CONVENTION

Between

The Government of The Hashemite Kingdom of Jordan,

And

The Government of The Republic of Bulgaria

For the avoidance of double taxation and the prevention of

fiscal evasion with respect to taxes on income

 

The Government of The Hashemite Kingdom of Jordan and the Government of The Republic of Bulgaria , 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 :

 

Chapter I

Scope Of The Convention

Article 1

PERSONAL  SCOPE

 

          This Convention shall apply to persons who are residents of one or both of the Contracting States .

 

Article 2

TAXES COVERED

 

1.       This Convention shall apply to taxes on income imposed on behalf of a Contracting State or local authorities thereof, irrespective of the manner in which they are levied .

 

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, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

 

3.         The existing taxes to which the Convention shall apply are in particular:

 

                        a.         in Jordan:

                                    i. the income tax ;

                                    ii.   the distribution tax;

                                                iii. the social services tax;

                        ( hereinafter referred  to as " Jordanian tax " ).

 

            b.         in Bulgaria:

                                                i.         the personal income tax;

ii.                 the corporate income tax;

                        ( hereinafter referred  to as "Bulgarian tax" ) .

 

4.         The Convention shall apply also to any 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 within a reasonable period  of any significant changes which have been made  in their respective taxation laws .

 

Chapter II

Definitions

Article  3

GENERAL  DEFINITIONS

 

1.       For the purposes of this Convention, unless the context otherwise requires :

 

a.         the terms "a Contracting State" and "the other Contracting State" mean Jordan or  Bulgaria, as the context requires;

 b.         the term "Jordan" means the territories of the Hashemite Kingdom of Jordan, the territorial waters of Jordan, and the seabed and subsoil of the territorial waters, and includes any area extending beyond the limits of the territorial waters of Jordan, and the seabed and subsoil of any such area, which has been or may hereafter be designated, under the laws of Jordan, and in accordance with international law as an area over which Jordan has sovereign rights for the purposes of exploring and exploiting the natural resources, whether living or non-living;

 c.         the term "Bulgaria" means the Republic of Bulgaria and when used in a geographical sense means the territory and the territorial sea over which it exercises its State sovereignty, as well as the continental shelf and the exclusive economic zone over which it exercises sovereign rights and jurisdiction in conformity with international law;

 d.         the term "person" includes an individual, a company and any other body of persons;

 e.         the term " company " means any body corporate or any entity which is treated as a body corporate for tax purposes;

 

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;

 g.         the term “place of registration” means the place where the company is incorporated and where it has its head office;

 h.         the term " national " means:

                         i. any individual possessing the nationality of a Contracting State;

                        ii. any legal person, partnership and association deriving its status as such from the laws in force in a Contracting State;

 i           the term " international traffic " means any transport by a ship,  aircraft, railway or road transport vehicle operated by an enterprise of a Contracting State, except when the ship, aircraft, railway or road transport vehicle is operated solely between places in the other Contracting State;

 j.                    the term " competent authority " means:

                      ii.  in the case of Jordan, the Minister of Finance or his  authorized representative.

i.      in the case of Bulgaria,  the Minister of Finance or his authorized representative;

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 which it has at that time under the laws of that State for the purposes of the taxes to which the Convention applies. Any meaning under the applicable tax laws of that State will be prevailing over a meaning given to the term under other laws of the State .

 

  Article  4

RESIDENT

 

1.       For the purposes of this Convention, the term " resident of the Contracting State " means any person who, under the laws of that State and also includes that State or a local authority thereof, is liable to tax therein by reason of his domicile, residence, place of  management, place of registration or any other criterion of a similar nature . But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State

 2.         Where by reason of the provisions of paragraph 1 of this Article an individual is a resident of both Contracting States, then his status shall be determined as follows:

 a.         he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer ( centre of vital interests );

b.         if  the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;

c.         if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;

d.         if he is a national of both States or of neither of them, the  competent authorities of the Contracting States shall settle the question by mutual agreement.

 3.         Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State under the laws of which it has been created .         

 Article  5

PERMANENT ESTABLISHMENT

 

1.       For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which an enterprise of a Contracting State wholly or partly carries on business in the other Contracting State.

 

2.         the term " permanent establishment " includes especially:

            a.         a place of management;

            b.         a branch;

            c.         an office;

            d.         a factory;

            e.         a workshop;

f.          a mine, an oil or gas well, a quarry, a drilling rig or any other place of exploration, exploitation or extraction of natural resources;

g.         a farm or plantation;

h.         a warehouse or premises used as sales outlet.

 3 .        The term "permanent establishment" likewise encompasses:

 a.         a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than 9 months.

b.         the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the country for a period or periods aggregating more than six months within any twelve month period.

 4.         Notwithstanding the preceding provisions of  this  Article, the  term   "permanent establishment " shall be deemed not to include :

a.         the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

b.         the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

c.         the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

d.         the maintenance of a fixed place of business  solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;

e.         the maintenance of a fixed place of business  solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character ;

f.         the maintenance of a fixed place of business  solely for any combination of activities mentioned in sub-paragraphs a.) to e.), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character .

 

5.         Notwithstanding the provisions of paragraphs 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 in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person 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 .

 

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 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 an independent status to whom paragraph 7 applies .

 

7.         An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other 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, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, he will not be considered an agent of an independent status within the meaning of this paragraph.

 

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 .

 

 Chapter III

Taxation of Income

Article  6

INCOME FROM IMMOVABLE PROPERTY

 

1.       Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated  in the other Contracting State may be taxed in that other State .

 

2.         The term " immovable property " shall have the meaning which it has under the laws 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 .

 

3.         The provisions of paragraph 1 of this Article shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

 

4.         The provisions of  paragraphs 1 and 3  of this Article 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.

  

Article  7

BUSINESS  PROFITS

 

1.                  The profits from business activity derived by an enterprise of a  Contracting State shall  be taxable only in that State unless the enterprise carries on business  in the other Contracting State through a permanent establishment situated therein . If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable  to that  permanent establishment .

 

2.                  Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment .

 

3.                  In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so  incurred, whether in the State in which the permanent establishment is situated or elsewhere . However ,no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by the way of commission, for specific services performed or for management , or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment . Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged, (otherwise than towards reimbursement of actual expenses) , by the permanent establishment to the head office of the enterprise or any of its other offices, by  way of royalties, fees or other similar payments in return for the use of patent or other rights, or by way of commission for specific services performed or for management or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

 

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 cont

 

5.                  ained in this Article .

 

5.         No profits shall be attributed  to a  permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

 

6.         For the purposes of  the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary .

 

7.         Where profits include items of income which 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 .

 

Article  8

 

INTERNATIONAL TRAFFIC

 

1.       Profits derived by an enterprise of a Contracting State from the operation of ships, aircraft , railway or road transport vehicles in international traffic shall be taxable only in that State.

 

2.         The provisions of paragraph 1 shall also apply to profits from the participation in a pool , a joint business or an international operating agency.  

 

 Article  9

ASSOCIATED ENTERPRISES

 

1.       Where

a.         an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

b.         the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other  Contracting State,

and  in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly .

 

2.         Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other  Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits . In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other .

 

3.         A Contracting State shall not change the profits of an enterprise in the circumstances referred to in paragraph 2 after the expiry of the time limits provided in its tax laws .

 

4.         The provisions of paragraph 2 of this Article shall not apply in the case of tax fraud or evasion.

            

Article 10

DIVIDENDS

 

1.         Dividends paid by a company which is a resident of a  Contracting State to  a resident of the other Contracting State may be taxed in that other State .

 

2.         However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but  if the beneficial owner of the dividends is resident of the other Contracting State the tax so charged shall not exceed 10 per cent of the gross amount of the dividends.

This paragraph shall not affect the taxation of the company in respect of the profits out of  which the dividends are paid.

 

3.         The term " dividends" as  used in this Article means income from all kinds of  shares, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

 

4.         The provisions of  paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a  Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of  Article 7 or Article 14, as the case may be, shall apply.

 

5.         Where a company which is a resident of a  Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far 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  the company's undistributed profits, even if  the dividends paid or the undistributed profits consist wholly or partly of profits or income arising  in such other State .

Article 11

INTEREST

 

1.         Interest arising in a  Contracting State and paid to  a resident of the other Contracting State may be taxed in that other State .

 2.         However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is resident of the other Contracting State, the tax so charged shall not exceed  10 percent of the gross amount of the interest .

 3.         Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to the Government of the other Contracting State or to the National Bank (Central Bank) of that other State, shall be exempt from tax in the first mentioned Contracting State .

 4.         The term “interest“ as used in this Article means income from debt-claims of every kind , whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures . Penalty charges for late payment shall not be regarded as interest for the purposes of this Article .

5.         The provisions of  paragraphs 1 , 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a  Contracting State, carries on business in the other Contracting State in which the interest arises , through a permanent establishment situated therein, or performs in that other State independent 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 a case, the provisions of  Article 7 or Article 14, as the case may be, shall apply.

 

6.         Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a local authority thereof or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

 

7.         Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the  debt-claim for which it is paid, exceeds 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.

 

Article 12

ROYALTIES

 

1.         Royalties arising in a  Contracting State and paid to a resident of the other Contracting State may be taxed in that other State .

 

2.         However, such royalties 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 royalties is resident of the other Contracting State ,  the tax so charged shall not exceed  10 percent of the gross amount of the royalties.

 

3.         The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of or the right to use, any copyright of literary, artistic or scientific work including cinematographic films and films or tapes and other means of image or sound reproduction for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience (know-how) or for the use of, or the right to use, industrial, commercial or scientific equipment.

 4.         The provisions of  paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a  Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base,  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 a case the provisions of Article 7 or Article 14, as the case may be, shall apply.

 5.         Royalties shall be deemed to arise in a Contracting State when the payer that State itself, a local authority thereof or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection  with which the right or property in respect of which the royalties are paid is effectively connected , and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated .

 6.         Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties paid  having regard to the use, right or information for which they are paid, exceeds the amount which would be agreed upon by the payer and the beneficial owner in the absence of such a  relationship, the provisions of  this Article shall apply only to the last - mentioned amount . In such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, with  due regard to the other provisions of this Convention.

 

Article 13

CAPITAL GAINS

 

1.       Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the  other Contracting State may be taxed in that other State .

 2.         Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from   the alienation of  such  a  permanent  establishment  (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State .     

3.         Gains derived by an enterprise of a Contracting State from the alienation of ships, aircraft, railway or road transport vehicles operated in international traffic or movable property pertaining to the operation of such ships, aircraft, railway or road transport vehicles shall be taxable only in that Contracting State.

4.         Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in the Contracting State may be taxed in that State .

 

5.         Gains from the alienation of shares other than those mentioned in paragraph 4 representing a participation of 51 per cent in a company which is a resident of a Contracting State may be taxed in that State.

 

6.         Gains from the alienation of any property other than that referred to in the preceding paragraphs of this Article shall be taxable only in the  Contracting State of which the alienator is a resident .

 

Article 14

INDEPENDENT PERSONAL SERVICES

 

1.         Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State except in the following circumstances when such income may also be taxed in the other Contracting State:

 

a.         if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities, in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State ; or

b.         If his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.

 2.         The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the  independent activities of physicians, engineers, lawyers, dentists, architects, and accountants .

 

 

 

 

 

Article 15

INCOME FROM EMPLOYMENT

 

1.         Subject to the provisions of  Articles 16, 18, 19 , 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State . If  the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

 

2.         Notwithstanding the provisions of paragraph 1,  remuneration derived by a resident of a Contracting State in respect of an employment  exercised in the other Contracting State shall be taxable only in the  first-mentioned State if :

 

            a)         the recipient is present in the other State for a period or periods                       not exceeding in the aggregate 183 days in any twelve-month                               period  commencing or ending in the fiscal year concerned, and

 

b)         the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

 

            c)         the remuneration is not borne by a permanent establishment or a                       fixed base which the employer has in the other State .

 

3.         Notwithstanding the preceding provisions of this Article,   remuneration derived in respect of an employment  exercised aboard a ship, aircraft, railway or road transport vehicle operated by a resident of a Contracting State in international traffic, shall be  taxable only in that State .

 

Article 16

DIRECTORS’ FEES

AND REMUNERATION OF TOP LEVEL MANAGERIAL OFFICIALS

 

1.         Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or of any similar organ of a company which is a resident of the other Contracting State may be taxed in that other  Contracting State .

2.         Salaries, wages and similar remuneration derived by a resident of a Contracting State in his capacity as an official in a top level managerial position of a company which is a resident of the other Contracting State may be taxed in that other State .

 

Article 17

ARTISTES AND SPORTSMEN

 

1.         Notwithstanding the 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 sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

 

2.         Where income in respect of personal activities exercised by an entertainer, or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of  Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.

 

3.         Notwithstanding the provisions of  paragraphs 1  and 2, the income mentioned in this Article shall be exempt from tax in the Contracting State in which the activity of an entertainer or a sportsman is exercised provided that this activity is supported wholly by public funds of either Contracting State or a local authority thereof , and the activity is exercised within the framework of cultural or sport cooperation agreement between the Contracting States .

 

Article 18

 PENSIONS AND ANNUITIES

 

1.         Subject to the provisions of  paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment and annuities may be taxed in that State.

 

2.         Notwithstanding the provisions of paragraph 1, pensions paid and other similar payments made under a public scheme which is part of the social security system of a Contracting State shall be taxable only in that State .

 

3.         The term “ annuity ” means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s  worth .

 

Article  19

GOVERNMENT SERVICES

 

1.         a)         Salaries, wages and other similar remuneration, other than a pension, paid by, or out of funds created by a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or local authority shall be taxable only in that State.

            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 :

    i.      is a national of that State; or

            ii. did not become a resident of that State solely for the purpose of rendering the services .

                                   

2. a)   Any pension paid by, or out of funds created by, a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or local authority shall be taxable only in that State .

    b)     However , such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of that other State .

 

3.         The provisions of  Articles 15, 16 and 18 shall apply to salaries, wages and other similar remuneration, and pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a local authority thereof .

 

Article 20

STUDENTS AND TRAINEES

 

1.         Payments which a  student or a 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 his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that other State, provided that such payments arise from sources outside that other State. 

2.         In respect of grants, scholarships and remuneration from employment not covered by paragraph I, a student or a trainee referred to in paragraph 1 shall, in addition be subjected during such education or training to the same taxation treatment as is available to residents of the Contracting State which he is visiting.

Article 21

TEACHERS AND RESEARCHERS

 

1.                 An individual who visits a Contracting State for the purpose of teaching or carrying out research at a university , college, school or other recognized educational institution in that State and who is or was immediately before that visit a resident of the other Contracting State , shall be exempt from tax in the first- mentioned State on any remuneration for such teaching or research for a period not exceeding two years from the date of his first visit to that State for that purpose.

 

2.                 The provision of the foregoing paragraph shall not apply to income from research if such activities are undertaken by the individual not in the public interest but primarily for the private benefit of some person or persons.

 

Article 22

OTHER INCOME

 

1.         Items of income of a resident of a Contracting State, which are not expressly mentioned in the foregoing Articles of this Convention shall be taxable only in that State except that, if such income is derived from sources within the other Contracting State, it may also be taxed in that other State .

 

2.         The provisions of  paragraph 1  shall not  apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State,  carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base.  In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

  

Article  23

ELIMINATION OF DOUBLE TAXATION

 

Double taxation shall be avoided as follows:

 

1.         In Jordan:

a) Where a resident of Jordan derives income which, in accordance with the provisions of this Convention, may be taxed in Bulgaria, Jordan shall allow as a deduction from the tax on the income of that resident , an amount equal to the income tax paid in Bulgaria .

Such deduction in either case shall not, however, exceed that part of     the income tax, as computed before the  deduction is given, which is attributable, as the case may be , to the income which may be taxed in Jordan .

 

b)         Where in accordance with any provision of the Convention , income derived  by a resident of Jordan is exempt from tax in Jordan , Jordan may nevertheless , in calculating the amount of tax on the remaining income of such resident , take into account the exempted income.

 2.                  In Bulgaria :

a) Where a resident of Bulgaria derives income which, in accordance with the provisions of this Convention, may be taxed in Jordan, Bulgaria shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in Jordan.

Such deduction in either case shall not, however, exceed that part of     the income tax, as computed before the  deduction is given, which is attributable, as the case may be , to the income which may be taxed in Bulgaria .

 

b)         Where in accordance with any provision of the Convention , income derived  by a resident of Bulgaria is exempt from tax in Bulgaria, Bulgaria may nevertheless, in calculating the amount of tax on the remaining income of such resident , take into account the exempted income.

 3.         For the purposes of deduction from the tax on income in a Contracting State, the tax paid in the other Contracting State shall be deemed to include the tax which is otherwise payable in that other Contracting State but has been reduced or waived by that Contracting State under its legal provisions for tax incentives.

 

Article  24

NON - DISCRIMINATION

 

1.       Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more 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 .The provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the  Contracting States .

2.         The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably levied  in that other State than the taxation levied on enterprises of that other State carrying on the same activities . This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, relieves and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents .

 

3.         Except where the provisions of paragraph 1 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 purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of  the first-mentioned State .

 

4.         Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected  in the first-mentioned State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected.

 

Article 25

MUTUAL AGREEMENT PROCEDURE

 

1.       Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the other Contracting State of which he is a national . The case must be presented within 3 years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention .

 

2.         The competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is  not in accordance with the Convention.  Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of  the Contracting States .

 

3.         The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention .

 

4.         The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representative , for the purpose of reaching an agreement in the sense of the preceding paragraphs .

 

Article 26

EXCHANGE OF INFORMATION

 

1.       The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of  the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States or local authorities, insofar as the taxation thereunder is not contrary to the Convention . The exchange of information is not restricted by Article 1 and 2. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes referred to in the first sentence. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

 

2.         In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation :

 

a.         to carry out administrative measures at variance with the laws and the administrative practice of that or of the other Contracting State ;

           

            b.         to supply information which is not obtainable under the laws or in                     the normal course of the administration of that or of the other                                   Contracting State ;

 

            c.         to supply information which would disclose any trade, business,                        industrial, commercial or professional secret or trade process, or               information, the disclosure of which would be contrary to public                  policy ( order public ) .

 

Article 27

MEMBERS OF DIPLOMATIC MISSIONS

AND CONSULAR POSTS

Nothing in this Convention shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements .

 

Article  28

ENTRY INTO FORCE

1.         This Convention shall be ratified. The Contracting States shall notify each other in writing that their constitutional requirements for entry into force of this Convention have been fulfilled .

 

 2.        The Convention shall enter into force on the date of the later of the notifications referred to in paragraph 1 and its provisions shall apply :

a)      in respect of taxes withheld at source to amounts of income derived on or after 1st January in the calendar year next following the year in which the Convention enters into force ;

b)     in respect of other taxes on income, to such taxes chargeable for any  taxable year beginning on or after 1st January in the calendar year next following the year in which the Convention enters into force .

 

Article 29

TERMINATION

This Convention shall remain in force until terminated by one of the Contracting States . Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year after the year following after the period of five years from the date on which the Convention enters into force. In such event, the Convention shall cease to have effect :

 

a)      in respect of taxes withheld at source to amounts of income derived on or after 1st January in the calendar year next following the year in which such notice has been given; and

 

b) in respect of other taxes on income, to such taxes chargeable for any  taxable year beginning on or after 1st January in the calendar year next following the year in which the notice is given.

             IN WITNESS whereof the undersigned, duly authorized thereto, by their respective Governments, have signed this Convention .

 

DONE in duplicate at…………this…………..on……………in, Arabic, Bulgarian and English languages,  all texts being equally authentic. In case of any divergence of interpretation, the English text shall prevail.

  

For the Government of                           For the Government of

the Hashemite Kingdom of Jordan                    Republic  of Bulgaria