South Korea - Peru Tax Treaty

The Republic of Korea and the Republic of Peru, 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:

CONVENTION Article 1

BETWEEN

PERSONS COVERED

THE REPUBLIC OF KOREA AND THE REPUBLIC OF PERU FOR THE AVOIDANCE OF DOUBLE TAXATION

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

AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

Article 2 TAXES COVERED

1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State or, in the case of Korea, of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

2. 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.

3. The existing taxes to which the Convention shall apply are in particular: a) in Korea: (i) the income tax; (ii) the corporation tax; (iii) the special tax for rural development; and (iv) the local income tax;

d) the term "person" includes an individual, a company and any other body of (hereinafter referred to as "Korean tax"); b) in Peru: persons;

e) the term "company" means any body corporate or any entity that is treated as the income taxes imposed by the Government of Peru under the Income Tax Act (Ley del Impuesto a la Renta) a body corporate for tax purposes; f) (hereinafter referred to as "Peruvian Tax").

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

4. The Convention shall apply also to any identical or substantially similar taxes that Contracting State; are imposed after the date of signature of the Convention in addition to, or in place

g) the term "international traffic" means any transport by a ship or aircraft of, the existing taxes. The competent authorities of the Contracting States shall notify operated by an enterprise of a Contracting State, except when the ship or each other of any significant changes that have been made in their taxation laws. aircraft is operated solely between places in the other Contracting State;

h) the term "national", in relation to a Contracting State, means: (i) any individual possessing the nationality of that Contracting State; and

Article 3

(ii) any legal person, partnership or association deriving its status as such from

GENERAL DEFINITIONS

the laws in force in that Contracting State; i)

1. For the purposes of this Convention, unless the context otherwise requires: a) 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

the term "competent authority" means: (i) in Korea, the Minister of Strategy and Finance or his authorized representative; (ii) in Peru, the Minister of Economy and Finance or his authorized representative.

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; b) the term "Peru", for the purposes of determining the geographical scope of

2. 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.

application of this Convention, means the continental territory, the islands, the maritime zones and the air space that covers them, under the sovereignty or sovereign rights and jurisdiction of Peru, in accordance with its domestic law and international law;

Article 4 RESIDENT

c) the terms "a Contracting State" and "the other Contracting State" mean Korea or Peru, as the context requires;

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

Article 5

means any person who, under the laws of that State, is liable to tax therein by

PERMANENT ESTABLISHMENT

reason of his domicile, residence, place of head or main office, place of incorporation, place of management or any other criterion of a similar nature, and also includes that

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

State and any political subdivision or local authority thereof. This term, however, does

fixed place of business through which the business of an enterprise is wholly or

not include any person who is liable to tax in that State in respect only of income

partly carried on. from sources in that State.

2. The term "permanent establishment" includes especially:
3. Where by reason of the provisions of paragraph 1 an individual is a resident of

a) a place of management;

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

b) a branch;

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

c) an office;

permanent home available to him; if he has a permanent home available to

d) a factory;

him in both States, he shall be deemed to be a resident only of the State

e) a workshop, and

with which his personal and economic relations are closer (centre of vital

f) interests);

a mine, an oil or gas well, a quarry or any other place relating to the exploration for, or the exploitation or extraction of natural resources.

b) 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; c) 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;

3. The term "permanent establishment" shall also include: a) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only if such site, project or activities last more than six months; and b) the furnishing of services, including consultancy services, by an enterprise of a

d) if he is a national of both States or of neither of them, the competent Contracting State through employees or other individuals engaged by the authorities of the Contracting States shall settle the question by mutual enterprise for such purposes in the other Contracting State, but only where agreement.

such activities continue (for the same or a connected project) within that State for a period or periods aggregating more than 183 days within any

3. Where by reason of the provisions of paragraph 1 a person other than an twelve-month period. individual is a resident of both Contracting States, then it shall be deemed to be a For the purposes of computing the time period or periods in this paragraph, resident only of the State in which its place of effective management is situated. If the duration of activities carried on by an enterprise shall include activities its place of effective management cannot be determined, the competent authorities of carried on by associated enterprises, within the meaning of Article 9, if the the Contracting States shall settle the question by mutual agreement. activities between the associated enterprises are identical, substantially the same, or connected.

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4. Notwithstanding the preceding provisions of this Article, the term "permanent territory of that other State or insures risks situated therein through a person other establishment" shall be deemed not to include:

than an agent of an independent status to whom paragraph 7 applies.

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

7. 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.

enterprise solely for the purpose of processing by another enterprise; d) the maintenance of a fixed place of business solely for the purpose of

8. The fact that a company which is a resident of a Contracting State controls or is

purchasing goods or merchandise or of collecting information, for the

controlled by a company which is a resident of the other Contracting State, or which

enterprise;

carries on business in that other State (whether through a permanent establishment or

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

otherwise), shall not of itself constitute either company a permanent establishment of the other. character;

f) the maintenance of a fixed place of business solely for any combination of Article 6

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

INCOME FROM IMMOVABLE PROPERTY preparatory or auxiliary character.

1. Income derived by a resident of a Contracting State from immovable property
2. 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 make this fixed place of business a permanent establishment under the provisions of that paragraph.

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

2. 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 rights 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 aircraft shall not be

3. Notwithstanding the preceding provisions of this Article, an insurance enterprise of

regarded as immovable property.

a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the

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3. The provisions of paragraph 1 shall apply to income derived from the direct use, 5. For the purposes of the preceding paragraphs, the profits to be attributed to the letting, or use in any other form of immovable property.

permanent establishment shall be determined by the same method year by year unless 4. The provisions of paragraphs 1 and 3 shall also apply to the income from there is good and sufficient reason to the contrary.

immovable property of an enterprise and to income from immovable property used for 6. Where profits include items of income which are dealt with separately in other the performance of independent personal services.

Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 7 BUSINESS PROFITS

Article 8

1. The profits of an enterprise of a Contracting State shall be taxable only in that

SHIPPING AND AIR TRANSPORT

State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as

1. Profits from the operation of ships or aircraft in international traffic carried on by aforesaid, the profits of the enterprise may be taxed in the other State but only so an enterprise of a Contracting State shall be taxable only in that State.

much of them as is attributable to that permanent establishment. 2. The provisions of paragraph 1 shall also apply to profits from the participation in 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting a pool, a joint business or an international operating agency.

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

3. For the purposes of this Article: a) the term "profits" includes especially:

(i) gross receipts derived from the operation of ships or aircraft in international traffic; and (ii) interest from payments derived from the operation of ships or aircraft in which it is a permanent establishment. international traffic, provided that such interest is incidental and inherent to

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent the operation;

b) the term "operation of ships or aircraft" for an enterprise includes especially:

establishment, including executive and general administrative expenses so incurred,

(i) the rental on a bareboat charter basis of ships or aircraft; and

whether in the State in which the permanent establishment is situated or elsewhere.

(ii) the use, maintenance or rental of containers and related equipment; if that charter, use, maintenance or rental is incidental to the operation by that

4. No profits shall be attributed to a permanent establishment by reason of the mere enterprise of ships or aircraft in international traffic. purchase by that permanent establishment of goods or merchandise for the enterprise.

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3. The provisions of paragraph 2 shall not apply in the case of fraud or wilful default. Article 9 ASSOCIATED ENTERPRISES Article 10

1. Where

DIVIDENDS

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,

1. Dividends paid by a company which is a resident of a Contracting State to a or resident of the other Contracting State may be taxed in that other State.

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

2. However, such dividends may also be taxed in the Contracting State of which the other Contracting State, company paying the dividends is a resident and according to the laws of that State, and in either case conditions are made or imposed between the two enterprises in but if the beneficial owner of the dividends is a resident of the other Contracting their commercial or financial relations which differ from those which would be made State, the tax so charged shall not exceed 10 per cent of the gross amount of the between independent enterprises, then any profits which would, but for those dividends.

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

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

3. The term "dividends" as used in this Article means income from shares or other
4. Where a Contracting State includes in the profits of an enterprise of that State - rights, not being debt-claims, participating in profits, as well as income from other and taxes accordingly - profits on which an enterprise of the other Contracting State corporate rights which is subjected to the same taxation treatment as income from has been charged to tax in that other State and the profits so included are profits shares by the laws of the State of which the company making the distribution is a which would have accrued to the enterprise of the first-mentioned State if the resident.

Conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of adjustment to the amount of the tax charged therein on those profits in accordance the dividends, being a resident of a Contracting State, carries on business in the other with the taxation laws of that other State, if it considers that the adjustment made in Contracting State of which the company paying the dividends is a resident through a a Contracting State is justified both in principle and as regards the amount. In permanent establishment situated therein, or performs in that other State independent determining such adjustment, due regard shall be had to the other provisions of this personal services from a fixed base situated therein and the holding in respect of Convention and the competent authorities of the Contracting States shall if necessary which consult each other.

Establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the dividends are paid is effectively the case may be, shall apply.

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Connected with such permanent owned by that other Contracting State, including its political subdivisions and local

5. Where a company which is a resident of a Contracting State derives profits or authorities thereof, or the Central Bank of that other Contracting State.

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

4. The term "interest" as used in this Article means income from debt-claims of resident of that other State or insofar as the holding in respect of which the dividends every kind, whether or not secured by mortgage and whether or not carrying a right are paid is effectively connected with a permanent establishment or a fixed base to participate in the debtor's profits, and in particular, income from government situated in that other State, nor subject the company's undistributed profits to a tax on securities and income from bonds or debentures, including premiums and prizes the company's undistributed profits, even if the dividends paid or the undistributed attaching to such securities, bonds or debentures. Penalty charges for late payment profits consist wholly or partly of profits or income arising in such other State.

shall not be regarded as interest for the purpose of this Article.

6. Where a company of a Contracting State has a permanent establishment in the

7. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of other Contracting State, the profits of the permanent establishment attributable to such the interest, being a resident of a Contracting State, carries on business in the other company may be subject in that other Contracting State to a tax other than the tax Contracting State in which the interest arises through a permanent establishment on the profits of the permanent establishment in that other Contracting State and in situated therein, or performs in that other State independent personal services from a accordance with the law of that other State. However, this tax other than the tax on fixed base situated therein and the debt-claim in respect of which the interest is paid the profits shall not exceed the limit provided for in paragraph 2 of this Article.

is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

Article 11

6. Interest shall be deemed to arise in a Contracting State when the payer is a

INTEREST

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

1. Interest arising in a Contracting State and paid to a resident of the other

establishment or a fixed base in connection with which the indebtedness on which the

Contracting State may be taxed in that other State.

interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in

2. However, such interest may also be taxed in the Contracting State in which it

which the permanent establishment or fixed base is situated.

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

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

exceed 15 per cent of the gross amount of the interest.

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 the amount which would

3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be taxable only in the other Contracting State if the interest is beneficially

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

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

or fixed base. In such case the provisions of Article 7 or Article 14, as the case may

this Convention.

be, shall apply. 5. Royalties shall be deemed to arise in a Contracting State when the payer is a Article 12

resident of that State. Where, however, the person paying the royalties, whether the

ROYALTIES

payer is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay

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

the Contracting State may be taxed in that other State.

establishment or fixed base, then such royalties shall be deemed to arise in the State

royalties was incurred, and such royalties are borne by such permanent in which the permanent establishment or fixed base is situated.

2. 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

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

royalties is a resident of the other Contracting State, the tax so charged shall not

owner or between both of them and some other person, the amount of the royalties,

exceed:

having regard to the use, right or information for which they are paid, exceeds the

a) 10 per cent of the gross amount of the payments received as consideration for the furnishing of technical assistance; b) 15 per cent of the gross amount of the royalties in all other cases.

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

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

other provisions of this Convention.

as a consideration for the use of, or the right to use, any copyright of literary, artistic, or scientific work, including cinematographic films, or films, tapes and other means of images or sound reproduction, any patent, trade mark, design or model, plan, secret

Article 13

formula, or process, or for information concerning industrial, commercial, or scientific

CAPITAL GAINS

experience. The term "royalties" also includes payments received as consideration for the furnishing of technical assistance.

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State

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

may be taxed in that other State.

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

2. Gains from the alienation of movable property forming part of the business

establishment situated therein, or performs in that other State independent personal

property of a permanent establishment which an enterprise of a Contracting State

services from a fixed base situated therein, and the right or property in respect of

has in the other Contracting State or of movable property pertaining to a fixed base

which the royalties are paid is effectively connected with such permanent establishment

available to a resident of a Contracting State in the other Contracting State for the

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purpose of performing independent personal services, including such gains from the

a) the individual has a fixed base regularly available to him in the other

alienation of such a permanent establishment (alone or with the whole enterprise) or

Contracting State for the purpose of performing the activities; in that case,

of such fixed base, may be taxed in that other State.

only so much of the income as is attributable to that fixed base may be taxed in that other State; or

3. Gains from the alienation of ships or aircraft operated in international traffic or

b) the individual is present in the other Contracting State for a period or periods

movable property pertaining to the operation of such ships or aircraft, shall be taxable

amounting to or exceeding in the aggregate 183 days in any twelve-month

only in the Contracting State of which the enterprise is a resident.

period; in that case, only so much of the income as is derived from the activities performed in that other State may be taxed in that State.

4. Gains derived by a resident of a Contracting State from the alienation of shares deriving more than 50 per cent of their value directly or indirectly from immovable

5. The term "professional services" includes especially independent scientific, literary,

property situated in the other Contracting State may be taxed in that other State.

artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

5. In addition to the provisions of the preceding paragraphs of this Article, gains derived by a resident of a Contracting State from the direct or indirect alienation of shares, comparable interests, securities, or other rights in the capital of a company

Article 15

which is a resident of the other Contracting State may be taxed in that other State if

INCOME FROM EMPLOYMENT

the recipient of the gain, during the twelve-month period preceding such alienation, had a participation of at least 20 per cent in the capital of that company.

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an

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

employment shall be taxable only in that State unless the employment is exercised in

1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator

the other Contracting State. If the employment is so exercised, such remuneration as

is a resident.

is derived therefrom may be taxed in that other State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident Article 14 INDEPENDENT PERSONAL SERVICES

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

1. Income derived by an individual who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State:

exceeding in the aggregate 183 days in any twelve month period; and b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and c) the remuneration is not borne by a permanent establishment or a fixed place which the employer has in the other State.

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3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international

Article 18

traffic by an enterprise of a Contracting State shall be taxable only in that State.

PENSIONS Pensions and other similar payments or annuities paid to a resident of a

Article 16

Contracting State shall be taxed only in the Contracting State in which they originate.

DIRECTORS' FEES Article 19 Directors' fees and other similar payments derived by a resident of a Contracting

GOVERNMENT SERVICE

State in his capacity as a member of the board of directors or other organs which are similar in function to the board of directors of a company which is a resident of the

1. a) Salaries, wages and other similar remuneration other than a pension paid by a

other Contracting State may be taxed in that other State.

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.

Article 17

b) However, such salaries, wages and other similar remuneration shall be taxable

ARTISTES AND SPORTSMEN

only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

1. Notwithstanding the provisions of Articles 7, 14 and 15, income derived by a

(i) is a national of that State; or

resident of a Contracting State as an entertainer, such as a theatre, motion picture,

(ii) did not become a resident of that State solely for the purpose of rendering

radio or television artiste, or a musician, or as a sportsman, from his personal

the services.

activities as such exercised in the other Contracting State, may be taxed in that other State. Income derived by an artiste or a sportsman who is a resident of a Contracting State from his personal activities relating to his reputation as an artiste or sportsman

2. The provisions of Articles 15, 16 and 17 shall apply to salaries, wages and other similar remuneration in respect of services rendered in connection with a business

exercised in the other Contracting State, such as advertising or sponsorship income,

carried on by a Contracting State or a political subdivision or a local authority

may be taxed in that other State.

thereof.

2. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself

Article 20

but to another person, that income may, notwithstanding the provisions of Articles 7,

STUDENTS

14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.

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

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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 Article 22

that State, provided that such payments arise from sources outside that State.

ELIMINATION OF DOUBLE TAXATION

Article 21 OTHER INCOME

1. In Korea, double taxation shall be avoided as follows: 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

2. 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.

affect the general principle thereof): a) Where a resident of Korea derives income from Peru which may be taxed in Peru under the laws of Peru in accordance with the provisions of this

2. The provisions of paragraph 1 shall not apply to income, other than income from

Convention, in respect of that income, the amount of Peruvian tax payable

immovable property as defined in paragraph 2 of Article 6, if the recipient of such

shall be allowed as a credit against the Korean tax payable imposed on that

income, being a resident of a Contracting State, carries on business in the other

resident. The amount of credit shall not, however, exceed that part of Korean

Contracting State through a permanent establishment situated therein, or performs in

tax as computed before the credit is given, which is appropriate to that

that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

income; b) Where the income derived from Peru is dividends paid by a company which is a resident of Peru to a company which is a resident of Korea which owns at least 10 per cent of the voting shares issued by or the capital stock of the company paying the dividends, the credit shall take into account the Peruvian

3. Where, by reason of a special relationship between the person referred to in paragraph 1 and some other person, or between both of them and some third person, the amount of income referred to in paragraph 1 exceeds the amount (if any) which would have been agreed upon between them in the absence of such a relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payment shall remain taxable according to the law of each Contracting State, due regard being had to the other applicable provisions of this Convention.

4. Notwithstanding the provisions of paragraph 1, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of the Convention and arising in the other Contracting State may also be taxed in that other State, but the tax so charged shall not exceed 10 per cent of the gross amount of such income.

tax payable by the company in respect of the profits out of which such dividend is paid. 2. In the case of Peru, double taxation shall be avoided as follows: a) Residents of Peru may credit against Peruvian income tax, as a credit, the Korean tax payable on income taxed in accordance with the laws of Korea and the provisions of this Convention. Such credit shall not, in any case, exceed that part of the Peruvian income tax which is attributable to the income which may be taxed in Korea; b) Where a company which is a resident of Korea pays a dividend to a company which is a resident of Peru that controls directly or indirectly at least 10 per cent of the voting power in the former company, the credit shall take into

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account the tax payable in Korea by the company in respect of the profits out

deductible under the same conditions as if they had been paid to a resident of the

of which such dividend is paid but only to the extent that the Peruvian tax

first-mentioned State.

exceeds the amount of the credit determined without reference to this 4. Enterprises of a Contracting State, the capital of which is wholly or partly owned

subparagraph; c) Where in accordance with any provision of the Convention income derived by

or controlled, directly or indirectly, by one or more residents of the other Contracting

a resident of a Contracting State is exempt from tax in that State, such State

State, shall not be subjected in the first-mentioned State to any taxation or any

may nevertheless, in calculating the amount of tax on the remaining income of

requirement connected therewith which is other or more burdensome than the taxation

such resident, take into account the exempted income.

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

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

Article 23

apply to taxes of every kind and description.

NON-DISCRIMINATION

1. 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

Article 24

burdensome than the taxation and connected requirements to which nationals of that

MUTUAL AGREEMENT PROCEDURE

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,

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

also apply to persons who are not residents of one or both of the Contracting States.

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

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

of those States, present his case to the competent authority of the Contracting State of

State has in the other Contracting State shall not be less favourably levied in that

which he is a resident or, if his case comes under paragraph 1 of Article 23, to that

other State than the taxation levied on enterprises of that other State carrying on the

of the Contracting State of which he is a national. The case must be presented within

same activities. This provision shall not be construed as obliging a Contracting State

three years from the first notification of the action resulting in taxation not in

to grant to residents of the other Contracting State any personal allowances, reliefs accordance with the provisions of the Convention.

and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

2. 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

3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article

case by mutual agreement with the competent authority of the other Contracting State,

11, or paragraph 6 of Article 12 apply, interest, royalties and other disbursements paid

with a view to the avoidance of taxation which is not in accordance with the

by an enterprise of a Contracting State to a resident of the other Contracting State

Convention. Any agreement reached shall be implemented notwithstanding any time

shall, for the purpose of determining the taxable profits of such enterprise, be

limits in the domestic law of the Contracting States.

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a) to 3. 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. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.

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

b) 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;

c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the

4. The competent authorities of the Contracting States may communicate with each disclosure of which would be contrary to public policy (ordre public). other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

5. 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 Article 25

requested information, even though that other State may not need such information for

EXCHANGE OF INFORMATION

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

1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

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

5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting

their political subdivisions or local authorities, insofar as the taxation thereunder is not

State to decline to supply information, solely because the information is held by a

contrary to the Convention. The exchange of information is not restricted by Articles 1

bank, other financial institution, nominee or person acting in an agency or a fiduciary

and 2.

capacity or because the information relates to ownership interests in a person. In applying this paragraph the Contracting States shall follow the constitutional and legal

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

procedures necessary to obtain the requested information.

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

Article 26

enforcement or prosecution in respect of, the determination of appeals in relation to

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

the taxes referred to in paragraph 1. 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.

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.

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

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Article 27

Article 29

LIMITATION ON BENEFITS

TERMINATION

1. In respect of Articles 10, 11, 12, 13 and 21, a resident of a Contracting State

This Convention shall remain in force until terminated by a Contracting State.

shall not be entitled to benefits if the main purpose or one of the main purposes of

Either Contracting State may terminate the Convention, through diplomatic channels,

any person concerned with the creation or assignment of a share, a debt-claim, or a

by giving written notice of termination at least six months before the end of any

right in respect of which the income is paid is to take advantage of these Articles by

calendar year. In such event, the Convention shall cease to have effect:

means of that creation or assignment.

a) in respect of taxes withheld at source, for amounts payable on or after the first day of January in the first calendar year following that in which the

2. Paragraph 1 shall not be construed as restricting, in any manner, the application of any provisions of the law of a Contracting State which are designed to prevent the avoidance or evasion of taxes, whether or not described as such.

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.

Article 28 ENTRY INTO FORCE

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

1. The Governments of the Contracting States shall notify each other that the constitutional requirements for the entry into force of this Convention have been complied with.

Done in duplicate at Seoul, this tenth day of May 2012, in the Korean, Spanish, and English languages, all three texts being equally authentic. In the case of any

2. The Convention shall enter into force on the date of the later of the notifications

divergence of interpretation, the English text shall prevail.

referred to in paragraph 1 and its provisions shall have effect: a) in respect of taxes withheld at source, for amounts payable on or after the first day of January in the first calendar year following that in which this

FOR THE REPUBLIC OF KOREA

FOR THE REPUBLIC OF PERU

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 this Convention enters into force.

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PROTOCOL

4. Article 11 a) With reference to paragraph 3 of Article 11, it is understood that the Korea

At the moment of signing the Convention between the Republic of Korea and the

Export-Import Bank constitutes a part of the Korean Government.

Republic of Peru for the Avoidance of Double Taxation and the Prevention of Fiscal

b) With reference to paragraph 4 of Article 11, it is understood that the term

Evasion with respect to Taxes on Income, the undersigned have agreed on the

"interest" includes the price differential on a repo transaction (operaciones de

following provisions which shall form an integral part of the Convention.

reporte y pactos de recompra) or on a loan with pledge of securities (préstamos bursátiles). It is further understood that the competent authorities

1. Article 3 With reference to subparagraph (d) of paragraph 1 of Article 3, the term "person" shall, in the case of Peru, include estates in the course of administration (sucesiones indivisas) as well as matrimonial partnerships (sociedades conyugales).

may by mutual agreement agree that other similar elements of other financial transactions treated as interest under domestic law coming into force after the date of signature of this Convention will be regarded as interest for the purposes of the Convention. In that event, the competent authorities will publish their mutual agreement solution.

2. Article 7 It is understood that the provisions of paragraph 3 of Article 7 shall apply only if the expenses can be attributed to the permanent establishment in accordance with the provisions of the tax legislation of the Contracting State in which the permanent establishment is situated.

3. Article 10 and Article 11 With reference to paragraph 2 of Article 10 and to paragraph 2 of Article 11, it is understood that if, in any agreement or convention between Peru and a third State, Peru agrees to limit the rate of tax on such dividends or interest (either generally or in respect of specific categories of dividends or interest) to a rate lower than the rates provided for in paragraph 2 of Article 10 or in paragraph 2 of Article 11 of this Convention, such lower rate shall automatically apply to such dividends and interest

4. Article 13 With reference to paragraph 5 of Article 13, it is understood that if in any agreement or convention between Peru and a third State, Peru agrees that gains (excluding gains provided in paragraph 4 of Article 13) from the direct or indirect alienation of shares, comparable interests, securities, or other rights shall be taxed only in the State of which the alienator is a resident, such gains under this Convention shall be taxed only in the State of which the alienator is a resident as if such provision had been specified in this Convention, with effect from the date on which such provision of that agreement or convention becomes effective. The competent authority of Peru shall inform the competent authority of Korea without delay that the conditions for the application of this provision have been met.

(either generally or in respect of specific categories of dividends or interest) under this Convention as if such lower rate had been specified in this Convention, with effect from the date on which those provisions of that agreement or convention becomes effective. The competent authority of Peru shall inform the competent authority of Korea without delay that the conditions for the application of this provision have been met.

6. In general, Nothing in the Convention shall preclude the application of the provisions of Peruvian Law Acts (Decretos Legislativos) numbers 662, 757 and 109 and Acts (Leyes) numbers 26221, 27342, 27343, 27909 as they are in force at the time of the signature of the Convention and as they may be amended from time to time without changing their principle or the optional nature of entering into the tax stability contracts. A person that is a party to a contract which grants tax stability in

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accordance with the above-mentioned provisions shall, notwithstanding any rate of tax set out in the Convention, remain subject to the rates of tax stabilized by the contract for its duration.

IN WITNESS WHEREOF, the undersigned, duly authorised thereto by their respective Governments, have signed this Protocol. Done in duplicate at Seoul, this tenth day of May 2012, in the Korean, Spanish, and English languages, all three texts being equally authentic. In the case of any divergence of interpretation, the English text shall prevail.

FOR THE REPUBLIC OF KOREA

FOR THE REPUBLIC OF PERU