DT6510 - DT: Egypt: double taxation agreement, Article 11: Interest

1. Interest arising in a Contracting State which is derived and beneficially owned by a resident of the other Contracting State may be taxed in that other State.
   
   
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed 15 per cent of the gross amount of the interest.
   
   
3. The term `interest` as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage (exclusive of interest on debts secured by mortgage on immovable property to which the provisions of Article 6 of this Convention shall apply) and whether or not carrying a right to participate in profits, and other debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the State in which the income arises. The term `interest` shall not include any item which is treated as a distribution under the provisions of Article 10 of this Convention.
   
   
4. Notwithstanding paragraph (2) of this Article, interest arising in Egypt which is paid to and beneficially owned by a resident of the United Kingdom shall be exempt from Egyptian tax if it is paid in respect of a loan made guaranteed or insured, or any other debt-claim or credit guaranteed or insured by the United Kingdom Export Credits Guarantee Department.
   
   
5. Notwithstanding paragraph (2) of this Article, interest arising in a Contracting State shall be exempt from tax in that State if that interest is derived and beneficially owned by the Government of the other Contracting State or by an instrumentality of that other State which is not subject to tax in that other State on its income. The term `instrumentality` as used in this paragraph means any agency or entity created or organised by the Government of either of the Contracting States in order to carry out Government functions.
   
   
6. The provisions of paragraphs (1) and (2) of this Article shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein, or performs in that other State professional services from a fixed base situated therein, and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
   
   
7. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by that permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
   
   
8. Where, owing to a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest paid exceeds, for whatever reason, the amount which would have been paid in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention.