Article 1
Personal Scope

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

Article 2
Taxes Covered

1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its political 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, taxes on the total amounts of wages or salaries, as well as taxes on capital appreciation.

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

   1. in the case of the Republic of Tunisia:

      • the individual income tax;

      • the corporation tax;

      (hereinafter referred to as 'Tunisian tax');

   2. in the case of the State of the United Arab Emirates:

      • the income tax;

      • the corporation tax;

   (hereinafter referred to as 'State of the United Arab Emirates tax').

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

Article 3
General Definitions

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

   1. the terms 'a Contracting State' and 'the other Contracting State' mean the State of Tunisia or the State of the United Arab Emirates, as the context requires;

   2. the term 'Tunisia' means the territory of the Republic of Tunisia, including any area adjacent to the territorial waters of Tunisia over which, in accordance with international law, Tunisia may exercise its rights relating to the seabed and its subsoil and their natural resources;

   3. the term 'State of the United Arab Emirates' means the State of the United Arab Emirates; in the geographical sense of the term it means the whole territory of the State of the United Arab Emirates, including the territorial waters and the islands in which the laws of the State of the United Arab Emirates are applicable, and any area beyond the territorial waters over which it exercises, in accordance with international law, its sovereign rights in respect of drilling and exploitation of resources relating to the seabed and adjacent marine resources;

   4. the term 'person' includes an individual, a company and any other body of persons in accordance with the laws of the Contracting States;

   5. the term 'company' means any body corporate or any entity which 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 'nationals' means all individuals possessing the nationality of a Contracting State and all legal persons, partnerships and associations deriving their status as such from the laws in force in both Contracting States;

   8. the term 'international traffic' means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

   9. the term 'tax' means the tax of the State of the United Arab Emirates or the tax of the Republic of Tunisia referred to in Article 2 of this Convention;

   10. the term 'competent authority' means:

       • in the case of the Republic of Tunisia, the Minister of Finance or his authorised representative for this purpose;

       • in the case of the State of the United Arab Emirates, the Minister of Finance and Industry or his authorised representative for this purpose.

2. As regards the application of the Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the laws of that State concerning the taxes to which the Convention applies.

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 or any other criterion of a similar nature.

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:

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

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

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:

   1. a place of management;

   2. a branch;

   3. an office;

   4. a factory;

   5. a workshop;

   6. a mine, a quarry or any other place of extraction of natural resources;

   7. a building site, a temporary assembly or installation project or supervisory activities in connection therewith, if such site, project or activities last more than six months.

3. 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 advertising;

   5. 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;

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

4. Subject to the provisions of paragraph 3 of this Article, a person acting in a Contracting State on behalf of an enterprise of the other Contracting State shall be deemed to constitute a permanent establishment of the enterprise in the first-mentioned State if such person:

   1. has and habitually exercises in that State an authority to negotiate and conclude contracts in the name of the enterprise;

   2. habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise for the enterprise or on behalf of the enterprise;

   3. habitually secures orders in the first-mentioned State wholly or almost wholly for the enterprise itself or for the enterprise and other enterprises which are controlled by it or which have a controlling interest in that enterprise or which are under common control.

5. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 6 applies.

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.

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 from immovable property may be taxed in the Contracting State in which such property is situated.

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, rights to which the provisions of general law respecting landed property apply, and rights

   to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits 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. 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 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.

4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

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

6. The participations of a partner in a partnership or other group of persons, the profits of which are taxable in the hands of the partners, shall be taxable only in the State in which the permanent establishment is situated.

Article 8
Shipping and Air Transport

1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

   If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.

2. The profits from the operation of ships or aircraft between points in a Contracting State shall be taxable only in that State.

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

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, or

2. 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.

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 shall not be taxable in either State.

2. The term 'dividends' as used in this Article means income from shares, 'jouissance' shares or 'jouissance' rights, 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.

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 recipient is the beneficial owner of the interest the tax so charged shall not exceed:

   • 2.5% of the gross amount of the interest if the beneficial owner is a banking institution as long as the domestic law of Tunisia provides for the taxation of interest derived by foreign banks not established in Tunisia at a rate of 2.5%. This rate shall be increased to a maximum rate of 5% if Tunisia revises upwards the rate under its domestic law;

   • 10% in other cases.

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

4. The provisions of paragraphs 1 and 2 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, as the case may be, shall apply.

5. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, 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.

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

Article 12
Royalties

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

2. However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties, the tax so charged shall not exceed 7.5% 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, 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.

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

5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, 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, 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 Convention.

Article 13
Capital Gains

1. Gains from the alienation of immovable property defined in paragraph 2 of Article 6 may be taxed in the Contracting State in which such property is situated.

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 a fixed base, may be taxed in that other State.

3. Gains from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

4. Gains from the alienation of any property, other than that referred to in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.

Article 14
Independent Personal Services

1. Income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State. However, such income may 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 such case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or

   2. if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the fiscal year concerned.

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

Article 15
Dependent Personal Services

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

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

   1. the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned, and

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

   3. 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 in which the place of effective management of the enterprise is situated.

Article 16
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 or other 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, income derived by 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 may be taxed in the Contracting State in which such activities are exercised.

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

3. Income earned by a person possessing the nationality of a Contracting State from the exercise of a temporary activity as an artist or sportsman in the other Contracting State shall be exempt from tax in that other State if such activity is exercised under an agreement concluded between the two Contracting States or if the costs are supported substantially by the other Contracting State, one of its statutory organs or political subdivisions or local authorities.

Article 18
Pensions

Pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

Article 19
Government Service

1. Remuneration, other than a pension, paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

2. The provisions of Articles 15, 16 and 18 shall apply to remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

Article 20
Students and Apprentices

1. A resident of a Contracting State who is present in the other Contracting State solely:

   1. as a student enrolled at a university, college or school of that other State;

   2. as a business or technical apprentice; or

   3. as a recipient of a scholarship, grant or award paid by a religious, charitable, scientific or educational institution for the primary purpose of his education or research,

      shall not be taxed in that other State in respect of his scholarship.

2. The same applies to any amounts received by such person as remuneration for activities exercised in the other Contracting State, provided that such activities are in connection with his studies or training or are necessary to cover his maintenance costs.

3. An individual who is a resident of a Contracting State and who visits the other Contracting State for the purpose of his education or professional training or to do research, shall not be taxed in that other State on payments which he receives for such purposes, provided that such payments arise from sources outside that State.

Article 21
Other Income

1. Items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention 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 14, as the case may be, shall apply.

Article 22
Elimination of Double Taxation

Double taxation shall be avoided in both Contracting States as follows:

1. Where a resident of a Contracting State derives items of income which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first-mentioned State shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in that other State. Such deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in that other State.

2. For the purposes of the tax deduction due in a Contracting State, the tax paid in the other Contracting State shall include the tax that should have been paid in that other Contracting State but has been exempt or reduced under the domestic law of each Contracting State.

3. For the purposes of paragraph 2 of this Article to income referred to in Article 11 of this Convention, the rate of tax referred to therein shall be considered.

Article 23
Non-discrimination

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected.

2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.

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

Article 24
Mutual Agreement Procedure

1. Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Convention, he may, irrespective of the remedies provided by the domestic laws of those States, present his case to the competent authority of the Contracting State of which he is a resident.

   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 Convention.

2. That competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Convention.

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

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs, if oral exchanges of views seem likely to facilitate such agreement. Such exchanges of views may take place through a Commission consisting of representatives of the competent authorities of the Contracting States, and within the time frame referred to in paragraph 1 of this Article.

Article 25
Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention. Any information so exchanged shall be treated as secret and shall be disclosed only to persons or authorities involved in the assessment or collection of the taxes covered by the Convention.

2. In no case shall the provisions of paragraph 1 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 (order public).

Article 26
Diplomatic Agents and Consular Officers

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

Article 27
Entry into Force

1. This Convention shall be ratified in accordance with the domestic laws in force in both Contracting States.

2. The Convention shall enter into force upon the exchange of instruments of ratification between the two Parties and its provisions shall have effect for the first time:

   1. in respect of taxes withheld at source, on income paid or credited after 30 days from the date of the exchange of instruments of ratification of the Convention;

   2. in respect of other taxes, on income derived on or after 1 January of the year of the exchange of instruments of ratification of the Convention.

Article 28
Termination

This Convention is concluded for an unlimited period. However, each Contracting State may, until 30 June of any calendar year after the fifth year following the ratification of the Convention, terminate the Convention, through diplomatic channels, by giving notice of termination to the other Contracting State.

In such event, the Convention shall have effect for the last time:

1. in respect of taxes withheld at source, on income paid or credited before 1 January of the calendar year following that in which the notice of termination is given;

2. in respect of other taxes, on income derived before 1 January of the calendar year following that in which the notice of termination is given.

In witness whereof the undersigned, duly authorised thereto, have signed this Convention. Done in duplicate at Tunis on 10 April 1996 in the Arabic language.

Protocol

At the moment of signing the Convention concluded today between the State of the United Arab Emirates and the Republic of Tunisia for the avoidance of double taxation with respect to taxes on income, the undersigned have agreed on the following additional provisions which shall form an integral part of the said Convention.

ARTICLE 1

With reference to Article 8:

1. Profits from the operation of ships and aircraft in international traffic shall include:

   1. profits from the rental of ships and aircraft operated in international traffic,

   2. profits from the rental of containers and equipment relating to the operation of ships and aircraft in international traffic.

2. The profits derived by the Gulf Air Company from its air traffic activities in the Republic of Tunisia, including profits from ancillary operations in connection with the activities referred to in paragraphs (a) and (b) of this Article, shall be exempt from tax with respect to such activities in the Republic of Tunisia but only insofar as the profits accrue to the State of the United Arab Emirates on the basis of its participation in the capital of that company.

ARTICLE 2

The remuneration received by an employee of an enterprise which operates ships or aircraft in international traffic shall be taxable only in the State in which the effective management of the enterprise is situated if the employee is a national of that State and has become a resident of the other State solely for the purpose of rendering services to the enterprise.

The provisions of this Article shall apply to the employees of the Gulf Air Company who are nationals of the State of the United Arab Emirates.

ARTICLE 3

Notwithstanding any contrary provisions in this Convention:

1. The Government of each Contracting State shall be exempt from the taxes referred to in Article 2 of this Convention in the other Contracting State. However, this exemption shall not apply to business profits referred to in Article 7 of this Convention.

2. The exemption referred to in paragraph 1 of this Article shall apply:

   • In the case of the Republic of Tunisia:

     • to the State of Tunisia, including local authorities,

     • to the Central Bank, and

     • to all other public financial institutions.

   • In the case of the State of the United Arab Emirates:

     • to the State of the United Arab Emirates, including local governments, political subdivisions, local authorities and financial institutions the capital of which is wholly owned by the Government of the State of the United Arab Emirates and in particular to the following institutions:

       • the Central Bank,

       • the Abu Dhabi Investment Authority,

       • the Abu Dhabi Fund for Arab Economic Development,

       • and all other public financial institutions.

3. Investments benefiting from tax advantages under a domestic law of a Contracting State or under a special agreement approved by law shall remain governed by the provisions of the said law or the special agreement as long as such provisions are more favourable than those contained in this Convention.

In witness whereof the undersigned, duly authorised thereto, have signed this Protocol. Done in duplicate at Tunis on 10 April 1996 in the Arabic language.