Interest withholding tax cap on cross-border payments, with exemptions and permanent establishment connection determining taxation.

Article 11 limits source-State withholding on interest paid to a resident beneficial owner to ten per cent of gross interest, subject to exemptions for the other State, its subdivisions and Central Bank and additional government-approved exemptions. Interest is broadly defined as income from debt-claims, excluding penalty charges. The Article does not apply where the beneficial owner's interest is effectively connected with a permanent establishment or fixed base in the source State, in which case business profits or independent personal services rules govern. A special-relationship rule restricts application to an arm's-length amount when related-party arrangements inflate interest.

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