Interest taxation: source withholding limited when beneficial owner is resident, with exemptions for specified public institutions.

Interest may be taxed in the recipient's residence, while the source State may also tax interest paid within its territory subject to a limited withholding tax when the beneficial owner is resident in the other Contracting State. The Article broadly defines interest as income from debt claims, excludes penalty charges, exempts specified governmental and financial institutions when they beneficially own the interest, deems interest to arise with the payer or the bearing permanent establishment, treats interest effectively connected with a permanent establishment as business income, and limits Article application to arm's length interest amounts where special relationships exist.

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