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of <h1>Article 12 of DTAA: Tax on Royalties & Service Fees Capped at 10% for Non-Residents with No Permanent Establishment</h1> Article 12 of the Double Tax Avoidance Agreement (DTAA) between two Contracting States addresses the taxation of royalties and fees for included services. These payments, arising in one State and paid to a resident of the other, may be taxed in both States, but the tax in the State of origin should not exceed 10% of the gross amount if the beneficial owner is a resident of the other State. 'Royalties' include payments for the use of copyrights, patents, and other intellectual properties, while 'fees for included services' refer to payments for technical or consultancy services. Specific exclusions apply, and the article outlines conditions under which these provisions do not apply, such as when the beneficial owner has a permanent establishment in the State where the payments arise. Additionally, if payments exceed the agreed amount due to special relationships, only the agreed amount is covered by this article, with the excess being taxed per local laws.
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