Royalties withholding cap applies when the recipient is the beneficial owner and payments come from qualifying enterprises or arrangements. Royalties may be taxed by the recipient's State and by the source State, but a reduced withholding charge applies where the recipient is the beneficial owner and payments are made by qualifying enterprises (Board of Investment-registered Philippine enterprises or Indian enterprises under Government-approved collaboration agreements). The definition of 'royalties' covers payments for use of copyrights, films, patents, trademarks, designs, plans, secret formulas, equipment and technical information. Exceptions apply when royalties are effectively connected with a permanent establishment or fixed base, in which case business profits or independent services rules govern. Special-relationship adjustments limit treaty relief to arm's-length amounts.