4. 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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5. 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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6. If any difficulty or doubt arising as to the interpretation or
application of the Convention cannot be resolved by the
competent authorities pursuant to the preceding paragraphs of
this Article, the case may be submitted for arbitration if both
competent authorities and the taxpayer agree and the taxpayer
agrees in writing to be bound by the decision of the arbitration
board. The decision of the arbitration board in a particular case
shall be binding on both States with respect to that case. The
procedure shall be established in an exchange of notes between
the Contracting States.
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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 this Convention
insofar as the taxation thereunder is not contrary to the
Convention. The exchange of information is not restricted by
Article 1. Any information received by a Contracting State shall
be treated as secret in the same manner as information obtained
under the domestic laws of that State and shall be disclosed only
to persons or authorities (including courts and administrative
bodies) concerned with, and only for use in connection with, the
assessment or collection of, the enforcement in respect of, or the
determination of appeals in relation to any tax. 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; or
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(c) to supply information that 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.
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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 that 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 by the laws of a Contracting State in the
determination of the tax imposed by that 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 company, in which that resident has an interest.
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3. The Convention shall not apply to any company, trust or
other entity 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
other entity by that State is substantially lower than the amount
that would be imposed by that State (after taking into account any
reduction or offset of the amount of tax in any manner, including
a refund, reimbursement, contribution, credit, or allowance to the
company, trust or partnership, or to any other person) if all of the
shares of the capital stock of the company or all of the interests
in the trust or other entity, as the case may be, were beneficially
owned by one or more individuals who were residents of that
State.
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4. 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 the 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 4 of Article 25 or, failing agreement under that
procedure, pursuant to any other procedure agreed to by both
Contracting States.
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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 in the calendar year 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 in the calendar
year following that in which the Convention enters into
force; and
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(b) in Peru, in respect of Peruvian taxes 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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This Convention shall continue in effect indefinitely but either
Contracting State may, on or before June 30 of any calendar year
after the year of the entry 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, after the end of that calendar
year, and
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(ii) in respect of other Canadian tax, for taxation years
beginning after the end of that calendar year; and
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(b) in Peru, in respect of Peruvian taxes 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 authorized
to that effect, have signed this Convention.
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DONE in duplicate at Lima, this 20th day of July, 2001, in the
English, French and Spanish languages, each version being
equally authentic.
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FOR THE GOVERNMENT FOR THE GOVERNMENT
OF CANADA OF THE REPUBLIC OF PERU
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Graeme Clark Javier Silva Ruete
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At the moment of signing the Convention this day concluded
between the Government of Canada and the Government of the
Republic of Peru for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and
on capital, the undersigned have agreed upon the following
provisions which shall be an integral part of the Convention.
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1. With reference to subparagraph (d) of paragraph 1 of Article
3, the term ``person'' shall, in the case of Peru, include undivided
estates (sucesiones indivisas) as well as matrimonial partnerships
(sociedades conyugales).
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2. With reference to paragraph 2 of Article 9, it is understood
that the other State is only required to make the appropriate
adjustment to the extent it considers that the adjustment made in
the first State is justified both in principle and in amount.
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3. 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 the Convention, Peru agrees:
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(a) with reference to subparagraph (a) of paragraph 2 of
Article 10, to a rate of tax on dividends that is lower than 10
per cent, the greater of such new rate and a rate of 5 per cent
shall automatically apply for the purposes of that
subparagraph as well as for paragraph 6 of that same Article;
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(b) with reference to paragraph 2 of Article 11, to a rate of tax
on interest that is lower than 15 per cent, the greater of such
new rate and a rate of 10 per cent shall automatically apply for
the purposes of that paragraph; and
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(c) with reference to paragraph 2 of Article 12, to a rate of tax
on royalties referred to in that paragraph that is lower than 15
per cent, the following shall apply for the purposes of that
paragraph:
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(i) to the extent that such lower rate applies to:
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(a) 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), or
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(b) royalties for the use of, or the right to use, computer
software or any patent or for information concerning
industrial, commercial or scientific experience (but not
including any such royalty provided in connection with
a rental or franchise agreement),
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that lower rate shall automatically apply in similar
circumstances,
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(ii) to the extent that such lower rate applies to other
royalties referred to in that paragraph, the greater of such
lower rate and the rate of 10 per cent shall automatically
apply in similar circumstances.
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4. Nothing in the Convention shall preclude the application of
the provisions of Peruvian Law Acts (Decretos Legislativos)
number 662, 757 and 109 and Acts (Leyes) number 26221,
27342, 27343 as they are in force at the time of the signature of
the Convention and as they may be amended from time to time
without changing their general principle or the optional nature of
entering into the tax stability contracts. A person that is a party
to a contract which grants tax stability in accordance with the
above-mentioned provisions shall, notwithstanding any rate of
tax set out in the Convention, remain subject to the rates of tax
stabilized by the contract for its duration.
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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 Lima, this 20th day of July, 2001, in the
English, French and Spanish languages, each version being
equally authentic.
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FOR THE GOVERNMENT FOR THE GOVERNMENT
OF CANADA OF THE REPUBLIC OF PERU
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Graeme Clark Javier Silva Ruete
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