Agreement between The Government of the KINGDOM OF SAUDI ARABIA and the Government of the STATE OF KUWAIT for the Avoidance of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance

Article 1
Persons Covered

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

2. For the purposes of this Agreement, income derived by or through an entity or arrangement that is treated as wholly or partly fiscally transparent under the tax law of either Contracting State shall be considered as income derived by a resident of a Contracting State but only to the extent that the income is treated for purposes of taxation by that Contracting State as the income of a resident of that State.

Article 2
Taxes Covered

1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political or administrative subdivisions or local authorities, 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.

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

   1. In the case of the Kingdom of Saudi Arabia:

      1. The Zakat.

      2. The Income Tax.

      (hereinafter referred to as the "Saudi Tax").

   2. In the case of the State of Kuwait:

      1. Decree of Income Tax No. 3 of 1955 and amended by Law No. 2 of 2008.

      2. Law No. 19 of 2000 regarding Support of National Manpower and Encouraging it to Work in Non-Governmental Entities.

      3. Law of Income Tax in the Designated Area No. 23 of 1961.

      (hereinafter referred to as the "Kuwaiti Tax").

4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed by either Contracting State after the date of signature of the Agreement 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 that have been made in their taxation laws.

Article 3
General Definitions

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

   1. The term "Kingdom of Saudi Arabia" means the territory of the Kingdom of Saudi Arabia which also includes the area outside the territorial waters, where the Kingdom of Saudi Arabia exercises its sovereign and jurisdictional rights over its waters, sea bed, sub-soil and natural resources by virtue of its law and international law.

   2. The term "State of Kuwait" means the territory of the State of Kuwait including any area beyond the territorial sea which in accordance with international law has been or may hereafter be designated under the laws of the State of Kuwait as an area over which the State of Kuwait may exercise sovereign rights or jurisdiction.

   3. The terms "a Contracting State" and "the other Contracting State" mean the Kingdom of Saudi Arabia or the State of Kuwait as the context requires.

   4. The term "person" includes an individual, a company and any other body of persons, including the State, its administrative or political subdivisions or local authorities.

   5. The term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes.

   6. 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.

   7. The term "international traffic" means any transport by a ship, aircraft or road vehicle except when the ship, aircraft or vehicle is operated solely between places in a Contracting State and the enterprise that operates the ship, aircraft or vehicle is not an enterprise of that Contracting State.

   8. The term "national" means, in relation to either State:

      1. Any individual possessing the nationality of a Contracting State.

      2. Any legal person, partnership or association deriving its status as such from the laws in force in that Contracting State.

   9. The term "competent authority" means:

      1. In the case of the Kingdom of Saudi Arabia, the Ministry of Finance represented by the Minister of Finance or his authorized representative.

      2. In the case of the State of Kuwait, the Minister of Finance or an authorized representative of the Minister of Finance.

   10. The term "tax" means Saudi Tax or Kuwaiti Tax, as the context requires.

2. As regards the application of this Agreement at any time by a Contracting State, any term or expression not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that Contracting State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term or expression under other laws of that Contracting State.

Article 4
Resident

1. For the purposes of this Agreement, the term "resident of a Contracting State" means:

   1. In the case of the Kingdom of Saudi Arabia: Any person who, under the laws of the Kingdom, is liable to tax therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion of a similar nature.

   2. In the case of the State of Kuwait: An individual who holds Kuwaiti nationality and has a permanent home in the State of Kuwait; or a company or entity incorporated in the State of Kuwait.

   However, 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. The term "resident of a Contracting State" also includes:

   1. The State or any political or administrative subdivision or local authority or a public legal body or entity or instrumentality thereof.

   2. Any entity directly or indirectly owned by the persons mentioned in paragraph (a) above, irrespective of whether it is liable to tax or not.

   3. Any institution established and operated exclusively for religious, charitable, scientific, cultural, or educational purposes.

3. 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:

   1. He shall be deemed to be a resident only 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 Contracting States, he shall be deemed to be a resident only of the Contracting State with which his personal and economic relations are closer (center of vital interests).

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

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

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

4. 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, the competent authorities of the Contracting States shall endeavor by mutual agreement to determine the Contracting State of which such person shall be deemed to be a resident for the purposes of this Agreement, having regard to its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors. In the absence of such agreement, such person shall not be entitled to any relief or exemption from tax provided by this Agreement except to the extent and in such manner as may be agreed upon by the competent authorities of the Contracting States.

Article 5
Permanent Establishment

1. For the purposes of this Agreement, 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:

   1. A place of management.

   2. A branch.

   3. An office.

   4. A factory.

   5. A workshop.

   6. A mine, an oil or gas well, a quarry or any other place for the extraction of natural resources.

3. The term "permanent establishment" also encompasses:

   1. A building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only if such site, project or activities continue for a period of more than (183) days.

   2. The furnishing of services, including consultancy or management services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only if activities of that nature continue in the Contracting State for a period or periods aggregating more than (183) days within any twelve-month period commencing or ending in the fiscal year concerned.

   3. The carrying on of activities or the use of substantial equipment by an enterprise in a Contracting State in connection with the exploration or exploitation of natural resources situated in that State for a period or periods aggregating more than (30) days within any (12) month period commencing or ending in the fiscal year concerned.

   For the purposes of Article 7 of this Agreement, such activity shall be deemed to be the carrying on of a business through that permanent establishment.

   The duration of activities referred to in subparagraphs (a), (b) and (c) shall be determined by aggregating the periods during which activities are carried on in a Contracting State by closely related enterprises, provided that the activities of such a closely related enterprise in that Contracting State are connected with the activities carried on in that Contracting State by its closely related enterprises. The period during which two or more associated enterprises carry on concurrent activities shall be counted only once for the purpose of determining the duration of activities.

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

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

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

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

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

   5. The maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity.

   6. The maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e), provided that such activity, or in the case of subparagraph (f), the overall activity of the fixed place of business, is of a preparatory or auxiliary character.

5. Paragraph 4 of this Article shall not apply to a fixed place of business that is used or maintained by an enterprise if the same enterprise or a closely related enterprise carries on business activities at the same place or at another place in the same Contracting State and:

   1. That place or other place constitutes a permanent establishment for the enterprise or the closely related enterprise under the provisions of this Article;

   2. Or the overall activity resulting from the combination of the activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, is not of a preparatory or auxiliary character, Provided that the business activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, constitute complementary functions that are part of a cohesive business operation.

6. Notwithstanding the provisions of paragraphs (1) and (2) of this Article, and subject to paragraph (7) of this Article, where a person is acting in a Contracting State on behalf of an enterprise, that enterprise shall be deemed to have a permanent establishment in that Contracting State in respect of any activities which that person undertakes for the enterprise, if such person:

   1. habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise, and these contracts are:

      1. In the name of the enterprise,

      2. Or for the transfer of the ownership of, or for the granting of the right to use, property owned by that enterprise or that the enterprise has the right to use,

      3. Or for the provision of services by that 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 (other than a fixed place of business to which paragraph (5) of this Article applies), would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

   2. Or the person does not habitually conclude contracts nor plays the principal role leading to the conclusion of contracts, but he habitually maintains in that State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.

7. Paragraph (6) of this Article shall not apply where the person acting in a Contracting State on behalf of an enterprise of the other Contracting State carries on business in the first-mentioned State as an independent agent and acts for the enterprise in the ordinary course of that business.

   However, when a person acts exclusively or almost exclusively on behalf of one or more enterprises to which it is closely related, that person shall not be considered to be an independent agent within the meaning of this paragraph with respect to any such enterprise.

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.

9. For the purposes of this Article, a person or enterprise is closely related to an enterprise if, based on all relevant facts and circumstances, one has control of the other or both are under the control of the same persons or enterprises.

   In any case, a person or enterprise shall be considered to be closely related to an enterprise if one possesses directly or indirectly more than 50 per cent of the beneficial interest in the other (or, in the case of a company, more than 50 per cent of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company) or if another person or enterprise possesses directly or indirectly more than 50 per cent of the beneficial interest (or, in the case of a company, more than 50 per cent of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company) in the person and the enterprise or in the two enterprises.

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 Contracting 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.

3. The term shall, in any case, include property accessory to immovable property, livestock and equipment used in agriculture, forestry, and woodlands, as well as rights to which the general law relating to land applies, the usufruct of immovable property, and rights to variable or fixed payments for the working of, or the right to work, mineral deposits, sources, and other natural resources; however, ships and aircraft shall not be regarded as immovable property.

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

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 Contracting State but only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph (4) 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. Where, in accordance with paragraph (2) of this Article, a Contracting State adjusts the profits that are attributable to a permanent establishment of an enterprise of one of the Contracting States and taxes accordingly profits of the enterprise that have been charged to tax in the other State, the other State shall, to the extent necessary to eliminate double taxation on these profits, make an appropriate adjustment to the amount of the tax charged on those profits.

   In determining such adjustment, the competent authorities of the Contracting States shall consult each other if necessary.

4. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business 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 way of commission, for specific services performed or for management, or (except in the case of a banking enterprise) by way of income from debt-claims 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 income from debt-claims on moneys lent to the head office of the enterprise or any of its other offices.

5. Nothing in this Article shall affect the right of either Contracting State to tax income or profits from any form of insurance or reinsurance business in accordance with its laws.

6. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

7. If 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) of this Article shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. However, the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

Article 8
Shipping, Air and Land Transport

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

2. For the purposes of this Article, profits from the international operation of ships, aircraft or road vehicles include, but are not limited to:

   1. profits from the full charter of ships, aircraft, or vehicles on a time or voyage basis where they are operated in international traffic.

   2. Profits from the rental of ships, aircraft or vehicles on a bareboat basis if the rental income is incidental to profits from the operation of ships, aircraft or vehicles in international traffic, or if such ships, aircraft or vehicles are operated in international traffic by the lessee. The profits derived by the enterprise referred to in paragraph (1) of this Article from the domestic transport of property or passengers within either Contracting State shall be treated as profits from the operation of ships, aircraft or vehicles in international traffic if such transport is part of 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.

Article 9
Associated Enterprises

1. Where:

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

   2. Or 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 Contracting 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 Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

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 Contracting State.

2. However, dividends paid by a company which is a resident of a Contracting State may also be taxed in that State 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 (5%) 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, "jouissance" shares or "jouissance" rights, mining shares, founders' 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) 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 15 of this Agreement, 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 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.

6. Notwithstanding any other provision of this Agreement, where a company which is a resident of a Contracting State has a permanent establishment in the other Contracting State, the profits taxable under paragraph (1) of Article 7 of this Agreement may be subject to an additional tax in that other State, in accordance with its laws, but the additional tax so charged shall not exceed 5% of the amount of such profits.

Article 11
Income from Debt-Claims

1. Income from debt-claims arising in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in that other State.

2. The term "income from debt-claims" 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 income from debt-claims for the purpose of this Article.

3. The provisions of paragraph (1) of this Article shall not apply if the beneficial owner of the income from debt-claims, being a resident of a Contracting State, carries on business in the other Contracting State in which the income from debt-claims 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 such income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15 of this Agreement, as the case may be, shall apply.

4. 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 income from debt-claims, 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 Agreement.

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, royalties arising in a Contracting State may also be taxed in that State 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%) 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 (including rights related to literary, artistic or scientific works, radio and cinematograph films, or films or tapes used for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience (know-how). The term "royalties" also includes payments received in respect of any profit derived from the alienation of any such right or property described in this paragraph, to the extent that such profit is contingent on the productivity, use or disposition of such property or rights.

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 15 of this Agreement, as the case may be, shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. However, where 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 Contracting 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, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount.

   In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 13
Income from Technical Services

1. Income from technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, notwithstanding the provisions of Article 15 of this Agreement, and subject to the provisions of Articles 8, 17 and 18 of this Agreement, income from technical services arising in a Contracting State may also be taxed in that State according to the laws of that State, but if the beneficial owner of the income is a resident of the other Contracting State, the tax so charged shall not exceed (10%) of the gross amount of the income from technical services.

3. The term "income from technical services" as used in this Article means any payment in consideration for any service of a managerial, technical or consultancy nature, unless the payment is made:

   1. to an employee of the person making the payment;

   2. for teaching in an educational institution or for teaching by an educational institution;

   3. or by an individual for services for the personal use of an individual.

4. The provisions of paragraphs (1) and (2) of this Article shall not apply if the beneficial owner of the income from technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the income from technical services arises through a permanent establishment situated in that other State, or performs in the other Contracting State independent personal services from a fixed base situated in that other State, and the income from technical services is effectively connected with such permanent establishment or fixed base.

   In such case the provisions of Article 7 or Article 15 of this Agreement, as the case may be, shall apply.

5. For the purposes of this Article, subject to paragraph (6) of this Article, income from technical services shall be deemed to arise in a Contracting State if the payer is a resident of that State, or if the person paying the income, whether that person 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 income was incurred, and such income is borne by the permanent establishment or fixed base.

6. For the purposes of this Article, income from technical services shall not be deemed to arise in a Contracting State if the payer is a resident of that Contracting State and carries on business in the other Contracting State through a permanent establishment situated in that other Contracting State or performs independent personal services through a fixed base situated in that other State and such permanent establishment or fixed base bears the liability to pay such income.

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 technical services, having regard to the technical services for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount.

   In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 14
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 Agreement 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 that operates ships, aircraft, or vehicles in international traffic from the alienation of such ships, aircraft, or vehicles, or of movable property pertaining to the operation of such ships, aircraft, or vehicles, shall be taxable only in that State.

4. Gains derived by a resident of a Contracting State from the alienation of shares or comparable interests, such as interests in a partnership or trust, may be taxed in the other Contracting State if, at any time during the 365 days preceding the alienation, these shares or comparable interests derived more than 50 per cent of their value directly or indirectly from immovable property, as defined in Article 6 of this Agreement, situated in that other State.

5. Gains, other than those to which paragraph (4) of this Article applies, derived by a resident of a Contracting State from the alienation of shares of a company or comparable interests, such as interests in a partnership or trust, which is a resident of the other Contracting State, may be taxed in that other State if the alienator, at any time during the 365 days preceding such alienation, held directly or indirectly at least 25 per cent of the capital of that company or entity. The tax imposed by the other Contracting State shall not exceed 15 per cent of the gains.

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 15
Independent Personal Services

1. Income derived by an individual who is 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 any of the following circumstances, where such income may also be taxed in the other Contracting State:

   1. 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 the other Contracting State.

   2. If the person is present in the other Contracting State for a period or periods amounting to or exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the 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 the other State.

   The term "professional services" includes, in particular, independent activities in the scientific, technical, educational or teaching fields, as well as independent activities practised by doctors, lawyers, engineers, architects, dentists and accountants.

Article 16
Dependent Personal Services

1. Subject to the provisions of Articles 17, 19, 20, 21, and 22 of this Agreement, 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 Contracting 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 in the following case:

   1. 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.

   2. And the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State.

   3. And the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other Contracting State.

3. Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State in respect of an employment, as a member of the regular crew of a ship or aircraft operated in international traffic, other than aboard a ship or aircraft operated solely within the other Contracting State, shall be taxable only in the first-mentioned State.

Article 17
Directors' 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 of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 18
Artistes and Sportspersons

1. Notwithstanding the provisions of Articles 15 and 16 of this Agreement, income derived by a resident of a Contracting State as an entertainer, such as a theater, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other Contracting State.

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 15 and 16 of this Agreement, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. The provisions of paragraphs (1) and (2) of this Article shall not apply to income derived from activities performed in a Contracting State by artistes or sportspersons if the visit to that State is wholly or mainly supported by public funds of one or both of the Contracting States or political or administrative subdivisions or local authorities thereof. In such case, the income shall be taxable only in the Contracting State of which the artiste or sportsperson is a resident.

Article 19
Pensions

1. Subject to the provisions of paragraph (2) of Article 20 of this Agreement, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that Contracting State.

2. Notwithstanding the provisions of paragraph (1) of this Article, pensions and other payments made under a public scheme which is part of the social security system of a Contracting State or a political or administrative subdivision or a local authority thereof shall be taxable only in that State.

Article 20
Government Service

1. 1. Salaries, wages and other similar remuneration paid by a Contracting State or a political or administrative 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.

   2. However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who:

      1. is a national of that State;

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

2. 1. Notwithstanding the provisions of paragraph (1) of this Article, pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a political or administrative 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.

   2. However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a national of, and a resident of, that other State.

3. The provisions of Articles 16, 17, 18 and 19 of this Agreement shall apply to salaries, wages, pensions and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political or administrative subdivision or a local authority thereof.

Article 21
Teachers and Researchers

1. Remuneration received by a teacher or researcher who is or was a resident of a Contracting State prior to being invited to or visiting the other Contracting State for the purpose of teaching or conducting research, and received in respect of such activities, shall not be taxed in that other Contracting State for a period not exceeding 4 years from the date of his first visit to that State.

2. The provisions of this Article shall not apply to income from research if such research is undertaken not in the public interest but primarily for the private benefit of a specific person or persons.

Article 22
Students and Trainees

1. Payments which a student or business apprentice or 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 Contracting State, provided that such payments arise from sources outside that State.

2. Payments which a student or business apprentice or 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 Contracting State solely for the purpose of his education or training, receives as remuneration in respect of services rendered in that Contracting State shall not be taxed in that State, provided that the services are connected with his education or training and are necessary for the purposes of his maintenance.

Article 23
Government Investments

1. Notwithstanding any provision of this Agreement, investments of a Contracting State in the other Contracting State and income derived from such investments (including income mentioned in Articles 10, 12, 13 and 14 of this Agreement), as well as gains from the alienation thereof, shall be taxable only in the first-mentioned Contracting State. However, the provisions of this Article shall not apply to income from immovable property or gains from the alienation thereof. The competent authorities of the Contracting States shall determine how to apply the provisions of this Article by mutual agreement.

2. For the purposes of this Article and in respect of the Kingdom of Saudi Arabia, "investments of a Contracting State" referred to in paragraph (1) of this Article means investments carried out by:

   1. That State or any administrative or political subdivision or local authority or legal body or agency or instrumentality or public law entity thereof, including:

      1. The Saudi Central Bank.

      2. The Saudi Fund for Development.

      3. The Public Investment Fund.

      4. The General Organization for Social Insurance.

      5. The Saudi Arabian Oil Company (Saudi Aramco).

   2. Any entity wholly owned directly or indirectly by persons mentioned in subparagraph (a) of paragraph (2) of this Article.

   3. Any other similar entity to be determined and agreed upon between the competent authorities of the Contracting States through the exchange of notes.

3. For the purposes of this Article and in respect of the State of Kuwait, "investments of a Contracting State" referred to in paragraph (1) of this Article means investments carried out by:

   1. That State or any administrative or political subdivision or local authority or legal body or agency or instrumentality or public law entity thereof, including:

      1. The Central Bank of Kuwait.

      2. The Kuwait Investment Authority.

      3. The Public Institution for Social Security.

      4. Kuwait Petroleum Corporation.

      5. Kuwait Fund for Arab Economic Development.

   2. Any entity wholly owned directly or indirectly by persons mentioned in subparagraph (a) of paragraph (3) of this Article.

   3. Any other similar entity to be determined and agreed upon between the competent authorities of the Contracting States through the exchange of notes.

Article 24
Other Income

1. Items of income of a resident of a Contracting State which are not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2. The provisions of paragraph (1) of this Article 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 15 of this Agreement, as the case may be, shall apply.

3. Notwithstanding the provisions of paragraphs (1) and (2) of this Article, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State.

Article 25
Methods of Elimination of Double Taxation

1. Where a resident of a Contracting State derives income which may be taxed in the other Contracting State in accordance with the provisions of this Agreement (except to the extent that these provisions allow taxation by that other State solely because the income is also income derived by a resident of that State), the first-mentioned State shall allow as a deduction from the tax on the income of that resident an amount equal to the amount of income tax paid in that other State.

   Such deduction shall not, however, exceed in either case 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 the other State.

2. In the case of the Kingdom of Saudi Arabia, the methods for elimination of double taxation shall not prejudice the provisions of the Zakat collection regulations.

Article 26
Mutual Agreement Procedure

1. Where a person 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 Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of either Contracting State. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.

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 provisions of this Agreement. 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 this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs. The competent authorities may, through consultations, develop appropriate bilateral procedures, conditions, methods and techniques for the implementation of the mutual agreement procedure provided for in this Article.

5. The competent authorities of the Contracting States may by mutual agreement decide the appropriate mode of application of this Agreement and, especially, the requirements to which the residents of a Contracting State shall be subjected in order to obtain, in the other State, the tax reliefs or exemptions provided for in this Agreement.

Article 27
Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political or administrative subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement.

   The exchange of information is not restricted by Articles 1 and 2 of this Agreement.

2. Any information received by a Contracting State under paragraph (1) of this Article shall be treated as confidential in the same manner as information obtained under the laws of that State, and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment, collection, enforcement, prosecution, or determination of appeals in relation to the taxes referred to in paragraph (1) of this Article, or the oversight of the foregoing.

   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.

   Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both Contracting States and the competent authority of the supplying State authorizes such use.

3. In no case shall the provisions of paragraphs (1) and (2) of this Article be construed so as to impose on a Contracting State the obligation:

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

   2. 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;

   3. 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.

4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes.

   The obligation contained in the preceding sentence is subject to the limitations of paragraph (3) of this Article but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

5. In no case shall the provisions of paragraph (3) of this Article be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

Article 28
Members of Diplomatic Missions and Consular Posts

Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts or employees of international organizations under the general rules of international law or under the provisions of special agreements.

Article 29
Entitlement to Benefits

1. Notwithstanding the other provisions of this Convention, a benefit under this Convention shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Convention.

Article 30
Entry into Force

1. Each Contracting State shall notify the other Contracting State in writing—through diplomatic channels—of the completion of the procedures required by its law for the entry into force of this Convention. This Convention shall enter into force on the first day of the second month following the month in which the later of these notifications was received.

2. The provisions of this Convention shall apply:

   1. With regard to taxes withheld at source, on amounts paid on or after the first day of January following the date on which this Convention enters into force.

   2. With regard to other taxes, on tax years beginning on or after the first day of January following the date on which this Convention enters into force.

Article 31
Termination

1. This Convention shall remain in force for an indefinite period, and either Contracting State may terminate it by giving written notice of termination—through diplomatic channels—to the other Contracting State not later than the 30th of June of any calendar year starting after the expiration of a period of five years after the year in which this Convention entered into force.

2. In such event, this Convention shall cease to have effect:

   1. With regard to taxes withheld at source, on amounts paid after the end of the calendar year in which the notice of termination of this Convention is given.

   2. With regard to other taxes, on tax years beginning after the end of the calendar year in which the notice of termination of this Convention is given.

In witness whereof the undersigned, being duly authorized thereto, have signed this Convention.
Done in Riyadh on 06/03/1446 H, corresponding to 04/12/2024 G, in two original copies in the Arabic language.