Taxation of cross-border interest: source state may tax but capped rate applies; exemptions for governments and agreed banks. The Article permits source-state taxation of interest paid to a resident of the other Contracting State, but limits that tax where the recipient is the beneficial owner to a capped proportion of the gross interest, with competent authorities to determine application. It broadly defines 'interest' as income from debt-claims (excluding penalty charges). Exemptions apply when interest is beneficially owned by governments, central banks, specified export-import banks, or other mutually agreed financial institutions. Interest effectively connected to a permanent establishment or fixed base is taxed under business profit or independent services provisions, and related-party excess interest is excluded from the Article and taxed under domestic law.