Article 12 Royalties
     1. Royalties arising in one of the States and paid to a resident of the other State may be taxed in that other State if such resident is the beneficial owner of the royalties.
     2. However, such royalties may also be taxed in the 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 15 percent 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 cinematographic films, 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. The term "royalties" also includes the gains obtained from the alienation of any of such property or rights which are conditioned upon the productivity or use of them.
     4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of one ofthe States, carries on business in the other 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 cases the provisions of Article 7 or Article 14, as the case may be, shall apply.
     5. Royalties shall be deemed to arise in one of the States when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of one of the States or not, has in one of the States a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
     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 for any reason 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 State, due regard being had to the other provisions of this Convention.
     7. The provisions of this Article shall not apply when the right or property for which the royalties are paid was granted or assigned principally for the purpose of taking advantage of this Article. In the case where one of the States intends to apply this paragraph, the competent authority of that State shall consult in advance with the competent authority of the other State.