Protocol

In respect of paragraph 1 of Article 7, profits derived from the sale of goods or merchandise of the same or similar kind as those sold, or from other business activities of the same or similar kind as those effected, through a permanent establishment, may be considered attributable to that permanent establishment if it is proved that this transaction has been resorted to in order to avoid taxation in the State where the permanent establishment is situated.

In respect of paragraphs 1 and 2 of Article 7, where an enterprise of a Contracting State sells goods or merchandise or carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall not be determined on the basis of the total amount received by the enterprise, but shall be determined only on the basis of that portion of the income of the enterprise that is attributable to the actual activity of the permanent establishment in respect of such sales or business. Specifically, in the case of contracts for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, when the enterprise has a permanent establishment, the profits attributable to such permanent establishment shall not be determined on the basis of the total amount of the contract, but shall be determined only on the basis of that part of the contract that is effectively carried out by the permanent establishment in the Contracting State where the permanent establishment is situated. The profits related to that part of the contract which is carried out by the head office of the enterprise shall be taxable only in the Contracting State of which the enterprise is a resident.

Notwithstanding the provisions of Article 7, the competent authority of a Contracting State may determine the tax liability of an enterprise of a Contracting State under its national legislation in case the enterprise did not supply that competent authority with adequate information and a request under Article 26 of the Agreement did not result in the supply of that information; the determination of the tax liability, however, shall be such that the result shall be in accordance with the principles contained in this Article.

Notwithstanding the provisions of paragraph 2 of Article 11, as long as, under the provisions of the Netherlands taxation laws and to the future amendments thereto, the Netherlands does not levy a tax at source on interest paid to a resident of Vietnam, the percentage provided for in this paragraph shall be reduced to 7 per cent of the gross amount of the interest.

If Vietnam after 1 July 1993 has signed an Agreement for the avoidance of double taxation with a member State of the Organisation for Economic Cooperation and Development which provides for a lower rate on interest (including a zero rate) then this lower rate will apply to residents of the Netherlands.

It is understood that the provisions of Articles 7 and 14 shall apply to services performed by a resident of a Contracting State in the other Contracting State. Notwithstanding the preceding sentence, in case there is no permanent establishment or fixed base, payments for technical services performed by a resident of a Contracting State in the other Contracting State shall be deemed to be payments to which the provisions subparagraph (a) of paragraph 2 of Article 12 apply.

If Vietnam after 1 July 1993 has signed an Agreement for the avoidance of double taxation with a member State of the Organisation for Economic Cooperation and Development which provides for a lower rate (including a zero rate) on payments for technical services as meant in paragraph 1 of this provision then this lower rate will apply to residents of the Netherlands.

For so long as Vietnam continues to grant to investors licences under the Law on Foreign Investment in Vietnam, which specify the taxation to which the investor shall be subject, the imposition of such taxation shall not be regarded as breaching the terms of paragraph 2 of Article 24.

If Vietnam after 1 July 1993 has signed an Agreement for the avoidance of double taxation with a member State of the Organisation for Economic Cooperation and Development with a provision which provides for a treatment in conformity with or comparable to that as provided for in Article 24 of the Model Tax Convention of the afore-mentioned organisation, as published in 1992, then such provision will apply to residents of both Contracting States; in that case the foregoing paragraph shall no longer apply.

Notwithstanding the provisions of paragraph 2 of Article 24, the percentage provided for in that paragraph shall be reduced to 7 per cent of the profits remitted from the permanent establishment to the head office as long as the profits remitted are exempt from tax in the Netherlands under subparagraph (b) of paragraph 2 of Article 23 of the Agreement.

If Vietnam after 1 July 1993 has signed an Agreement for the avoidance of double taxation with a member State of the Organisation for Economic Cooperation and Development which provides for a lower rate on profits remitted from the permanent establishment to the head office (including a zero rate) then this lower rate will apply to residents of the Netherlands.