II SÉRIE-A — NÚMERO 78 104_______________________________________________________________________________________________________________

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 Contracting 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 14, 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 Contracting 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 Contracting 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 Contracting State.

ARTICLE 11

Interest

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

taxed in that other Contracting 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 beneficial owner of the interest is a resident of the other Contracting State, the

tax so charged shall not exceed 10 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest referred to in paragraph 1 shall be taxable only

in the Contracting State of which the recipient is a resident, if such interest is paid to and beneficially owned

by:

(a) in the case of Viet Nam, the State, a political or administrative subdivision or a local authority thereof,

or the State Bank of Viet Nam; and

(b) in the case of Portugal, the State, a political or administrative subdivision or a local authority thereof,

or the Central Bank of Portugal.

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 Contracting 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 14, as the case may be, shall apply.

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

Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in

a Contracting State a permanent establishment 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