AGREEMENT

BETWEEN
THE GOVERNMENT OF THE KINGDOM OF THAILAND
AND
THE GOVERNMENT OF MALAYSIA
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME

The Government of the Kingdom of Thailand and the Government of Malaysia

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:

CHAPTER I
SCOPE OF THE AGREEMENT
ARTICLE 1
PERSONAL SCOPE

This Agreement shall apply to persons who are residents of one or both of the
Contracting States.

ARTICLE 2
TAXES COVERED

1. This Agreement shall apply to taxes on income imposed by each Contracting State,
irrespective of the manner in which they are levied.
2. The existing taxes to which the Agreement shall apply are:
(a) in the case of Malaysia:
(i) the income tax and excess profit tax;
(ii) the supplementary income taxes, that is, tin
profits tax, development tax and timber profits
tax; and
(iii) the petroleum income tax;
(hereinafter referred to as "Malaysian tax");
(b) in the case of Thailand:
(i) the income tax;
(ii) the petroleum income tax;
(hereinafter referred to as "Thai tax").

3. The Agreement shall also apply to any identical or substantially similar taxes on income
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
important changes which have been made in their respective taxation laws.

CHAPTER II
DEFINITIONS
ARTICLE 3
GENERAL DEFINITIONS

1. In this Agreement, unless the context otherwise requires:

(a) the term "Malaysia" means the Federation of Malaysia,and
includes any area adjacent to the territorial waters of
Malaysia which in accordance with international law, has
been or may hereafter be designated, under the laws of
Malaysia concerning the continental shelf, as an area within
which the rights of Malaysia with respect to the sea bed and
sub-soil and their natural resources may be exercised;
(b) the term "Thailand" means the Kingdom of Thailand and
includes any area adjacent to the territorial waters of the
Kingdom of Thailand which by Thai legislation, and in
accordance with international law, has been or may
hereafter be designated as an area within which the rights
of the Kingdom of Thailand with respect to the sea bed and
sub-soil and their natural resources may be exercised;
(c) the terms "a Contracting State" and "the other Contracting
State" mean Malaysia or Thailand, as the context requires;
(d) the term "person" includes an individual, a company and any
other body of persons which is treated as an entity for tax
purposes;
(e) the term "company" means any body corporate or any entity
which is treated as a body corporate under the taxation
laws of the respective Contracting States;
(f) the term "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 "tax" means Malaysian tax or Thai tax, as the context
requires;
(h) the term "national" means:
(i) any individual possessing the citizenship of a
Contracting state;
(ii) any legal person, partnership, association and any
other entity deriving its status as such from the laws
in force in a Contracting State;
(i) the term "international traffic" means transport by a ship or
aircraft operated by an enterprise of a Contracting State,
except where the ship or aircraft is operated solely between
places in the other Contracting State;
 (j) the term "competent authority" means:
(i) in the case of Malaysia, the Minister of Finance or
his authorised representative;
(ii) in the case of Thailand, the Minister of Finance or
his authorised representative.

2. In the application of the Agreement by a Contracting State, any term

not otherwise defined shall, unless the context otherwise requires, have the meaning which it
has under the laws of that Contracting State relating to the taxes which are the subject of the
Agreement.

ARTICLE 4
RESIDENT

1. For the purposes of this Agreement, the term "resident of a Contracting State" means:
(a) in the case of Thailand, a person who is resident in Thailand
for the purposes of Thai tax; and
(b) in the case of Malaysia, a person who is resident in Malaysia
for the purposes of Malaysian tax.

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 in accordance with the following rules:
(a) he shall be deemed to be a resident of the Contracting State
in which he has a permanent home available to him. If he
has a permanent home availble to him in both Contracting
States, he shall be deemed to be resident of the Contracting
State with which his personal and economic relations are
closer (centre of vital interests);
(b) if the Contracting State in which he has his centre of vital
interests cannot be determined, or if he has not a permanent
home available to him in either Contracting State, he shall
 be deemed to be a resident of the Contracting State in which
he has an habitual abode;
(c) if he has an habitual abode in both Contracting States or
in neither of them, he shall be deemed to be a resident of the
Contracting State of which he is a national;
(d) if he is a national of both Contracting States or of neither of
them, the competent authorities of the Contracting States
shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1, a person other than an individual is a

resident of both Contracting States, then the Competent authorities of the Contracting
States shall settle the question by mutual agreement.

ARTICLE 5
PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of
business in which the business of the enterprise is wholly or partly carried on.

2. The term "permanent establishment" shall include especially:

(a) a place of management ;
(b) a branch ;
(c) an office ;
(d) a factory ;
(e) a workshop ;
(f) a mine, quarry, oil or gas well or other place of extraction of
natural resources including timber or other forest produce ;
(g) a farm or plantation ;
(h) a building site or construction, installation or assembly
projectwhich exists for more than six months.
3. The term "permanent establishment" shall not be deemed to include:
(a) the use of facilities solely for the purpose of storage, display
or 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 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 for
collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the
purpose of advertising, for the supply of information, for
scientific research, or for similar activities which have a
preparatory or auxiliary character, for the enterprise.

4. An enterprise of a Contracting State shall be deemed to have a permanent

establishment in the other Contracting State if it carries on supervisory activities in that other
Contracting State for more than six months in connection with a construction, installation or
assembly project which is being undertaken in that other Contracting State.

5. A person (other than a broker, general commission agent or any other agent of an
independent status to whom paragraph 6 applies) acting in a Contracting State on behalf of
an enterprise of the other Contracting State shall be deemed to be a permanent establishment
in the first-mentioned Contracting State, if:
(a) he has, and habitually exercises in the first-mentioned
Contracting State, an authority to conclude contracts in
the name of the enterprise, unless his activities are
limited to the purchase of goods or merchandise for the
enterprise ;
 (b) he maintains in the first-mentioned Contracting State a
stock of goods or merchandise belonging to the enterprise
from which he regularly fills orders on behalf of the
enterprise, or
(c) he secures orders in the first-mentioned State substantially
for the enterprise itself or for the enterprise and other
enterprise which are controlled by it or have a controlling
interest in it.

6. 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 other
Contracting State through a broker, general commission agent or any other agent of an
independent status, where such persons are acting in the ordinary course of their business.
For this purpose, an agent shall not be considered to be an agent of an independent status if it
carries on in that other State an activity described in paragraph 5 substantially for the enterprise
itself or for the enterprise and other enterprises which are controlled by it or have a controlling
interest in it.

7. The fact that 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 Contracting State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a permanent
establishment of the other.

CHAPTER III
TAXATION OF INCOME
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY

1. Income from immovable property may be taxed in the Contracting State in which such
property is situated.
2. For the purposes of this Agreement, the term "immovable property" shall be defined in
accordance with the laws 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, oil or gas wells, quarries
and other places of extraction of natural resources including timber or other forest produce.
Ships, boats and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting,
or use in any other form of immovable property.

4. The provisions of paragraph 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
professional services or other independent activities.

ARTICLE 7
BUSINESS INCOME OR PROFITS

1. The income or profits of an enterprise of a Contracting State shall be taxable only in

that Contracting 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 income or profits of the enterprise may be taxed in the other Contracting State but
only on so much thereof as is attributable to that permanent establishment.

2. 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 income or 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 income or profits of a permanent establishment, there shall be

allowed as deductions all expenses including executive and general administrative expenses,
which would be deductible if the permanent establishment were aw independent enterprise,
insofar as they are reasonably allocable to the permanent establishment, whether incurred in the
Contracting State in which the permanent establishment is situated or elsewhere.

4. In so far as it has been customary in Thailand to determine the income or profits to be

attributed to a permanent establishment on the basis of a certain reasonable percentage of the
gross receipts of the enterprise or on the basis of an apportionment of the total income or profits
of the enterprise to its various parts, nothing in paragraph 2 shall preclude Thailand
from determining the income or profits to be taxed by any such method.
The method adopted shall, however, be such that the result shall be in accordance with the
principles laid down in this Article.

5. No income or 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.

6. Where income or 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 TRANSPORT

1. Income derived by an enterprise of a Contracting State from the operation of aircraft in

international traffic shall be taxable only in that Contracting State.

2. Income derived by an enterprise of a Contracting State from the operation of ships

in international traffic may be taxed in the other Contracting State, but the tax imposed in
that other Contracting State shall be reduced by an amount equal to 50 per cent thereof.

3. The provisions of paragraphs 1 and 2 shall likewise apply in respect of participations in

pools of any kind by enterprises engaged in shipping or air transport.

ARTICLE 9
ASSOCIATED ENTERPRISES

Where
(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, or
(b) 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 income or profits which would, but for those conditions, have
accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be
included in the profits of that enterprise and taxed accordingly.

ARTICLE 10
DIVIDENDS

1. 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 Contracting State.
2. However,
(a) dividends paid by a company which is a resident of Thailand
to a company which is a resident of Malaysia and which
 owns not less than 15 percent of the voting shares of the
company paying the dividends, may be taxed in Thailand but
the tax so charged shall not exceed:
(i) 15 per cent of the gross amount of the dividends
if the company paying the dividends engages in an
industrial undertaking;
(ii) 20 per cent of the gross amount of the dividends in
other cases;
(b) dividends paid by a company which is a resident of Malaysia
to a resident of Thailand who is the beneficial owner thereof
shall be exempt from any tax in Malaysia which is
chargeable on dividends in addition to the tax chargeable in
respect of the income of the company. Nothing in this
subparagraph shall affect the provisions of the Malaysian
laws under which the tax in respect of a dividend paid by a
company which is a resident of Malaysia from which
Malaysian tax has been, or has been deemed to be,
deducted may be adjusted by reference to the rate of tax
appropriate to the Malaysian year of assessment
immediately following that in which the dividend was paid.

3. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends,
being a resident of a Contracting State, has in the other Contracting State of which the company
paying the dividends is a resident, a permanent establishment with which the holding by virtue of
which the dividends are paid is effectively connected. In such a case, the provisions of Article 7
shall apply.

4. Where a company which is a resident of a Contracting State derives income or profits

from the other Contracting State, that other Contracting State may not impose any tax on the
dividends paid by the company to persons who are not residents of that other Contracting
State, or subject the company's undistributed profits to a tax on undistributed profits, even if the
dividends paid or the undistributed profits consist wholly or partly of income or profit arising in
that other Contracting State.

5. The term "dividends" as used in this Article means income from shares or other rights
(not being debt-claims) participating in income or profits, as well as income from other
corporate rights assimilated to income from shares according to the taxation laws of the
Contracting State of which the company making the distribution is a resident.
6. The term "industrial undertaking" means:
(a) any undertaking engaged in
(i) manufacturing, assembling and processing,
(ii) construction, civil engineering and shipbuilding,
(iii) production of electricity, hydraulic power, gas or
the supply of water, or
(iv) agriculture, forestry and fishery and the carrying
on of a plantation, and
(b) any other undertaking entitled to the privileges accorded
under the laws of Thailand on the promotion of industrial
investment.

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,
(a) interest arising in Thailand may be taxed according to the
laws of Thailand but if the recipient is a resident of Malaysia,
the tax so charged shall not exceed:
(i) 10 per cent of the gross amount of the interest if it is
received by any financial institution
 (including an insurance company);
(ii) in all other cases, 25 per cent of the gross amount of
the interest;
(b) interest arising in Malaysia may be taxed according to the
laws of Malaysia, but if the recipient is a resident of Thailand,
the tax so charged shall not exceed 15 per cent of the gross
amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State

and paid to the Government of the other Contracting State shall be exempt from tax in the first-
mentioned Contracting State.

4. For the purposes of paragraph 3, the term "Government"

(a) in the case of Malaysia, means the Government of Malaysia
or any State Government and shall include:
(i) the Bank Negara Malaysia;
(ii) the local authorities; and
(iii) such institutions, the capital of which is wholly
owned by the Government of Malaysia or any State
Government or any local authorities, as may be
agreed from time to time between the Governments
of the two Contracting States;
(b) in the case of Thailand, means the Government of the
Kingdom of Thailand and shall include:
(i) the Bank of Thailand;
(ii) the local authorities; and
(iii) such institutions, the capital of which is wholly owned
by the Government of the Kingdom of Thailand or
any local authorities, as may be agreed from time to
time between the Governments of the two
Contracting States.
5. The provisions of paragraphs 1 and 2, shall not apply if the recipient of the interest is a
resident of a Contracting State and has in the other Contracting State in which the interest arises a
permanent establishment with which the debt-claim in respect of which the interest arises
effectively connected. In such a case, the provisions of Article 7 shall apply.

6. Interest shall be deemed to arise in a Contracting State when the

payer is that Contracting State itself, a political subdivision, a local authority or a resident of
that Contracting 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 in connection
with which the indebtedness on which the interest is paid was incurred, and that interest is
borne by that permanent establishment, then such interest shall be deemed to arise in the
Contracting State in which the permanent establishment is situated.

7. Where, owing to a special relationship between the payer and the

recipient or between both of them and some other person, the amount of the interest paid,
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 recipient in the absence of such relationship, the provisions of
this Article shall apply only to the last-mentioned amount. In that 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.

8. 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, as
well as income assimilated to income from money lent by the taxation laws of the Contracting
State in which the income arises.

ARTICLE 12
ROYALTIES
1. Royalties 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 royalties may be taxed in the Contracting State in which they arise, and
according to the laws of that Contracting State, but if the recipient is a resident of the other
Contracting State, the tax so charged shall not exceed 15 per cent of the gross amount of the
royalties.

3. Notwithstanding the provisions of paragraph 2, approved industrial royalties derived

from Malaysia by a resident of Thailand shall be exempt from Malaysian tax.

4. 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, patent, trade mark, design or model, plan, secret formula or process, or
for the use of, or right to use, industrial, commercial or scientific equipment, or for information
concerning industrial, commercial or scientific experience. The term, however, does not include
any royalty or other amount paid in respect of motion picture films or of tapes for radio or
television broadcasting, or of the operation of a mine, oil well, quarry or any other place of
extraction of natural resources or of timber or other forest produce.

5. The term "approved industrial royalties" means royalties as defined in

paragh 4 which are approved and certified by the competent authority of
Malaysia as payable for the purpose of promoting industrial development in
Malaysia and which are payable by an enterprise which is wholly or mainly engaged in
activities falling within one of the following classes:
(a) manufacturing, assembling or processing;
(b) construction, civil engineering or shipbuilding; or
(c) electricity, hydraulic power, gas or water supply.

6. Income derived from the alienation of rights or property mentioned in paragraph 4 may be
taxed in the Contracting State in which such income arises, but the tax which it imposes shall not
exceed 15 per cent of the gross amount thereof.
7. The provisions of paragraphs 1,2,3 and 6 shall not apply if the recipient of the royalties
or income, being a resident of a Contracting State, has in the other Contracting State in which
the royalties or income arise a permanent establishment with which the right or property giving
rise to the royalties or income is effectively connected. In such a case, the provisions of Article 7
shall apply.

8. Royalties or income mentioned in paragraph 6 shall be deemed to arise

in a Contracting State if the payer is that Contracting State itself, a political subdivision, a
local authority or a resident of that Contracting State. Where, however, the person paying such
royalties or income, 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 royalties or
income was incurred, and those royalties or income are borne by that permanent
establishment, then such royalties or income shall be deemed to arise in the Contracting State in
which the permanent establishment is situated.

9. Where, owing to a special relationship between the payer and the

recipient or between both of them and some other person, the amount of the
royalties or income paid, 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 recipient in the
absence of such relationship, the provisions of this Article shall apply only to the last-mentioned
amount. In that 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
GAINS FROM THE ALIENATION OF PROPERTY

1. Gains from the alienation of immovable property, as defined in paragraph 2 of Article

6, may be taxed in the Contracting State in which such property is situated.

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 professional
services, including such gains from the alienation of such a permanent establishment
(alone or together with the whole enterprise) or of such a fixed base may be taxed in the other
Contracting State. However, gains from the alienation of ships or aircraft operated by an
enterprise of a Contracting State in international traffic and movable property pertaining to the
operation of such ships or aircraft shall be taxable only in the Contracting State of which the
enterprise is a resident.

3. Gains from the alienation of any property or assets, other than those mentioned in
paragraphs 1 and 2 of this Article and paragraphs 4 and 6 of Article 12 shall be taxable
only in the Contracting State of which the alienator is a resident. Nothing in this paragraph
shall prevent either Contracting State from taxing the gains or income from the sale or transfer
of shares or other securities.

ARTICLE 14
PERSONAL SERVICES

1. Subject to the provisions of Articles 15, 17, 18, 19 and 20 remuneration ( other than
pensions) derived by a resident of a Contracting State in respect of personal (including
professional) services shall be taxable only in that Contracting State in respect of personal
(including professional) services shall be taxable only in that Contracting State unless services are
performed in the other Contracting State. If the services are so performed, such the remuneration
as is derived therefrom may be taxed in the other Contracting State.

2. Notwithstanding the provisions of paragraph 1, remuneration (other than pensions)

derived by a resident of a Contracting State in respect of personal (including professional)
services performed in any calendar year in the other Contracting State shall be taxable only
in the first-mentioned Contracting State, if
(a) the recipient is present in the other Contracting State for a
 period or periods not exceeding in the aggregate 183 days in
the calendar year concerned, and
(b) the services are performed for or on behalf of a person who
is a resident of the first-mentioned Contracting State, and
(c) the remuneration is not borne by a permanent establishment
which the person paying the remuneration has in the other
Contracting State.

3. Notwithstanding the perceding provisions of this Article, remuneration in respect of

an employment exercised on board a ship or aircraft operated in international traffic by an
enterprise of a Contracting State, shall be taxable only in that Contracting State.

ARTICLE 15
DIRECTOR'S FEES

Director's 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 Contracting State.

ARTICLE 16
ARTISTES AND ATHLETES

1. Notwithstanding the provisions of Article 14, income derived by public entertainers

(such as stage, motion picture, radio or television artistes and musicians) or athletes, from their
personal activities as such may be taxed in the Contracting State in which these activities are
exercised.

2. Where the personal activities referred to in paragraph 1 are provided in a Contracting

State by an enterprise of the other Contracting State, the profits derived from providing these
activities by such an enterprise may be taxed in the first-mentioned Contracting State.
3. The provisions of paragraphs 1 and 2 shall not apply to remuneration or profits derived
from activities exercised in a Contracting State if the visit to that Contracting State is directly or
indirectly supported wholly or substantially from the public funds of the other Contracting State,
a political sub-division, a local authority or statutory body thereof.

ARTICLE 17
PENSIONS AND ANNUITIES

1. Subject to the provisions of Article 18, any pension or other remuneration for past
employment or any annuity arising in a Contracting State and paid to resident of the other
Contracting State may be taxed in the first-mentioned Contracting State.

2. Pensions or other remuneration for past employment shall be deemed to arise in a

Contracting State if the payer is that Contracting State itself, a political subdivision or local
authority or a resident of that Contracting State. Where, however, the person paying such income,
whether he is a resident of a Contracting State or not, has in a Contracting State a permanent
establishment, and such income is borne by the permanent establishment, then the income shall
be deemed to arise in the Contracting State in which the permanent establishment is situated.

3. The term "annuity" includes 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 or money's worth.

ARTICLE 18
GOVERNMENTAL FUNCTIONS

1 (a) Remuneration, other than a pension, paid by a Contracting

State or a political sub-division or a local authority thereof
to any individual in respect of services rendered to that
Contracting State or political sub-division or local authority
thereof shall be taxable only in that Contracting State.
 (b) However, such remuneration shall be taxable only in the
other Contracting State if the services are rendered in that
Contracting State and the recipient is a resident of that other
Contracting State who:
(i) is a national of that Contracting State; or
(ii) did not become a resident of that Contracting State
solely for the purpose of performing the services.

2. Any pension paid by, or out of funds created by, a Contracting State or a political sub-
division or a local authority thereof to any individual in respect of services rendered to that
Contracting State or political sub-division or authority thereof may be taxed in the other
Contracting State.

3. The provisions of Article 14,15 and 17 shall apply to remuneration or pensions in

respect of services rendered in connection with any trade or business carried on by a
Contracting State or a political sub-division or a local authority thereof.

ARTICLE 19
STUDENTS AND APPRENTICE

An individual who is a resident of a Contracting State immediately before making a visit

to the other Contracting State and is temporarily present in that other Contracting State solely
(a) as a student at a recognised university, college or school;
(b) as a recipient of grant, allowance or award for the primary
purpose of study or research from a government, religious,
charitable, scientific, literary or educational organisation; or
(c) as a business or technical apprentice, shall be exempt from
tax in that other Contracting State in respect of
(i) remittances from abroad for the purposes of this
maintenance, education, study, research or
training,
 (ii) the grant, allowance or award, and
(iii) remuneration for personal services in that other
Contracting State not exceeding 3,600 Malaysian
ringgit or 28,800 Thai baht during any calendar year
or such other amounts as the competent authorities
of the Contracting States may from time to time
agree upon, provided that such services are in
connection with his study, research or training or
are necessary for the purpose of his maintenance.

ARTICLE 20
PROFESSORS, TEACHERS AND RESEARCHERS

An individual who is a resident of a Contracting State immediately before making a visit to

the other Contracting State, and who, at the invitation of any university, college, school or other
similar educational institution, which is recognised by the competent authority in that other
Contracting State, visits that other Contracting State for a period not exceeding two years solely
for the purpose of teaching or research or both at such educational institution shall be exempt
from tax in that other Contracting State on any remuneration for such teaching or research.

ARTICLE 21
INCOME NOT EXPRESSLY MENTIONED

Items of income of a resident of a Contracting State which are not expressly mentioned
in the foregoing Articles of this Agreement may be taxed in the Contracting State where the
income arises.

CHARTER IV
METHODS FOR ELIMINATION OF DOUBLE TAXATION
 ARTICLE 22
LIMITATION OF RELIEF

Where this Agreement provides (with or without other conditions) that income from
sources in a Contracting State shall be exempt from tax, or taxed at a reduced rate in that
Contracting State and under the laws in force in the other Contracting State the said income is
subject to tax by reference to the amount thereof which is remitted to or received in that other
Contracting State and not by reference to the full amount thereof, then the exemption or reduction
of tax to be allowed under this Agreement in the first-mentioned Contracting State shall apply
to so much of the income as is remitted to or received in that other Contracting State.

ARTICLE 23
ELIMINATION OF DOUBLE TAXATION

1. The laws in force in either of the Contracting States shall continue to govern the taxation
of income in the respective Contracting States except where the express provisions to the
contrary are made in this Agreement. Where income is subject to tax in both Contracting States,
relief from double taxation shall be given in accordance with the following paragraphs of this
Articles.

2 In the case of Malaysia, subject to the laws of Malaysia regarding the allowance as a
credit against Malaysian tax ot tax payable in any country other than Malaysia, Thai tax payable
in respect of income derived from Thailand shall be allowed as a credit against Malaysian tax
payable in respect of that income. Where such income is a dividend paid by a company which
is a resident of Thailand to a company which is a resident of Malaysia and which owns not less
than 15 per cent of the voting shares of the company paying the dividend, the credit shall take
into account Thai tax payable by that company in respect of its income out of which the
dividend is paid. The credit shall not, however, exceed that part of the Malaysian tax, as
computed before the credit is given, which is appropriate to such item of income.
3. For the purposes of paragraph 2, the term "Thai tax payable" shall be deemed to include
the amount of Thai tax which would have been paid if the Thai tax had not been exempted or
reduced in accordance with
(a) the special incentive laws designed to promote economic
development in Thailand so far as they are in force on the
date of signature of this Agreement; or
(b) any other provisions which may subsequently be introduced
in Thailand in modification of, or in addition to, the existing
special incentive laws so far as they are agreed by the
competent authorities of the Contracting States to be of a
substantially similar character.

4. In the case of Thailand, Malaysian tax payable in respect of income derived from
Malaysia shall be allowed as a credit against Thai tax payable in respect of that income.
The credit shall not, however, exceed that part of the Thai tax, as computed before the credit is
given, which is appropriate to such item of income. Where such income is a dividend paid by a
company which is a resident of Malaysia to a company which is a resident of Thailand and which
owns not less than 15 per cent of the voting shares of the company paying the dividend, the credit
shall take into account Malaysian tax payable by that company in respect of its income out of
which the dividend is paid.

5. For the purposes of paragraph 4, the term "Malaysian tax payable" shall be deemed to
include Malaysian tax which would, under the laws of Malaysia and in accordance with this
Agreement, have been payable on
(a) any income derived from sources in Malaysia had the income
not been exempted from Malaysia tax in accordance with
(i) sections 21,22 and 26 of the Investment Incentives
Act, 1968 of Malaysia so far as they were in force on
the date of signature of this Agreement; or
(ii) any other provisions which may subsequently be
introduced in Malaysia in modification of, or in
addition to, the Investment Incentives laws so far as
 they are agreed by the competent authorities of the
Contracting States to be of a substantially similar
character; and
(b) approved industrial royalties to which paragraph 3 of Article
12 applies had those royalties not been exempted from
Malaysian tax in accordance with that paragraph.

CHAPTER V
SPECIAL PROVISIONS
ARTICLE 24
NON-DISCRIMINATION

1. The 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 Contracting State in the
same circumstances are or may be subjected.

2. The taxation on a permanent establishment which an enterprise of a Contracting State had

in the other Contracting State shall not be less favourably levied in that other Contracting State
than the taxation levied on enterprises of that other Contracting State carrying on the same
activities.

3. 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 Contracting State are or
may be subjected.

4. Nothing in this Article shall be construed as obliging:

(a) a Contracting State to grant to individuals who are resident of
 the other Contracting State any personal allowances, reliefs
and reductions for taxation purposes on account of civil
status or family responsibilities which it grants to its own
residents;
(b) Malaysia to grant to nationals of Thailand not resident in
Malaysia those personal allowances, reliefs and reductions
for taxation purposes which are by law available on the date
of signature of this Agreement only to nationals of Malaysia
who are not resident in Malaysia.

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

ARITCLE 25
MUTUAL AGREEMENT PROCEDURE

1. 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 taxation laws of those
Contracting States, present his case to the competent authority of the Contracting State of
which he is a resident.

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 an appropriate 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 which is not in accordance with the Agreement.

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.

ARTICLE 26
EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such information as is
necessary for the carrying out of this Agreement or for the prevention or detection of evasion or
avoidance of taxes covered by this Agreement. Any information so exchanged shall be treated as
secret and shall not be disclosed to any persons or authorities other than those (including a Court
or reviewing authority) concerned with the assessment, collection or enforcement of the taxes
which are the subject of the Agreement or the determination of appeals in relation thereto.

2. In no case shall the provisions of paragraph 1 be construed so as to impose on one of the

Contracting States the obligation:
(a) to carry out administrative measures at variance with the laws
or the administrative practice of that or of the other
Contracting State;
(b) to supply particulars 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 which would disclose any trade,
business, industrial, commercial or professional secret, trade
process, or information the disclosure of which would be
contrary to public policy (order public).

ARTICLE 27
DIPLOMATIC AND CONSULAR OFFICIALS
 Nothing in this Agreement shall affect the fiscal privileges of diplomatic or consular
officials under the general rules of international law or under the provisions of special
agreements.

CHAPTER VI
FINAL PROVISIONS
ARTICLE 28
ENTRY INTO FORCE

1. This Agreement shall be ratified and the instruments of ratification shall be exchanged at
Bangkok as soon as possible.

2. This Agreement shall enter into force upon the exchange of the instruments of
ratification and shall have effect for the income of the calendar years or accounting periods
beginning on or after the first day of January of the calendar year in which the instruments of
ratification are exchanged.

ARTICLE 29
TERMINATION

This Agreement shall remain in effect indefinitely, but either Contracting State may
terminate the Agreement, through diplomatic channels, by giving to the other Contracting
State, written notice of termination on or before June 30 of any calendar year from the fifth
year from the year in which the Agreement entered into force. In such event, the Agreement shall
cease to have effect for the income of the calendar years or accounting periods beginning on or
after the first day of January of the calendar year following that in which the notice is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed
this Agreement.
 Done in duplicate at Kuala Lumpur on this 29th day of March, one thousand nine hundred
and eighty-two Year of the Christian Era, each in the Thai, Bahasa Malaysia and English
languages, the three texts equally authoritative.

FOR THE GOVERNMENT OF THE FOR THE GOVERNMENT OF MALAYSIA

KINGDOM OF THAILAND
Tan Sri Thong Yaw Hong
Nissai Vejjajiva
(Tan Sri Thong Yaw Hong)
(Nissai Vejjajiva)
Secretary-General Treasury
Ambassador
Extraordinary and Plenipotentiary
of the Kingdom of Thailand to
Malaysia
Kll.A.LA ,LUXPDR, O;)l ,.2.9XJl ~~RCH .1.982

The Government of the Kingdom of Thailand and the

Government of Malaysia;

Desiring to conclude a Protocol to amend the

Agreement between the Contracting Governments for the
Double Taxation and the Prevention of Fiscal

respect to Taxes on Income, signed at Kuala

Lumpur on 29th March 1982 <hereinafter referred to as "the

Agreement");

Have agreed as follows:

~
 '}j
-10 -

Done in duplicate at Bangkok on this 10th day of February

1995 i~ .the Thai, Bahasa Malaysia ~d..,the English .,:1.angJJ.ages,

the three texts being equally authoritative.

FOR THE GOVERNMENTOF FOR THE GOVERNMENTOF

9

THE KINGDOM OF THAILAND MALAYSIA

~"'~. ~
4:: "~--(H.E.
, Thaksin Shinawatra) Dato' Zainal Abidin Alias)
,I
Minister of Foreign Affairs Extraordinary and
;..
.. Plenipotentiary
1
II
;
i
..
I

(H.E.
"Ambassador
 MINISTER OF FINANCE MALAYSIA

Your Excellency,

On behalf of the Government of Malaysia, I have the honour to refer to the

discussions held between our respective delegations concerning the scope and
application of Article 7 A and Article 2 of the Agreement for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion and the Protocol amending that
Agreement signed between us on the 29th March 1982 and 10th February 1995
respectively.

As Your Excellency would recall, we find difficulties at this stage in identifying'

or determining the activities that are directly related to exploration and exploitation of
any petroleum in the Joint Development Area or JDA. In that respect, I have the
honour to propose that such identification or determination be made in accordance with
the facts and circumstances of each particular case.

However, to eliminate some of the difficulties, I propose that the activities listed
in 1'.nnexure 1 sha!1 be exciuded frcm being activities directly related to the exploration
and exploitation of petroleum in the JDA.

With reference to the procedures for implementation of the fifty per cent
reduction as agreed in the said Protocol, I have the honour to propose the following:

(i) With respect to withholding taxes, the fifty per cent reduction shall be
effected ot the time the payment is made by the payer provided that
sufficient evidence is produced to the respective tax authorities;

(ii) Other than withholding tax cases, the fifty per cent reduction shall be
effected upon sufficient evidence produced to the respective tax
authorities;

(iii) In the case of any ambiguity with respect to the application of the
Protocol, both competent authorities v{ilJ consult each other.

If the foregoing proposals are acceptable to the Government of the Kingdom of

Thailand, I have the further honour to propose that my Note and Your Excellency's
reply in acceptance thereof shall constitute an Agreement between our two
Governments regarding this matter, which shall enter into force on the date of Your
Excellency's reply.

Ministry of Finance, Jalan Duta, 50592 Kuala Lumpur.

T~I ."C ,,':'(\(\1\ "c ,,£(\,:.,:. "CAO111 t:"~_. (\'1 "c£,,£££
Please accept, Your Excellency, the assurances of my highest and fraternal
consideration.

Dated at KUQta this 25 +1-) day of $er+~r)')be,. 1995.

Lt.tMf\.AY'"

( ~ .
Anwar Ibrahim

~
HIS EXCELLEN Y SURAKIAT SATHIRATHAI, .-.'
-'

Minister of Finan e
The Kingdom of hailand
 Annexure 1

Activities not directly related to exploration and exploitation of any

petroleum in the JDA shall include but not limited to the following:

(1) Professional services provided by accountants, auditors, lawyers

and doctors.

(2) The maintenance and repairs that are general in nature and do not
require specialised skills.

(3) Catering and support services.

(4) Land transportation. -,'"to;

(5) Insurance.

(6) Financial services.

(7) Construction, installation or erection of facilities onshore except

facilities utilised before the point of sale of petroleum.

(8) Any other activities as may be agreed from time to time by the
competent authorities of both Contracting States.
 " ~ fiR 0808/ ~I$}
~
".; L~'ftiifl",U fI~lI&1~~W'fI~fI~'1JfI'lI&1" Lu, Pie1tJ 1.i-d" RUL:!.v" fiull ,i. VLLi.

(copy)

b
Excellency~

I have the honour to acknowledge the receipt of Your

Excellency's Note dated September25, 1995 which reads as follows:
" On behalf of the Government of Malaysia, I have the honour
to refer to the discussions held between our respective delegations
concerning the scope and application of Article 7A and Article 2 of the
Agreement for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion and the Protocol amending that Agreement signed between us
on the 29th March 1982 and 10th February 1995 respectively.

As Your Excellency would recall, we find difficulties at this

stage in identifying or determining the activities that are directly related to
exploration and exploitation of any petroleum in the Joint Development Area
or illA. In that respect, I have the honour to propose that such identification
or determination be made in accordance with the facts and circumstances of
each particular case.

However, to eliminate some of the difficulties, I propose that the

activities listed in Annexure 1 shall be excluded from being activities directly
related to the exploration and exploitation of petroleum in the illA.

With referenceto the procedures for implementation of the fifty

per cent reduction as agreed in the said Protocol, I have the honour to
propose the following:
(i) With respectto withholding taxes, the fifty per cent reduction
shall be effected at the time the payment is made by the payer provided that
sufficient evidenceis produced to the respectivetax authorities;

/ (ii)...
His Excellency
Mr .An war Ibrahim
Deputy Prime Minister of Malaysia
KUALA LUMPUR.
 -2-

(ii) Other than withholding tax cases,the fifty per cent reduction
shall be effected upon sufficient evidence produced to the respective tax
authorities;

(iii) In the case of any ambiguity with respect to the application

of the Protocol, both competent authorities will consult each other.

If the foregoing proposals are acceptable to the Government of

the Kingdom of Thailand, I have the further honour to propose that my Note
and Your Excellency's reply in acceptance thereof shall constitute an
Agreement between our two Governments regarding this matter, which shall
enter into force on the date of Your Excellency's reply."

.In reply, I have the honour to inform Your Excellency that the
foregoing proposals in Your Excellency's Note are acceptable and reflect
correctly the understanding of the Government of Malaysia and the
Government of the Kingdom of Thailand. The present Note and Your
Excellency's Note constitute an Agreement between the two Governments
regarding this matter, which shall enter into force on the date of the present
Note.

/-L::~~~
(Dr. Surakiart Sathirathai)
Minister of Finance