Interest withholding rules cap source state tax on cross-border interest while exempting government and PE connected interest. Article 12 limits source-State taxation of cross-border interest paid to a beneficial owner by prescribing reduced withholding rates and by exempting interest beneficially owned by Governments, the Central Bank and specified lending institutions; an additional Government-approved exemption may apply to other resident beneficiaries. Interest effectively connected with a permanent establishment or fixed base is treated as business or independent personal service income and taxed under the provisions for such income. The Article defines interest broadly as income from debt-claims, excluding penalty charges for late payment, and requires related-party pricing adjustments to apply arm's-length amounts.