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SECTION

90 OF THE INCOME-TAX ACT, 1961---DOUBLE TAXATION AGREEMENT AGREEMENT FOR

AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION WITH FOREIGN

COUNTRIES---WITH VIETNAMNotification

No. 9758 (F. NO. 503/7/91---FTD), dated 28-4-1995Whereas

the annexed Agreement between the Government of the Republic of India and the

Government of the Socialist Republic of Vietnam for the avoidance of double

taxation and the prevention of fiscal evasion with respect to taxes on income

has come into force on the 2nd day of February, 1995 after the notification by

both the Contracting States to each other of the Completion of the procedures

required under their laws for bringing into force of the said Agreement in

accordance with Article 29 of the said Agreement;Now,

therefore, in exercise of the powers conferred by section 90 of the Income-tax

Act, 1961 (43 of 1961), the Central Government hereby directs that all the

provisions of the said Agreement shall be given effect to in the Union of

India.ANNEXUREAGREEMENT

BETWEEN THE REPUBLIC OF INDIA AND THE SOCIALIST REPUBLIC OF VIETNAM FOR THE

AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT

TO TAXES ON INCOMEThe

Government of the Republic of India and the Government of the Socialist

Republic of Vietnam, desiring to conclude an Agreement for the avoidance of

double taxation and the prevention of fiscal evasion with respect to taxes on

income, have agreed as follows:Article

1: PERSONAL SCOPEThis

Agreement shall apply to persons who are residents of one or both of the

Contracting States.Article

2: TAXES COVERED1. This Agreement shall

apply to taxes on income imposed on behalf of a Contracting State or 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.3. The existing taxes to

which the Agreement shall apply are:a. in India:the

income-tax including any surcharge thereon;(hereinafter

referred to as "Indian tax");a.b. in Vietnam:i.

the

personal income-tax;ii.

the

profit tax; andiii.

the

profit remittance tax;(hereinafter

referred to as "Vietnamese tax").1.2.3.4. The Agreement shall

also apply to any identical or substantially similar taxes which are imposed

after the date of signature of this Agreement in addition to, or in place of,

the existing taxes. The competent authorities of the Contracting States shall

notify each other of substantial changes which have been made in their

respective taxation laws.Article

3: GENERAL DEFINITIONS1. In this Agreement,

unless the context otherwise requires:a. the term

"India" means the territory of India and includes the territorial sea

and airspace above it, as well as any other maritime zone in which India has

sovereign rights, other rights and jurisdictions, according to the Indian law

and in accordance with international law or the U.N. Convention on the Law of

the Sea;b. the term

"Vietnam" means the Socialist Republic of Vietnam; when used in a

geographical sense, it means all its national territory, including its

territorial sea and any area beyond and adjacent to its territorial sea, within

which Vietnam, by Vietnamese legislation and in accordance with international

law, has sovereign rights of exploration for and exploitation of natural

resources of the sea bed and its sub-soil and superjacent watermass;c. the terms "a

Contracting State" and "the other Contracting State" mean India

or Vietnam as the context requires;d. the term

"company" means any body corporate or any entity which is treated as

a company or body corporate under the taxation law in force in the respective

Contracting States;e. the term

"competent authority" means:i.

in

the case of India, the Central Government in the Ministry of Finance

(Department of Revenue) or their authorized representative; andii.

in

the case of Vietnam, the Minister of Finance or his authorized representative;a.b.c.d.e.f. 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;g. the term "fiscal

year" means:i.

in

the case of India, "previous year" as defined under section 3 of the

Income-tax Act, 1961; andii.

in

the case of Vietnam, the accounting year comprising of a twelve-month period;a.b.c.d.e.f.g.h. the term

"international traffic" means any transport by a ship or aircraft

operated by an enterprise of a Contracting State, except when the ship or

aircraft is operated solely between places in the other Contracting State;i. the term

"national" means any individual, possessing the nationality of a Contracting

State and any legal person, partnership or association deriving its status from

the laws in force in the Contracting State;j. the term

"person" includes an individual, a company, a body of persons and any

other entity which is treated as a taxable unit under the taxation laws in

force in the respective Contracting States;k. the term

"tax" means Indian tax or Vietnamese tax, as the context requires,

but shall not include any amount which is payable in respect of any default or

omission in relation to the taxes to which this Agreement applies or which

represents a penalty imposed relating to those taxes.1.2. As regards the

application of the Agreement by a Contracting State, any term not defined

therein shall, unless the context otherwise requires, have the meaning which it

has under the law of that State concerning the taxes to which the Agreement

applies.Article

4: RESIDENT1. For the purposes of

this Agreement, 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 registration or any

other criterion of a similar nature.2. 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:a. he shall be deemed to

be a resident 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 of the State with which his personal and economic relations are

closer (centre of vital interests);b. if the State in which

he has his centre of vital interests cannot be determined, or if he has no

permanent home available to him in either State, he shall be deemed to be a

resident 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

of the State of which he is a national;d. 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.1.2.3. 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 of the

State in which its place of effective management is situated.Article

5: PERMANENT ESTABLISHMENT1. For the purposes of

this Agreement, the term "permanent establishment" means a fixed

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

partly carried on.2. The term

"permanent establishment" includes especially:a. a place of management;b. a branch;c. an office;d. a factory;e. a workshop;f. a mine, an oil or gas

well, a quarry or any other place of extraction of natural resources;g. a warehouse, in

relation to a person providing storage facilities for others; andh. a building site or

construction or assembly project or supervisory activities in connection

therewith; but only where such site, project or activity continues for a period

of more than six months.1.2.3. 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 occasional 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 occasional delivery;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;d. 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.1.2.3.4. Notwithstanding the

provisions of paragraphs 1 and 2, where a person---other than an agent of an

independent status to whom paragraph 5 applies---is acting in a Contracting

State on behalf of an enterprise of the other Contracting State, that

enterprise shall be deemed to have a permanent establishment in the

first-mentioned Contracting State in respect of any activities which that

person undertakes for the enterprise, if such a person:a. has and habitually

exercises in that State an authority to conclude contracts in the name of the

enterprise, unless the activities of such person are limited to those mentioned

in paragraph 3 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; orb. has no such

authority, but habitually maintains in the first-mentioned State a stock of

goods or merchandise from which he regularly delivers goods or merchandise on

behalf of the enterprise.1.2.3.4.5. An enterprise of a

Contracting State shall not be deemed to have a permanent establishment in the

other 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, he will not be considered an agent

of an independent status within the meaning of this paragraph.6. 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.Article

6: INCOME FROM IMMOVABLE PROPERTY1. 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.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, boats and aircraft shall not be regarded as immovable

property.3. The provisions of

paragraph 1 shall also apply to income derived from the direct use, letting, or

use in any other form of immovable property.4. The provisions of

paragraphs 1 and 3 shall also apply to the income from immovable property of an

enterprise and to income from immovable property used for the performance of

independent services.Article

7: BUSINESS PROFITS1.

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

on business as aforesaid, the profits of the enterprise may also be taxed in

the other State but only so much of them as is attributable directly or

indirectly to that permanent establishment.The

words "directly or indirectly" mean, for the purposes of this

Article, that where a permanent establishment takes an active part in

negotiating, concluding or fulfilling contracts entered into by the enterprise,

then notwithstanding that other parts of the enterprise have also participated

in those transactions, there shall be attributed to the permanent establishment

that proportion of profits of the enterprise arising out of those contracts as

the contribution of the permanent establishment to those transactions bears to

that of the enterprise as a whole.1.2. 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.3. In determining the

profits of a permanent establishment, there shall be allowed as deductions

expenses which are incurred for the purposes of the business 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 in accordance with the provisions of and subject to the limitations

of the tax laws of that State.4. Nothing in this

Article shall affect the application of any law of a Contracting State relating

to the determination of the tax liability of a person in cases where

information is not available to the competent authority of that State in order

to determine the profits to be attributed to a permanent establishment, provided

that law shall be applied consistently with the principles of this Article.5. Insofar as it has

been customary in a Contracting State to determine the profits to be attributed

to a permanent establishment on the basis of an apportionment of the total profits

of the enterprise to its various parts, nothing in paragraph 2 shall preclude

that Contracting State from determining the profits to be taxed by such an

apportionment as may be customary. The method of apportionment adopted shall,

however, be such that the result shall be in accordance with the principles

contained in this Article.6. 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.7. 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.8. Where profits include

items of income which are dealt with separately in other Articles of this

Agreement, then the provisions of those Articles shall not be affected by the

provisions of this Article.Article

8: SHIPPING AND AIR TRANSPORT1. Profits derived by an

enterprise of a Contracting State from the operation of ships or aircraft in

inter-national traffic shall be taxable only in that State.2. For the purposes of

this Article, profits from the operation of ships or aircraft in international

traffic include:a. income from the lease

of ships or aircraft; andb. profits from the use,

maintenance or rental of containers (including trailers and related equipment

for the transport of containers).Where

such lease or such use, maintenance or rental, as the case may be, is

incidental to the operation of ships or aircraft in international traffic.1.2.3. The provisions of

paragraph 1 shall also apply to profits from the participation in a pool, a

joint business or an international operating agency.4. For the purposes of

this Article, interest on funds connected with the operation of ships or

aircraft in international traffic earmarked for the purpose of payments of all

kinds of wages and maintenance of ships or aircraft and their crew shall be

regarded as income or profits derived from the operation of such ships or

aircraft and the provisions of Article 11 shall not apply in relation to such

interest.Article

9: ASSOCIATED ENTERPRISESWhere---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, orb. 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,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 the reason of

those conditions, have not so accrued, may be included in the profits of that

enterprise and taxed accordingly.Article

10: DIVIDENDS1. 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.2. 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 recipient is the beneficial owner of the dividends, the tax so charged

shall not exceed 10 per cent of the gross amount of the dividends. This

paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.3. 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.4. 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, or performs in that other State

independent personal services from a fixed base situated therein, and the

holding in respect of which the dividends are paid is effectively connected

with such permanent establishment or fixed base. In such case, the provisions

of Article 7 or Article 15, as the case may be, shall apply.5. 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

that other Contracting State or insofar as the holding in respect of which the

dividends are paid is effectively connected with a permanent establishment or a

fixed base 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: INTEREST1. Interest arising in a

Contracting State and paid to a resident of the other Contracting State may be

taxed in that other State.2. However, such

interest may also be taxed in the Contracting State in which it arises and

according to the laws of that State, but if the recipient is the beneficial

owner of such interest the tax so charged shall not exceed 10 per cent of the

gross amount of the interest.3. Notwithstanding the

provisions of paragraph 2,----a. interest arising in a

Contracting State shall be exempt from tax in that State provided it is derived

and beneficially owned by:i.

the

Government, a political sub-division or a local authority of the other

Contracting State; orii.

the

Central Bank of the other Contracting State;a.b. interest arising in a

Contracting State shall be exempt from tax in that Contracting State to the

extent approved by the Government of that State if it is derived and

beneficially owned by any person [other than a person referred to in

sub-paragraph (a)] who is a resident of the other Contracting State provided that

the transaction giving rise to the debt-claim has been approved in this regard

by the Government of the first-mentioned Contracting State.1.2.3.4. The term

"interest" as used in this Article means income from debt-claims of

every kind, whether or not secured by mortgage and whether or not carrying a

right to participate in the debtor's profits, 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.5. 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, or performs in that other State independent

personal services from a fixed base situated therein and the debt-claim in

respect of which the interest is paid is effectively connected with such

permanent establishment or fixed base. In such case, the provisions of Article

7 or Article 15, as the case may be, shall apply.6. Interest shall be

deemed to arise in a Contracting State when the payer is that Contracting State

itself, a political sub-division, a local authority or a resident of that

State. Where, however, the person paying the interest, whether he is a resident

of a Contracting State or not, has in a Contracting State a permanent

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

which the 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 which the permanent establishment or fixed base is situated.7. 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 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 Agreement.Article

12: ROYALTIES1. Royalties arising in

a Contracting State and paid to a resident of the other Contracting State may

be taxed in that other State.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 recipient is the beneficial

owner of the royalties, the tax so charged shall not exceed 10 per cent of the

gross amount of the royalties.3. 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, or films or tapes

used for radio or television broadcasting, any patent, trade mark, design or

model, plan, secret formula or process, or for the use of, or the right to use,

industrial, commercial or scientific equipment, or for information concerning

industrial, commercial or scientific experience.4. The provisions of

paragraphs 1 and 2 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, or performs in that other State independent

personal services from a fixed base situated therein, and the right or property

in respect of which the royalties are paid is effectively connected with such

permanent establishment or fixed base. In such case, the provisions of Article

7 or Article 15, as the case may be, shall apply.5. Royalties shall be

deemed to arise in a Contracting State when the payer is that State itself, a

political sub-division, a local authority or 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

or a fixed base in connection with which the liability to pay the royalties was

incurred, and such royalties are borne by such permanent establishment or fixed

base, then such royalties shall be deemed to arise in the State in which the

permanent establishment or fixed base is situated.6. 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 Agreement.Article

13: TECHNICAL FEES1. Technical fees

arising in a Contracting State which are derived by a resident of the other

Contracting State may be taxed in that other State.2. However, such

technical fees may also be taxed in the Contracting State in which they arise,

and according to the laws of that State; but if the recipient is the beneficial

owner of the technical fees, the tax so charged shall not exceed 10 per cent of

the gross amount of the technical fees.3. The term

"technical fees" as used in this Article means payments of any kind

to any person, other than to an employee of the person making the payments, in

consideration for any services of a technical, managerial or consultancy

nature.4. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the technical

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

Contracting State in which the technical fees arise through a permanent

establishment situated therein, or performs in that other State independent

personal services, and the technical fees are effectively connected with such

permanent establishment or such services. In such case, the provisions of

Article 7 or Article 15, as the case may be, shall apply.5. Technical fees shall

be deemed to arise in a Contracting State when the payer is that State itself,

a political sub-division, a local authority or a statutory body thereof, or a

resident of that State. Where, however, the person paying the technical fees,

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 technical fees was incurred, and such technical fees are borne by that

permanent establishment, then such technical fees shall be deemed to arise in

the Contracting State in which the permanent establishment is situated.6. Where, by reason of a

special relationship between the payer and the recipient or between both of

them and some other person, the amount of the technical fees 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 the law of each

Contracting State due regard being had to the other provisions of this

Agreement.Article

14: CAPITAL GAINS1. 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 may be

taxed in that other State.2. 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 or of movable property pertaining to a fixed base

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

for the purpose of performing independent personal services, including such

gains from the alienation of such a permanent establishment (alone or together

with the whole enterprise) or of such fixed base, may be taxed in that other

State.3. 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.4. Gains from the

alienation of share of the capital stock of a company the property of which

consists directly or indirectly principally of immovable property situated in a

Contracting State may be taxed in that State.5. Gains from the

alienation of shares other than those mentioned in paragraph 4 in a company

which is a resident of a Contracting State may be taxed in that State.6. Gains from the

alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4

and 5 shall be taxable only in the Contracting State of which the alienator is

a resident.Article

15: INDEPENDENT PERSONAL SERVICES1. Income derived by a

resident of a Contracting State in respect of professional services or other

independent activities of a similar 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:a. if he has a fixed

base regularly available to him in the other Contracting State for the purpose

of performing this activities; in that case, only so much of the income as is

attributable to that fixed base may be taxed in that other Contracting State;

orb. if his stay in the

other Contracting State is for a period or periods amounting to or exceeding in

the aggregate 183 days in the relevant fiscal year concerned; in that case,

only so much of the income as is derived from his activities performed in that

other State may be taxed in that other State.1.2. The term

"professional services" includes independent scientific, literary,

artistic, educational or teaching activities, as well as the independent

activities of physicians, surgeons, lawyers, engineers, architects, dentists

and accountants.Article

16: DEPENDENT PERSONAL SERVICES1. Subject to the

provisions of Articles 17, 18, 19, 20, 21 and 22, 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.2. 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 the relevant fiscal year; andb. the remuneration is paid

by, or on behalf of, an employer who is not a resident of the other State; andc. the remuneration is

not borne by a permanent establishment or a fixed base which the employer has

in the other State.1.2.3. 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

17: DIRECTORS' FEESDirectors'

fees and 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.Article

18: INCOME EARNED BY ENTERTAINERS AND ATHLETES1. Notwithstanding the

provisions of Articles 15 and 16, income derived by a resident of a Contracting

State as an entertainer such as a theatre, motion picture, radio or television

artists, or a musician, or as an athlete, from his personal activities as such

exercised in the other Contracting State may be taxed in that other State.2. While income in

respect of personal activities exercised by an entertainer or an athlete in his

capacity as such accrues not to the entertainer or athlete himself but to

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

15 and 16, be taxed in the Contracting State in which the activities of the

entertainer or athlete are exercised.3. Notwithstanding the

provisions of paragraph 1, income derived by an entertainer or an athlete who

is a resident of a Contracting State from his personal activities as such

exercised in the other Contracting State, shall be taxable only in the

first-mentioned Contracting State, if the activities in the other Contracting

State are supported wholly or substantially from the public funds of the

first-mentioned Contracting State, including any of its political sub-divisions

or local authorities.4. Notwithstanding the

provisions of paragraph 2 and Articles 7, 15 and 16, where income in respect of

personal activities exercised by an entertainer or an athlete in his capacity

as such in a Contracting State accrues not to the entertainer or athlete

himself but to another person, that income shall be taxable only in the other

Contracting State, if that other person is supported wholly or substantially

from the public funds of the other State, including any of its political

sub-divisions or local authorities.Article

19: REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE1.a. Remuneration, other

than a pension, paid by a Contracting State or a political sub-division or a

local authority thereof to an individual in respect of services rendered to

that State or sub-division or authority shall be taxable only in that State.b. However, such

remuneration shall be taxable only in the other Contracting State if the

services are rendered in that other State and the individual is a resident of

that State who:i.

is

a national of that State; orii.

did

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

services.1.2.a. Any pension paid by,

or out of funds created by a Contracting State or a political sub-division or a

local authority thereof to an individual in respect of services rendered to

that State or sub-division or authority shall be taxable only in that State.b. However, such pension

shall be taxable only in the other Contracting State if the individual is a

resident of, and a national of that other State.1.2.3. The provisions of

Articles 16, 17 and 20 shall apply to remuneration and pensions in respect of

services rendered in connection with a business carried on by a Contracting

State or a political sub-division or a local authority thereof.Article

20: NON-GOVERNMENT PENSIONS AND ANNUITIES1. Any pension, other

than a pension referred to in Article 19, or any annuity derived by a resident

of a Contracting State from sources within the other Contracting State shall be

taxed only in the first-mentioned Contracting State.2. The term

"pension" means a periodic payment made in consideration of past

services or by way of compensation for injuries received in the course of

performance of services.3. The term

"annuity" means a stated sum payable periodically at stated times during

life or during a specified or ascertainable period of time, under an obligation

to make the payments in return for adequate and full consideration in money's

worth.Article

21: PAYMENTS RECEIVED BY STUDENTS AND APPRENTICES1. A student or business

apprentice who is or was a resident of one of the Contracting States

immediately before visiting the other Contracting State and who is present in

that other State solely for the purpose of his education or training, shall be

exempt from tax in that other State on:a. payments made to him

by persons residing outside that other State for the purposes of his

maintenance, education or training; andb. remuneration from

employment in that other State, in an amount not exceeding US $ 2,000 or its

equivalent in respective currencies during any fiscal year, as the case may be,

provided that such employment is directly related to his studies or is

undertaken for the purpose of his maintenance.1.2. The benefits of this

Article shall extend only for such period of time as may be reasonable or

customarily required to complete the education or training undertaken, but in

no event shall any individual have the benefits of this Article for more than

five consecutive years from the date of his first arrival in that other

Contracting State.Article

22: PAYMENTS RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS1. A professor or

teacher who is or was a resident of one of the Contracting States immediately

before visiting the other Contracting State for the purpose of teaching or engaging

in research, or both, at a university, college, school or other approved

institution in that other Contracting State shall be exempt from tax in that

other State on any remuneration for such teaching or research for a period not

exceeding two years from the date of his arrival in that other State.2. This Article shall

not apply to income from research if such research is undertaken primarily for

the private benefit of a specific person or persons.3. For the purposes of

paragraph 1, "approved institution" means an institution which has

been approved in this regard by the competent authority of the concerned

Contracting State.Article

23: OTHER INCOME1. Subject to the

provisions of paragraph 2, items of income of a resident of a Contracting

State, wherever arising, which are not expressly dealt with in the foregoing

Articles of this Agreement, shall be taxable only in that Contracting State.2. The provisions of

paragraph 1 shall not apply to the 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, or

performs in 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 15, as the case may be,

shall apply.3. Notwithstanding the

provisions of paragraphs 1 and 2, items of income of a resident of a

Contracting State not dealt with in the foregoing Articles of this Agreement

and arising in other Contracting State may also be taxed in that other State.Article

24: AVOIDANCE OF DOUBLE TAXATION1. The laws in force in

either of the Contracting States will continue to govern the taxation of income

in the respective Contracting States except where provisions to the contrary

are made in this Agreement.2. Where a resident of a

Contracting State derives income which, in accordance with the provisions of

this Agreement, may be taxed in the other Contracting State, the

first-mentioned Contracting State shall allow as a deduction from the tax on

the income of that resident an amount equal to the income-tax paid in the other

Contracting State whether directly or by deduction. Such deduction shall not,

however, exceed that part of the income-tax (as computed before the deduction

is given) in the first-mentioned Contracting State which is attributable to the

income which may be taxed in the other Contracting State.3. The tax paid in the

other Contracting State mentioned in paragraph 2 of this Article shall be

deemed to include the tax which would have been payable but for the tax

incentives granted under the laws of that Contracting State and which are

designed to promote economic development.Article

25: NON-DISCRIMINATION1. 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 are or may be subjected.2. 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 in the same circumstances. This provision shall not be

construed as preventing a Contracting State from charging the profits of a

permanent establishment which an enterprise of the other Contracting State has

in the first-mentioned State at a rate higher than that imposed on the profits

of a similar enterprise of the first-mentioned Contracting State, nor as being

in conflict with the provisions of paragraph 3 of Article 7 of this Agreement.3. Nothing contained in

this Article shall be construed as obliging a Contracting State to grant to

persons not resident in that State any personal allowances, reliefs, reductions

and deductions for taxation purposes which are by law available only to persons

who are so resident.4. 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 Contracting

State to any taxation or any requirement connected therewith which is other or

more burdensome than the taxation and connected requirements to which other

similar enterprises of that first-mentioned State are or may be subjected in

the same circumstances.5. The provisions of

paragraphs 2 and 4 of this Article shall not apply to the Vietnamese profit

remittance tax, which in any case shall not exceed 10 per cent of the gross

amount of profits remitted, and the Vietnamese taxation in respect of

agricultural production activities.6. In this Article, the

term "taxation" means taxes which are the subject of this Agreement.Article

26: MUTUAL AGREEMENT PROCEDURE1. Where a resident of a

Contracting State considers that the actions of one or both of the Contracting

States result or will result for him in taxation not in accordance with this

Agreement, he may, notwithstanding the remedies provided by the national laws of

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

State of which he is a resident. This case must be presented within three years

of the date of receipt of notice of the action which gives rise to taxation not

in accordance with the Agreement.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

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

State, with a view to the avoidance of taxation not in accordance with the

Agreement. Any agreement reached shall be implemented notwithstanding any time

limits in the national laws of the Contracting States.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 Agreement. They may also consult together for the

elimination of double taxation in cases not provided for in the Agreement.4. 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. When it seems advisable in order to reach agreement to have an oral

exchange of opinions, such exchange may take place through a Commission

consisting of representative of the competent authorities of the Contracting

State.Article

27: EXCHANGE OF INFORMATION1. The competent

authorities of the Contracting States shall exchange such information

(including documents) as is necessary for carrying out the provisions of the

Agreement or of the domestic laws of the Contracting States concerning taxes

covered by the Agreement, insofar as the taxation thereunder is not contrary to

the Agreement, in particular for the prevention of fraud or evasion of such

taxes. Any information received by a Contracting State shall be treated as

secret in the same manner as information obtained under the domestic laws of

the State. However, if the information is originally regarded as secret in the

transmitting State, it shall be disclosed only to persons or authorities

(including courts and administrative bodies) involved in the assessment or

collection of, the enforcement or prosecution in respect of, or the

determination of appeals in relation to, the taxes which are the subject of the

Agreement. Such persons or authorities shall use the information only for such

purposes but may disclose the information in public court proceedings or in

judicial decisions. The competent authorities shall, through consultation,

develop appropriate conditions, methods and techniques concerning the matters

in respect of which such exchange of information shall be made, including,

where appropriate, exchange of information regarding tax avoidance.2. The exchange of

information or documents shall be either on a routine basis or on request with

reference to particular cases or both. The competent authorities of the

Contracting States shall agree from time to time on the list of the information

or documents which shall be furnished on a routine basis.3. In no case shall the

provisions of paragraph 1 be construed so as to impose on a Contracting State

the obligation:a. to carry out

administrative measures at variance with the laws or administrative practice of

that or of the other Contracting State;b. to supply information

or documents which are 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

or documents which would disclose any trade, business, industrial, commercial

or professional secret of trade process of information the disclosure of which

would be contrary to public policy.Article

28: DIPLOMATIC AGENTS AND CONSULAR OFFICERSNothing

in this Agreement shall affect the fiscal privileges of diplomatic or consular

officers under the general rules of international law or under the provisions

of special agreements.Article

29: ENTRY INTO FORCEEach

of the Contracting State shall notify to the other the completion of the

procedures required by its law for the bringing into force of this Agreement.

This Agreement shall enter into force on the date of the latter of these

notifications and shall thereupon have effect:a. in India, in respect

of income arising in any previous year beginning on or after the first day of

April next following the calendar year in which the latter of the notifications

is given;b. in Vietnam:i.

in

respect of taxes withheld at source, in relation to taxable amount paid on or

after 1 January following the calendar year in which the Agreement enters into

force;ii.

in

respect of other Vietnamese taxes, in relation to income, profits or gains

arising in the calendar year following the calendar year in which the Agreement

enters into force, and in subsequent calendar years.Article

30: TERMINATIONThis

Agreement shall remain in force indefinitely but either of the Contracting

States may, on or before the thirtieth day of June in any calendar year

beginning after the expiration of a period of five years from the date of its

entry into force, give the other Contracting State through diplomatic channels,

written notice of termination and, in such event, this Agreement shall cease to

have effect:a. in India, in respect

of income arising in any previous year beginning on or after the first day of

April next following the calendar year in which the notice is given;b. in Vietnam:i.

in

respect of taxes withheld at source, in relation to taxable amount paid on or

after 1 January following the calendar year in which the notice of termination

is given;ii.

in

respect of other Vietnamese taxes, in relation to income, profits or gains

arising in the calendar year following the calendar year in which the notice of

termination is given, and in subsequent calendar years.In

witness whereof the

undersigned, being duly authorized thereto by their respective Governments,

have signed the present Agreement.Done in duplicate at

Hanoi this 7th day of September one thousand nine hundred and ninety four in

Hindi, Vietnamese and English languages. In case of divergence of

interpretation, the English text shall prevail.(Sd.)............For

the Government of the Republic of India(Sd.)............For

the Government of the Socialist Republic of Vietnam.