Document ID: chunk:federal_register_of_legislation:C2008A00102:schedule:6:p35
Version: federal_register_of_legislation:C2008A00102
Segment Type: schedule
Provision Reference: sch 6 (pt 35/39)
Character Range: 88051–90752

a permanent establishment situated therein, receives, after the enterprise has ceased to carry on business as aforesaid, income, profits or gains attributable to the permanent establishment, such income, profits or gains may be taxed in that other Contracting State in accordance with the principles stated in Articles 7 and 13 of the Convention.

10.  With reference to paragraph 6 of Article 7 (Business Profits) of the Convention:

It is understood that, for the purposes of the paragraph, a good and sufficient reason to the contrary shall be considered to exist where there is an alternative method that gives the most appropriate determination of the profits in accordance with the principles contained in the Article.

11.  With reference to subparagraph a) of paragraph 9 of Article 7 (Business Profits) of the Convention:

It is understood that in the case of Japan the term "a trust which is treated as a company for tax purposes" means a trust, the trustee of which is subject to tax in respect of profits derived from business carried on by the use of trust estate.

12.  With reference to Articles 10 (Dividends), 11 (Interest) and 12 (Royalties) of the Convention:

The term "for the purposes of its tax" in relation to a resident of a Contracting State refers to the case where a person is a resident of a Contracting State by virtue of paragraph 1 of Article 4 of the Convention, even if the person is deemed to be a resident of the other Contracting State by virtue of paragraph 2 or 3 of that Article.

13.  With reference to subparagraph a) of paragraph 3 of Article 11 (Interest) of the Convention:

It is understood that the term "any other body exercising governmental function" shall be determined according to the law of the Contracting State in which the interest arises.

14.  With reference to subparagraph b) of paragraph 3 of Article 11 (Interest) of the Convention:

It is understood that:

a)  a financial institution shall be unrelated to a payer of the interest where, in considering the level of participation in the ownership or control of either the financial institution or the payer by the other party, neither party is able to exert sufficient influence over the other party;

b)  an enterprise shall derive its profits substantially by a certain activity, where the activity constitutes its main activity when compared to any other activity that it undertakes in terms of its contribution to the enterprise's overall profits.

15.  With reference to paragraph 4 of Article 11 (Interest) of the Convention:

It is understood that the term "arrangement involving back‑to‑back loans" would cover, inter alia, any kind of arrangement structured in such a way that a