Taxation of income from debt-claims: source withholding limited, exemptions for state entities, and permanent establishment connection. Income from debt-claims may be taxed in the recipient's State, while the source State may also tax it with a withholding tax cap of ten per cent if the beneficial owner is resident of the other State. Exemptions apply for governments, specified central banks and wholly government-owned financial institutions. The Article defines income from debt-claims broadly, excludes penalty charges, rules source by payer or by permanent establishment connection, and limits application where amounts exceed arm's-length terms between related parties.