South Korea - Colombia Tax Treaty

CONVENTION BETWEEN

THE REPUBLIC OF KOREA

AND

THE REPUBLIC OF COLOMBIA

FOR THE AVOIDANCE OF DOUBLE TAXATION AND

THE PREVENTION OF FISCAL EVASION WITH RESPECT

TO TAXES ON INCOME

The Republic of Korea and the Republic of Colombia, desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,

Have agreed as follows:

CHAPTER I

SCOPE OF THE CONVENTION

Article 1

PERSONS COVERED

This Convention shall apply to persons who are residents of one or both of the Contracting States.

Article 2

TAXES COVERED

This Convention shall apply to taxes on income imposed on behalf of a

Contracting State, irrespective of the manner in which they are levied.

There shall be regarded as taxes on income all taxes imposed on total income or

on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

The existing taxes to which the Convention shall apply are in particular:

a) in Colombia, the income tax and its complementary taxes

(hereinafter referred to as "Colombian tax");

b) in Korea,

(i) the income tax;

(ii) the corporation tax; and

(iii) the special tax for rural development

(hereinafter referred to as "Korean tax").

The Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their taxation laws.

CHAPTER II

DEFINITIONS

Article 3

GENERAL DEFINITIONS

For the purposes of this Convention, unless the context otherwise requires:

the term "Colombia" means the Republic of Colombia and, used in the

geographical sense, includes, in addition to the continental territory, the archipelago of San Andrés, Providencia and Santa Catalina, the island of Malpelo and other islands, islets, keys, promontories and banks belonging thereto, as well as the subsoil, territorial waters, contiguous zone, continental shelf and exclusive economic zone, the airspace, electromagnetic spectrum and any other space over which sovereignty is exercised or can be exercised in accordance with international law and the laws of Colombia;

b) the term "Korea" means the Republic of Korea, and when used in a

geographical sense, the territory of the Republic of Korea including its territorial sea, and any area adjacent to the territorial sea of the Republic of Korea which, in accordance with international law, has been or may hereafter be designated under the laws of the Republic of Korea as an area within which the sovereign rights or jurisdiction of the Republic of Korea with respect to the sea-bed and sub-soil and their natural resources may be exercised;

c) the term "tax" means Korean tax or Colombian tax, as the context

d) the terms "a Contracting State" and "the other Contracting State" mean, as

requires;

required by the context, Colombia or Korea;

e) the term "person" includes an individual, a company and any other body

of persons;

the term "company" means any body corporate or any entity that is treated

as a body corporate for tax purposes;

g) the term "enterprise" applies to the carrying on of any business;

h) the terms "enterprise of a Contracting State" and "enterprise of the other

Contracting State" mean, respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

i) the term "international traffic" means any transport by a ship or aircraft

operated by an enterprise of a Contracting State, except when such transport occurs solely between places in the other Contracting State;

j) the term "competent authority" means:

(i) in Colombia, the Minister of Finance and Public Credit or the Minister’s authorized representative;

(ii) in Korea, the Minister of Strategy and Finance or his authorized representative;

k) the term "national", in relation to a Contracting State means:

(i) any individual possessing the nationality of that Contracting State; and

(ii) any legal person, partnership or association deriving its status as such from the laws in force in that Contracting State;

l) the term "business" includes the performance of professional services and of other activities of an independent character.

As regards the application of the Convention at any time by a Contracting State,

any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

Article 4

RESIDENT

For the purposes of this Convention, the term "resident of a Contracting State"

means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of head or main office, place of incorporation or any other criterion of a similar nature, and also includes that State, and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.

Where by reason of the provisions of paragraph 1, an individual is a resident of

both Contracting States, then his status shall be determined as follows:

he shall be deemed to be a resident only of the State in which he has a

permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

if the State in which he has his centre of vital interests cannot be

determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;

if he has an habitual abode in both States or in neither of them, he shall

be deemed to be a resident only of the State of which he is a national;

if he is a national of both States or of neither of them, the competent

authorities of the Contracting States shall settle the question by mutual agreement.

Where by reason of the provisions of paragraph 1 a person other than an

individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State of which it is a national. If it is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement. In the absence of such mutual agreement between the competent authorities of the Contracting States, such person shall not be entitled to any of the benefits or exemptions provided by the Convention.

Article 5

PERMANENT ESTABLISHMENT

For the purposes of this Convention, the term "permanent establishment" means a

fixed place of business through which the business of an enterprise is wholly or partly carried on.

The term "permanent establishment" includes especially:

a) a place of management;

b) a branch;

c) an office;

d) a factory;

e) a workshop; and

f) a mine, an oil or gas well, a quarry or any other place relating to the

exploration for or extraction of natural resources.

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3. The term "permanent establishment" also includes a building site, construction

project, or installation activity, including planning and preparatory tasks, as well as the supervisory activities thereof, but only if such site, project or activity lasts more than six months.

For purposes of calculating the time limits set forth in this paragraph, the time period of the activities carried on by an enterprise associated with another enterprise in terms of Article 9, will be added to that of the activities carried on by the latter mentioned enterprise, if the activities of both enterprises are identical or substantially similar.

Notwithstanding the preceding provisions of this Article, the term "permanent

establishment" shall be deemed not to include:

a) the use of facilities solely for the purpose of storage, display or delivery

of goods or merchandise belonging to the enterprise;

b) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of storage, display or delivery;

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c) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of processing by another enterprise;

d) the maintenance of a fixed place of business solely for the purpose of

purchasing goods or merchandise or of collecting information, for the enterprise;

e) the maintenance of a fixed place of business solely for the purpose of carrying on for the enterprise, any other activity of a preparatory or auxiliary character;

f) the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs a) to e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status to whom paragraph 7 applies is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4, which, if exercised through a fixed place of business, would not

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make this fixed place of business a permanent establishment under the provisions of that paragraph.

Notwithstanding the preceding provisions of this Article, an insurance company resident in a Contracting State shall, except in regard to reinsurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a representative other than an agent of an independent status to which paragraph 7 applies.

An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, he will not be considered an agent of an independent status within the meaning of this paragraph.

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The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

CHAPTER III

TAXATION OF INCOME

Article 6

INCOME FROM IMMOVABLE PROPERTY

Income derived by a resident of a Contracting State from immovable property

(including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

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For the purposes of this Convention, the term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall, in any case, include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and right to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships and aircrafts shall not be regarded as immovable property.

The provisions of paragraph 1 shall apply to income derived from the direct use,

letting, or use in any other form of immovable property.

The provisions of paragraphs 1 and 3 shall also apply to the income from

immovable property of an enterprise.

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Article 7

BUSINESS PROFITS

The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

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In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

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Article 8

SHIPPING AND AIR TRANSPORT

Profits of an enterprise resident of a Contracting State from the operation of ships

or aircraft in international traffic shall be taxable only in that State.

For the purposes of this Article:

a) the term "profits" includes those derived directly from the operation of

ships or aircraft in international traffic; and

b) the terms "profits from the operation of ships or aircraft in international

traffic" shall include profits from:

(i) the rental of a ship or aircraft on a bare boat charter basis; and

(ii) the use, maintenance or rental of containers (including trailers and

related equipment for the transport of containers) used for the transport of goods and merchandise;

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where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircraft in international traffic.

The provisions of paragraph 1 shall also apply to profits derived from the participation in a pool, a joint business or an international operating agency.

Article 9

ASSOCIATED ENTERPRISES

Where

a) an enterprise of a Contracting State participates directly or indirectly in the

management, control or capital of an enterprise of the other Contracting State, or

b) the same persons participate directly or indirectly in the management,

control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

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and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State, if it agrees that the adjustment made by the first-mentioned state is justified, in itself and in its amount, shall make an appropriate adjustment to the amount of tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.

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Article 10

DIVIDENDS

Dividends paid by a company which is a resident of a Contracting State to a

resident of the other Contracting State may be taxed in that other State.

However, such dividends may also be taxed in the Contracting State of which the

company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company other than a partnership which holds directly at least 20 per cent of the capital of the company paying the dividends;

b) 10 per cent of the gross amount of the dividends in all other cases.

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations.

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This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

The term "dividends" as used in this Article means income from shares or other rights, not being debt claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.
The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of

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that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

Article 11

INTEREST

Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent

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of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

Notwithstanding the provisions of paragraph 2, interest arising in a Contracting

State and derived by the Government of the other Contracting State including political subdivisions and local authorities thereof, the Central Bank of that other State or any financial institution performing functions of a governmental nature shall be exempt from tax in the first-mentioned State.

For the purpose of paragraph 3, the phrase "the Central Bank or financial institution performing functions of a governmental nature" means:

a) in Korea:

(i) the Bank of Korea;

(ii) the Korea Export-Import Bank;

(iii) the Korea Export Insurance Corporation;

(iv) the Korea Investment Corporation (KIC);

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(v) the Korea Finance Corporation(KoFC); and

(vi) such other financial institution performing functions of a

governmental nature as may be specified and agreed upon in letters exchanged between the competent authorities of the Contracting States;

b) in Colombia:

(i) the Banco de la República;

(ii) the Banco de Comercio Exterior de Colombia S.A. Bancoldex; and

(iii) such other financial institution performing functions of a governmental nature as may be specified and agreed upon in letters exchanged between the competent authorities of the Contracting States.

The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

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6. The provisions of paragraphs 1 and 2 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, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

Interest shall be deemed to arise in a Contracting State when the payer is 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 such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.

Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to

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the laws of each Contracting State, due regard being had to the other provisions of this Convention.

Article 12

ROYALTIES

Royalties arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in that other State.

However, such royalties may also be taxed in the Contracting State in which they

arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations.

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The term "royalties" as used in this Article means payments of any kind received

as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process or for information concerning industrial, commercial or scientific experience. The term "royalties" also means payments received in consideration for technical assistance, technical services and consultancy services.

The provisions of paragraphs 1 and 2 of this Article shall not apply if the

beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

Royalties shall be deemed to arise in a Contracting State when the payer is a

resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the royalties was incurred,

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and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

Where, by reason of a special relationship between the payer and the beneficial

owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

Article 13

CAPITAL GAINS

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Gains derived by a resident of a Contracting State from the alienation of

immovable property referred to in Article 6 situated in the other Contracting State may be taxed in that other State.

Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

Gains from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State of which the alienator is a resident.

Gains derived by a resident of a Contracting State from the alienation of shares or other rights representing the capital of a company resident of the other Contracting State, may be taxed in that other State if:

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a) they are derived from the alienation of shares or other rights representing

the capital of a company deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State;

b) the recipient of the gains has at any time during the twelve month period preceding the alienation, directly or indirectly, owned shares or other rights representing capital of such company by 25 or more per cent.

Notwithstanding any other provision of this paragraph, capital gains derived by a pension fund resident of a Contracting State from the alienation of shares or other rights representing the capital of a company of the other Contracting State, shall be taxed only in the first mentioned Contracting State.

Gains from the alienation of any property, other than that referred to in paragraphs

1, 2, 3 and 4, shall be taxable only in the Contracting State of which the alienator is a resident.

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Article 14

INCOME FROM EMPLOYMENT

Subject to the provisions of Articles 15, 17, 18 and 20, salaries, wages and other

similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and

b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

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c) the remuneration is not borne by a permanent establishment which the employer has in the other State.

Notwithstanding the preceding provisions of this Article, remuneration derived, in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that State.

Article 15

DIRECTORS’ FEES

Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

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Article 16

ARTISTES AND SPORTSPERSONS

Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. Income referred to in this paragraph includes income derived by such resident from any personal activity exercised in the other Contracting State related to his recognition as an artiste or as a sportsperson.

Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

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Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraph 1 and 2 of this Article, shall be exempt from tax in that other State if the visit to the other State is supported wholly or mainly by public funds of the first mentioned Contracting State, a political subdivision or local authorities thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States.

Article 17

PENSIONS

Pensions and other similar payments or annuities paid to a resident of a Contracting State shall be taxed only in the Contracting State in which they originate.

Article 18

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GOVERNMENT SERVICE

a) Salaries, wages and other similar remuneration other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

(i)

is a national of that State; or

(ii)

did not become a resident of that State solely for the purpose of

rendering the services.

The provisions of Articles 14, 15 and 16 shall apply to salaries, wages and other

similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

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Article 19

STUDENTS

Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.

Article 20

PROFESSORS AND TEACHERS

An individual who visits a Contracting State for the purpose of teaching or

carrying out research at a university, college, school, or other similar educational institution

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recognized as non-profit organization by the Government of that Contracting State and who is or was immediately before that visit a resident of the other Contracting State shall not be subject to tax in the first-mentioned Contracting State on any remuneration for such teaching or research for a period not exceeding 2 years from the date of his first visit for that purpose.

The provisions of paragraph 1 shall not apply to income from research if such research is undertaken not for public interest but primarily for the private benefit of a specific person or persons.

Article 21

OTHER INCOME

Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.

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The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

CHAPTER IV

METHODS FOR THE AVOIDANCE OF DOUBLE TAXATION

Article 22

ELIMINATION OF DOUBLE TAXATION

In the case of Colombia, double taxation shall be avoided as follows:

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Where a resident of Colombia derives income which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, Colombia shall allow, subject to the limitations of provided for by its internal law:

a deduction from the income tax effectively paid by such resident in an

amount equal to the income tax paid in Korea;

in the case of dividends, Colombia shall allow a deduction on income tax

equivalent to multiplying the total amount of the dividends by the rate of income tax applicable to the profits out of which such dividends are paid. When such dividends are taxed in the other Contracting State, such deduction will be increased in the corresponding amount. However, in no case may such deduction exceed the total amount of income tax accrued in Colombia by such dividends.

Such deduction shall not, however, exceed that part of the tax on the income, as computed before the deduction is given, which is attributable to such items of income which may be taxed in that other Contracting State.

In the case of Korea, double taxation shall be avoided as follows:

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Subject to the provisions of Korean tax law regarding the allowance as credit against Korean tax of tax payable in any country other than Korea (which shall not affect the general principle thereof):

a) Where a resident of Korea derives income from Colombia which may be taxed in Colombia under the laws of Colombia in accordance with the provisions of the Convention, in respect of that income, the amount of Colombian tax payable shall be allowed as a credit against the Korean tax payable imposed on that resident. The amount of credit shall not, however, exceed that part of Korean tax as computed before the credit is given, which is appropriate to that income;

b) Where the income derived from Colombia is dividends paid by a company which is a resident of Colombia to a company which is a resident of Korea which owns at least 10 per cent of the voting shares issued by the company paying the dividends, the credit shall take into account the Colombian tax payable by the company in respect of the profits out of which such dividend is paid.

Where in accordance with any provision of this Convention income derived by a

resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.

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CHAPTER V

SPECIAL PROVISIONS

Article 23

NON-DISCRIMINATION

Nationals of a Contracting State shall not be subjected in the other Contracting

State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

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The taxation on a permanent establishment which an enterprise of a Contracting

State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

Except where the provisions of paragraph 1 of Article 9, paragraph 8 of Article

11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.

Enterprises of a Contracting State, the capital of which is wholly or partly owned

or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and

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connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

The provisions of this Article shall, notwithstanding the provisions of Article 2,

apply to taxes of every kind and description.

Article 24

MUTUAL AGREEMENT PROCEDURE

Where a person considers that the actions of one or both of the Contracting States

result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the Contracting State of which he is a national. The case must be presented within three years

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from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention.

The competent authority shall endeavour, if the objection appears to it to be

justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

The competent authorities of the Contracting States shall endeavour to resolve by

mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention.

The competent authorities of the Contracting States may communicate with each

other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

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Article 25

EXCHANGE OF INFORMATION

The competent authorities of the Contracting States shall exchange such information

as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2.

Any information received under paragraph 1 by a Contracting State shall be treated

as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in the first sentence in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

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In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

to supply information which is not obtainable under the laws or in the

normal course of the administration of that or of the other Contracting State;

to supply information which would disclose any trade, business, industrial,

commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).

If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

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In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interest in a person.

Article 26

LIMITATION ON BENEFITS

In respect of Articles 10, 11, 12, 13 and 21, a resident of a Contracting State shall not be entitled to benefits otherwise accorded to residents of a Contracting State by the Convention, if:

a) the resident is controlled directly or indirectly by one or more persons that are not residents of that Contracting State; and

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b) the main purpose or one of the main purposes of any person concerned with the creation or assignment of a share, a debt-claim, or a right in respect of which the income is paid is to take advantage of these Articles by means of that creation or assignment.

In the event that one or more of the provisions of the Convention give rise to results that were not intended or envisaged thereunder, the Contracting States shall consult each other on the matter with a view towards reaching a mutually acceptable solution, including possible amendments to the Convention.

Article 27

ASSISTANCE IN THE COLLECTION OF TAXES

The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent

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authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.

The term "revenue claim" as used in this Article means an amount owed in

respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Convention or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.

When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.

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4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection.

Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

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6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State.

Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be:

a) in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or

b) in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection

the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.

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8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:

a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

b) to carry out measures which would be contrary to public policy (ordre public);

c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;

d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.

Article 28

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MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

CHAPTER VI

FINAL PROVISIONS

Article 29

ENTRY INTO FORCE

Each of the Contracting States shall notify the other through diplomatic channels of the completion of the procedures required by law for the bringing into force of this

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Convention. The Convention shall enter into force on the date of the later of these notifications and its provisions shall thereupon have effect in both Contracting States:

a) in respect of taxes withheld at source, for amounts paid or credited to

non-residents, on or after the first day of January in the first calendar year following that in which the Convention enters into force; and

b) in respect of other taxes, for the taxable year beginning on or after the

first day of January in the first calendar year following that in which the Convention enters into force.

Article 30

TERMINATION

This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving written notice of termination at least six months before the end of any calendar

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year from the fifth year following that in which the Convention entered into force. In such event, the Convention shall cease to have effect in both Contracting States:

a) in respect of taxes withheld at source, for amounts paid or credited to

non-residents, on or after the first day of January in the first calendar year following that in which the notice is given; and

b) in respect of other taxes, for the taxable year beginning on or after the

first day of January in the first calendar year following that in which the notice is given.

IN WITNESS WHEREOF, the undersigned, duly authorized thereto by their respective Governments, have signed this Convention.

Done in duplicate at Bogota on this 27th day of July 2010, in the Korean, Spanish, and English languages, all three texts being equally authentic. In the case of divergence of interpretation, the English text shall prevail.

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FOR THE REPUBLIC OF KOREA

FOR THE REPUBLIC OF COLOMBIA

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PROTOCOL

At the moment of signing the Convention between the Republic of Korea and the Republic of Colombia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, the undersigned have agreed that the following provisions shall form an integral part of the Convention.

In relation with Article 7, it is understood that:

for purposes of Article 7, profits are attributed to a permanent establishment under paragraph 2 of Article 7 as if the permanent establishment were a separate enterprise dealing independently from the enterprise of which it is a part. Paragraph 3 of Article 7 sets out the principle that expenses incurred by the enterprise for the purpose of the permanent establishment, wherever incurred, shall be allowed as a deduction in attributing profits to the permanent establishment. In applying that paragraph, deductibility of expenses shall be determined in accordance with the internal legislation of the Contracting State in which the permanent establishment is located, provided that the requirements, conditions, and limitations to which they are subjected, are complied with.

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In relation with Article 10, it is understood that:

subject to the provisions of paragraph 2, in the case of Colombia, when a company which is a resident of Colombia has not paid income tax on profits distributed to shareholders (socios o accionistas) because of exemptions or because the profit exceeds the non taxed limit contained in Article 49 and in paragraph 1 of Article 245 of the Tax Statute, the dividend distributed may be taxed in Colombia at a rate of 15 per cent, if the beneficial owner of the dividend is a shareholder (socio o accionista) resident of Korea.

In relation with Article 12, it is understood that:

the term "royalties" includes the gains derived from the alienation of any such rights or property mentioned in paragraph 3 that are contingent on the productivity, use or disposition thereof.

In relation with paragraph 1 of Article 18, it is understood that this paragraph

shall likewise apply in respect of salaries, wages, and other similar remuneration paid by the Bank of Korea, the Export-Import Bank of Korea, the Korea Export Insurance

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Corporation, the Korea Investment Corporation (KIC) and the Korea Finance Corporation (KoFC).

IN WITNESS WHEREOF, the undersigned, being duly authorized thereto by their respective Governments, have signed this Convention.

Done in duplicate at Bogota on this 27th day of July 2010, in the Korean, Spanish, and English languages, all texts being equally authentic. In case of divergence of interpretation, the English text shall prevail.

FOR THE REPUBLIC OF KOREA

FOR THE REPUBLIC OF COLOMBIA

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