DT7711 - DT: The Gambia: double taxation agreement, Article 12: Interest

(1) Interest arising in one of the territories and paid to a resident of the other territory may be taxed in that other territory.

(2) However, such interest may also be taxed in the territory in which it arises, and according to the law of that territory; but where such interest is paid to a resident of the other territory who is subject to tax there in respect thereof the tax so charged in the territory in which the interest arises shall not exceed 15 per cent of the gross amount of the interest.

(3) Notwithstanding the provisions of paragraph (2) of this Article, interest arising in one of the territories and paid to the Government of the other territory, or a local authority thereof, the Central Bank of that other territory, or any agency wholly owned by that Government or local authority shall be exempt from tax in the first-mentioned territory. The competent authorities of the territories may determine by mutual agreement any other government institution to which this paragraph shall apply.

(4) The term `interest` as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage 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 territory in which the income arises.

(5) The provisions of paragraphs (1) and (2) of this Article shall not apply if the recipient of the interest, being a resident of one of the territories, has in the other territory in which the interest arises a permanent establishment and the debt-claim from which the interest arises is effectively connected with a business carried on through that permanent establishment. In such a case, the provisions of Article 7 shall apply.

(6) Interest shall be deemed to arise in a territory when the payer is the Government of that territory or a political subdivision thereof, a local authority or a resident of that territory. Where, however, the person paying the interest, whether he is a resident of one of the territories or not, has in one of the territories 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 territory in which the permanent establishment is situated.

(7) Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient 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 territory due regard being had to the other provisions of this Convention.