- 1
- The Netherlands, when imposing tax on its residents, may include in the basis upon which such taxes are imposed the items of income which, according to the provisions of this Convention, may be taxed in Bangladesh.
- 2
- However where a resident of the Netherlands derives items of income which according to Article 6, Article 7, paragraph 5 of Article 10, paragraph 5 of Article 11, paragraph 4 of Article 12, paragraphs 1 and 2 of Article 13, Article 14, paragraph 1 and 3 of Article 15, Article 16, Article 19 and paragraph 2 of Article 22 of this Convention may be taxed in Bangladesh and are included in the basis referred to in paragraph 1 the Netherlands shall exempt such items of income by allowing a reduction of its tax. This reduction shall be computed in conformity with the provisions of Netherlands law for the avoidance of double taxation. For that purpose the said items of income shall be deemed to be included in the total amount of the items of income which are exempt from Netherlands tax under those provisions.
- 3
- Further, the Netherlands shall allow a deduction from the Netherlands tax so computed for the items of income which according to paragraph 2 of Article 8, paragraph 2 of Article 10 paragraph 2 of Article 11, paragraph 2 of Article 12, paragraph 5 of Article 13, Article 17 and paragraph 2 of Article 18 of this Convention may be taxed in Bangladesh to the extent that these items are included in the basis referred to in paragraph 1. The amount of this deduction shall be equal to the tax paid in Bangladesh on these items of income, but shall not exceed the amount of the reduction which would be allowed if the items of income so included were the sole items of income which are exempt from Netherlands tax under the provisions of Netherlands law for the avoidance of double taxation.
- 4
- Where, by reason of special relief given under the provisions of Bangladesh law for the purpose of encouraging investment in Bangladesh the Bangladesh tax actually levied on interest and royalties arising in Bangladesh is lower than the tax Bangladesh may levy according to paragraph 2 of Article 11 and paragraph 2 of Article 12, then the amount of the tax paid in Bangladesh on such interest and royalties shall be deemed to have been paid at the rates of tax mentioned in the said provisions. However, if the general tax rates under Bangladesh law applicable to the afore-mentioned interest and royalties are reduced below those mentioned in the foregoing sentence these lower rates shall apply for the purposes of that sentence.
- The provisions of the two foregoing sentences shall only apply for a period of ten years after the date on which the Convention became effective. This period may be extended by mutual agreement between the competent authorities.
- 5
- Subject to the provisions of the law of Bangladesh regarding the allowance as a credit against Bangladesh tax of tax payable in a territory outside Bangladesh (which shall not affect the general principle hereof), tax payable under the laws of the Netherlands and in accordance with this Convention on income, profits or gains from sources within the Netherlands shall be allowed as a credit against any Bangladesh tax computed in respect of the same income, profits or gains by reference to which the Netherlands tax is computed.
- For the purposes of this paragraph in determining the taxes on income paid to the Netherlands, the investment premiums and bonuses and disinvestment payments as meant in the Netherlands Investment Account Law ("Wet investeringsrekening") shall not be taken into account. For the purposes of this paragraph, the taxes referred to in paragraph 3 (a) and 4 of Article 2 shall be considered taxes on income.
