CONVENTION

BETWEENTHE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE HASHEMITE KINGDOM OF JORDANFOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL GAINS

            The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Hashemite Kingdom of Jordan;

            Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains;

            Have agreed as follows:

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 and on capital gains imposed on behalf of a Contracting State, irrespective of the manner in which they are levied.

            2.         There shall be regarded as taxes on income and on capital gains all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property.

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

            a.          in the case of Jordan:

                        (i)        the income tax;

                        (ii)       the distribution tax; and

                        (iii)     the social service tax;

             (hereinafter referred to as "Jordanian tax");

            b.         in the case of the United Kingdom:

                        (i)        the income tax;

                        (ii)       the corporation tax; and

                        (iii)     the capital gains tax;

             (hereinafter referred to as "United Kingdom tax").

            4.         This Convention shall also apply to any identical or substantially similar taxes, which are imposed by either Contracting State after the date of signature of this Convention in addition to, or in place of, the existing taxes.  The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws.

Article 3

GENERAL DEFINITIONS

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

a.         the term "Jordan" means the territories of the Hashemite Kingdom of Jordan, the territorial waters of Jordan, and the sea bed and sub-soil of the territorial waters, and includes any area extending beyond the limits of the territorial waters of Jordan, and the sea bed and sub-soil 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;

b.         the term "United Kingdom" means Great Britain and Northern Ireland, including any area outside the territorial sea of the United Kingdom which in accordance with international law has been or may hereafter be designated, under the laws of the United Kingdom concerning the Continental Shelf, as an area within which the rights of the United Kingdom with respect to the sea bed and sub-soil and their natural resources may be exercised;

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

d.         the term "person" includes an individual, a company and any other body of persons, and does not include a partnership;

e.         the term "company" means any body corporate or any entity that 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 "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

h.         the term "competent authority" means:

i)         in the case of Jordan, the Minister of Finance or his authorised representative;

(ii)       in the case of the United Kingdom, the Commissioners of Inland Revenue or their authorized representative;

i.          the term "national" means:

 (i)       in relation to Jordan, any individual possessing the nationality of Jordan; and any legal person, partnership and association deriving its status as such from the laws in force in Jordan;

(ii)       in relation to the United Kingdom, any British citizen, or any British subject not possessing the citizenship of any other Commonwealth country or territory, provided he has the right of abode in the United Kingdom; and any legal person, partnership, association or other entity deriving its status as such from the law in force in the United Kingdom.

            2.         As regards the application of this 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 laws of that State for the purposes of the taxes to which this Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

Article 4

RESIDENT

1.       For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof.

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

c.         if he has an habitual abode in both 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 Contracting States or of neither of them, the competent authorities of the Contacting States shall settle the question by mutual agreement.

            3.         Where by reason of the provisions of paragraph 1 of this Article, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.

Article 5

PERMANENT ESTABLISHMENT

            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.

            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 warehouse or premises used as a sales outlet;

            g.         a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

            3.         The term "permanent establishment" likewise encompasses 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 six months.

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

 a.          the use of the facilities solely for the purpose of storage or display 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 or display;

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. of this paragraph, 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 of this Article, where a person - other than an agent of an independent status to whom paragraph 6 of this Article applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned State in respect of any activities which that person undertakes for the enterprise if such a person :

a.          has and habitually exercises in that State an authority to conclude contracts on behalf of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 of this Article 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; or

b.         manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise.

            6.         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 or its associated enterprises, and the transactions are not made under arms length conditions, he will not be considered an agent of an independent status within the meaning of this  paragraph .

            7.         The fact that a company which is a resident of  a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which 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 .

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 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 .

            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 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 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 of this Article, 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 Contracting 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 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 patents 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 or moneys lent to the head office of the enterprise or any of its other offices.

4.         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 .

            5.         Where profits include items of income or capital gains 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 .

            6.         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 .

Article 8

SHIPPING AND AIR TRANSPORT

            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.

            2.         For the purposes of this Article , profits from the operation of ships or aircraft in international traffic include :

            a.        

profits from the rental on a bareboat basis of ships or aircraft; and

            b.         profits from the use , maintenance or rental of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise;

            where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircraft in international traffic.

            3.         The provisions of paragraph 1 of this Article shall also apply to profits from the participation in a pool, a joint business or an international operating agency, but only to so much of the profits so derived as is attributable to the participant in proportion to its share in the joint operation.  

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 by a Contracting State 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.         The provisions of paragraph 2 of this Article shall not apply in the case of tax fraud .

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 a 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 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 and also includes any other item which, under the laws of the Contracting State of which the company paying the dividend is a resident, is treated as a dividend or distribution of a company.

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

            6.         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.

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 a resident of the other Contracting State, the tax so charged shall not exceed 10  per cent. of the gross amount of the interest .

            3.         Notwithstanding the provisions of paragraph 2 of this Article, interest arising in a Contracting State and derived by the Government of the other Contracting State including local authorities thereof, a political subdivision, the Central Bank or any financial institution controlled by that Government, the capital of which is wholly owned by the Government of the other Contracting State, as may be agreed upon from time to time between the competent authorities of the Contracting States, shall be exempt from tax in the first-mentioned 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.  The term shall not include any item which is treated as a dividend under the provisions of Article 10 of this Convention.

            5.         The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the interest, being a resident of a  Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base.  In such case , the provisions of Article 7 or Article 14 of this Convention, 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 political sub-division, a local authority 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 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 paid exceeds, for whatever reason, 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.

            8.         The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt-claim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment. 

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 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  10 per cent. 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 cinematograph films, and films or tapes for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for information (know-how) concerning industrial, commercial or scientific experience.

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

            5.         Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a local authority 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 liability 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 .

            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 exceeds, for whatever reason, 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.

            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. 

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 of this Convention and situated in the  other Contracting State may be taxed in that other State .

            2.         Gains derived by a resident of a Contracting State from the alienation of:

a.          shares, other than shares quoted on an approved stock exchange, deriving their value or the greater part of their value directly or indirectly from immovable property situated in the other Contracting State, or

b.         rights deriving from a partnership or trust the assets of which consist principally of immovable property situated in the other Contracting State, or of shares referred to in sub-paragraph a. of this paragraph,

may be taxed in that other State. 

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

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

            5.         Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 of this Article shall be taxable only in the Contracting State of which the alienator is a resident, provided he is subject to tax in respect of the gains in that State.

            6.         The provisions of paragraph 5 of this Article shall not affect the right of a Contracting State to levy according to its law a tax on capital gains from the alienation of any property derived by an individual who is a resident of the other Contracting State and has been a resident of the first-mentioned Contracting State at any time during the six years immediately preceding the alienation of the property.   

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 unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities.  If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to that fixed base.

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

Article 15

DEPENDENT PERSONAL SERVICES

          1.         Subject to the provisions of Articles 16, 18, 19 and 20 of this Convention, 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 of this Article, 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 or aircraft operated in international traffic may be taxed in the Contracting State of which the enterprise operating the ship or aircraft is a resident.

Article 16

DIRECTOR'S FEES

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

Article 17

ARTISTES AND SPORTSMEN

            1.         Notwithstanding the provisions of  Articles 14 and 15 of this Convention, 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 of this Convention, 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 of this Article, income derived  from activities referred to in paragraph 1 performed under a cultural agreement or arrangement between the Contracting States shall be exempt from tax in the Contracting State in which the activities are exercised if the visit to that State is wholly or substantially supported by funds of one or both of  the Contracting States, a local authority or public institution thereof.

Article 18

PENSIONS AND ANNUITIES

            1.         Subject to the provisions of  paragraph 2 of Article 19 of this Convention, any pension or other similar remuneration paid to a resident of one of the Contracting States from a source in the other Contracting State in consideration of past employment  or services in the other Contracting State and any annuity paid to such a resident from such a source shall be taxed only in that other  State.

            2.         The term "annuity" means a stated sum payable to an individual periodically at stated times during his 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 SERVICE