Convention between the Government of the Russian Federation and the Government of the Republic of Korea for the avoidance of double taxation with respect to taxes on income

Convention between the Government of the Republic of Korea and the Government of the Russian Federation for the Avoidance of Double Taxation with Respect to Taxes on Income

 

Article 1 Personal Scope

This Convention shall apply to persons who are residents of one or both of the

Contracting States.

Article 2 Taxes Covered

1. This Convention shall apply to taxes on income or part of total income

imposed in accordance with the legislation of each of the Contracting States,

irrespective of the manner in which they are levied.

2. The taxes, to which the Convention shall apply, are:

a) in the case of the Republic of Korea - "the income tax", "the corporation

tax" and "the inhabitant tax" imposed in accordance with the Laws of the

Republic of Korea;

(hereinafter referred to as "the Korean tax");

b) in the case of the Russian Federation - the taxes on income and profits

imposed in accordance with the Laws of the Russian Federation "On

taxes on profits of enterprises and organisations", "On taxation of income

of banks", "On taxation on income from insurance activities" and "On the

income tax on individuals";

(hereinafter referred to as "the Russian tax").

3. This Convention shall apply also to any identical or substantially similar

taxes which are imposed after the date of signature of this Convention in addition

to, or in place of, the existing taxes referred to in paragraph 2 of this Article. The

competent authorities of the Contracting States shall notify each other of any

substantial changes which have been made in their respective taxation laws.

Article 3 General Definitions

1. For the purposes of this Convention, unless the context otherwise requires:

a) the terms "a Contracting State" and "the other Contracting State" mean the

Republic of Korea or the Russian Federation (Russia), as the context requires;

b) the term "the Republic of Korea" means, when used in geographical sense,

its territory, including its territorial sea, and also its economic zone and

continental shelf in which this State for certain purposes may exercise

sovereign rights and jurisdiction in accordance with international law and in

which its laws relating to taxes are applicable;

c) the term "the Russian Federation", when used in geographical sense,

means its territory, including its territorial waters as well as economic zone

and continental shelf where this State exercises sovereign rights and

jurisdiction in conformity with international law and where its tax laws are

effective;

d) the term "person" means an individual, a company and any other body of

persons;

e) the term "company" means any body corporate or any entity which is

treated as a body corporate for tax purposes;

f) the term "international traffic" means any transport by a ship, a boat, an

aircraft or any other means of transportation operated by a resident of a

Contracting State, when the transportation takes place solely between

places in different Contracting States;

g) the term "competent authority" means:

ⅰ) in the case of the Republic of Korea - the Minister of Finance or his

authorised representative;

ⅱ) in the case of the Russian Federation - the Ministry of Finance or its

authorised representative.

2. As regards the application of this Convention by a Contracting State, any

term not defined therein shall, unless the context otherwise requires, have the

meaning which it has under the laws of that Contracting State concerning the taxes

to which this Convention applies.

Article 4 Resident

1. For the purposes of this Convention, the term "resident of a Contracting

State" means any person who, under the laws of that Contracting State, is liable to

tax therein by reason of his domicile, residence, place of head or main office,

place of registration, place of management or any other criterion of a similar nature.

2. Where, by reason of the provisions of paragraph 1 of this Article, a person

other than an individual is a resident of both Contracting States, the main criterion

of its residence will be considered the place where its effective management is

situated.

In case of doubt the competent authorities of the Contracting States will

settle this question by mutual agreement.

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

resident of both Contracting States, then his status shall be determined as follows:

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

available to him in both Contracting States, he shall be deemed to be a

resident of the Contracting State with which his personal and economic

relations are closer (centre of vital interests);

b) if the 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 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 each Contracting State considers him to be its national or if he is a

national of neither of them, the competent authorities of the Contracting

States shall settle the question by mutual agreement.

Article 5 Permanent Establishment

1 For the purposes of this Convention, the term "permanent establishment"

means a fixed place of business through which the business of a resident is

wholly or partly carried out in the other Contracting State.

2. The term "permanent establishment" includes especially:

a) a place of management;

b) a branch;

c) an office;

d) a factory;

e) a workshop; and

f) a mine, an oil or gas well, a quarry or any other place of extraction of

natural resources.

3. A building site, a construction, assembly or installation project, a drilling rig,

or a ship used for the exploration and exploitation of natural resources shall

constitute a permanent establishment only if the duration of works connected

therewith exceeds 12 months. Competent authorities of the Contracting States in

which such works are exercised may, on the basis of an application submitted by

the relevant persons in exceptional cases, consider that such activity does not

constitute a permanent establishment also in cases where the activities continue

for more than 12 months but not more than 24 months.

4. Notwithstanding the previous provisions of this Article the following types

of activity of a resident of a Contracting State shall not be deemed as carried on

in the other Contracting State through a permanent establishment:

a) the use of facilities solely for the purpose of storage, display or delivery

of goods or merchandise belonging to this resident;

b) the maintenance of a stock of goods of merchandise belonging to this

resident solely for the purpose of storage, display or delivery;

c) the maintenance of a stock of goods or merchandise, belonging to this

resident solely for the purpose of processing by another person;

d) the maintenance of a fixed place of business solely for the purpose of

purchasing goods or merchandise or of collecting information, for this

resident;

e) the maintenance of a fixed place of business solely for the purpose of

carrying on, for this resident, any other activity of a preparatory or an

auxiliary character;

f) the maintenance of a fixed place of business solely for the purpose of

facilitation of conclusion or mere signing contracts on behalf of this resident;

g) the maintenance of a fixed place of business solely for the purpose of

carrying on any combination of activities mentioned in subparagraphs a) to f).

5. Notwithstanding the provisions of paragraphs 1 and 2, where a resident of

one Contracting State carries on the activities in the other Contracting State through

an agent, that person shall be deemed to have a permanent establishment in that

other State in respect of any activities which the agent undertakes for that person, if

the agent meets each of the following conditions:

a) he has an authority to conclude contracts in that other state in the name of

that person;

b) he habitually exercises that authority;

c) he is not an agent of an independent status to whom the provisions of

paragraph 6 of this Article apply;

d) his activities are not limited to those mentioned in paragraph 4 of this Article.

6. A resident 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 State through a broker, general commission agent or any other agent

of an independent status, provided that such persons are acting in the ordinary

course of their business.

7. The fact that a 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 State (whether through a permanent

establishment or otherwise), shall not of itself constitute either company a

permanent establishment of the other.

Article 6 Income from Immovable Property

1. Income derived by a resident of a Contracting State from immovable property

(including income from agriculture or forestry) situated in the other Contracting State

may be taxed in that other State.

2. The term "immovable property" shall have the meaning which it has under the

law of the Contracting State in which the property in question is situated. 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 paragraphs 1 and 3 of this Article shall also apply to the

income from immovable property of a resident of a Contracting State and to income

from immovable property used for the performance of independent personal services.

Article 7 Business Profits

1. The profits of a resident of a Contracting State shall be taxable only in that

State unless the resident carries on business in the other Contracting State through

a permanent establishment situated therein. If the resident carries on business as

aforesaid, the profits of the resident may be taxed in the other State but only so much

of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3 of this article, where a resident of a

Contracting State carries on any business activities in the other Contracting State

through a permanent establishment situated therein, there shall in each Contracting

State be attributed to that permanent establishment the profits which it might be

expected to make if it were a distinct and separate person engaged in the same or

similar activities under the same or similar conditions and dealing wholly

independently with the resident of which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall be

allowed as deductions expenses which are incurred for the purposes of the

business of the permanent establishment. There shall be allowed a reasonable

allocation between a resident of a Contracting State and its permanent

establishment situated in the other Contracting State, of properly documented

expenses. Such expenses include executive and general administrative expenses,

research and development expenses, interest and charges for management

consultancy or technical assistance incurred either in the State in which the

permanent establishment is situated or elsewhere.

4. For the purposes of applying the provisions of the preceding paragraphs,

the profits to be attributed to the permanent establishment shall be determined by

the same method year by year, unless there is good and sufficient reason to the

contrary.

5. No business profits shall be attributed to a permanent establishment of a

person who is a resident of one Contracting State by reason of a mere purchase

by the permanent establishment of goods or merchandise for that person.

6. Where profits include items of income which are dealt with separately in

other Articles of this Convention, then the provisions of those Articles shall not be

affected by the provisions of this Article.

Article 8 International Traffic

1. Profits (or income) of a resident of a Contracting State from the operation of

ships, boats, aircraft or any other means of transportation shall be taxable only in

that State.

2. For the purpose of this Convention, profits (or income) from international

traffic shall include profits (or income) from the direct use, profits (or income) from

the lease or use in any other means of transportation, mentioned in paragraph 1

of this Article including profits (or income) from the use, maintenance and lease

of containers and other related equipment.

3. The provisions of paragraphs 1 and 2 shall also apply to profits (or income)

from the participation in a pool, a joint business or an international transport agency.

Article 9 Adjustments to Income in Cases Where Persons Participate,

Directly or Indirectly, in the Management, Control or Capital of

Other Persons

Where:

a) a person which is a resident of a Contracting State participates directly or

indirectly in the management, control or capital of a person which is a

resident of the other Contracting State, or

b) the same persons participate directly or indirectly in the management,

control or capital of a resident of a Contracting State and a resident of the

other Contracting State,

and in either case conditions are made or imposed between the two persons

in their commercial or financial relations which differ from those which would be

made between independent persons, then any profits which would, but for those

conditions, have accrued to one of the persons, but, by reason of those conditions

have not so accrued, may be included in the profits of that person 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 State.

2. However, such dividends may also be taxed in the Contracting State of

which the company paying the dividends is a resident and according to the laws

of that State, but if the recipient is the beneficial owner of the dividends, the tax so

charged shall not exceed:

a) 5 percent of the gross amount of the dividends if the beneficial owner is a

company (other than a partnership) which holds directly at least 30 percent

of the capital of the company paying the dividends and invests not less than

100,000 USD or equivalent amount of local currencies to the company

paying the dividends;

b) 10 percent of the gross amount of the dividends in all other cases.

This paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.

3. The term "dividends" as used in this Article means income from shares, or

other rights, not being debt-claims, participating in profits, as well as income from

other corporate rights which is subjected to the same taxation treatment as income

from shares by the laws of the State of which the company making the distribution

is a resident. In the case of the Russian Federation, this term includes, in particular,

profits distributed to the foreign participants of an enterprise with foreign investments

created under the law of the Russian Federation.

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 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

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 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 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 State, nor subject the company's undistributed

profits to a tax on the company's undistributed profits, even if the dividends paid

or undistributed profits consist wholly or partly of profits or income arising in such

other State.

Article 11 Interest

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

Contracting State shall be taxable only in that other State.

2. 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.

3. The provisions of paragraph 1 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 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 14 of this Convention, as

the case may be, shall apply.

4. 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 paid, 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 Contracting State,

due regard being had to the other provisions of this Convention.

Article 12 Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed only in that other Contracting State.

2. However, such royalties may also be taxed in the Contracting 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 5 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 cinematograph films and films or tapes

for radio or television broadcasting, 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, or for information concerning industrial,

commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner

of the royalties, being a resident of a Contracting State, carries on business in the

other Contracting State in which the royalties arise, through a permanent

establishment situated therein, or performs in that other state independent personal

services through 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 case, the provisions of Article 7 or 14 of this

Convention shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is

the Government of that Contracting State, a local authority thereof or a resident of

that Contracting State. Where, however, the person paying the royalties, whether

he is a resident of a Contracting State or not, has in a Contracting State a

permanent establishment or fixed base in connection with which the liability to pay

the royalties was incurred, and such royalties are borne by such permanent

establishment or fixed base, then such royalties shall be deemed to arise in the

Contracting State in which the permanent establishment or fixed base 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 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 beneficial owner in the absence of such relationship, the provisions of this

Article shall apply only to the last-mentioned amount. In such a 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 Convention.

Article 13 Capital Gains

1. Gains derived by a resident of a Contracting State from the alienation of

immovable property referred to in Article 6 situated in the other Contracting State

may be taxed in that other Contracting State.

2. Gains derived from the alienation of movable property forming part of property

of a permanent establishment which a resident of a Contracting State has in the

other Contracting State or of movable property pertaining to fixed base available to a

resident of a Contracting State in the other Contracting State for the purpose of

performing independent personal services, including such gains from the alienation

of such a permanent establishment or of such a fixed base, may be taxed in that

other Contracting State. The term "movable property" means property which is

recognised as such by the legislation of the Contracting State where such property

is located.

3. Gains derived from the alienation of ships, boats, aircraft and other means

of transportation operated in international traffic or movable property pertaining to

such operation shall be taxable only in the Contracting State of which the alienator

is a resident.

4. Gains derived from the alienation of any property other than that referred to

in paragraphs 1, 2 and 3 of this Article, shall be taxable only in the Contracting State

of which the alienator is a resident.

Article 14 Independent Personal Services

1. Income derived by an individual who is a resident of a Contracting State from

the performance of independent professional services shall be taxable only in that

State, unless

a) such services are performed or were performed in the other Contracting

State; and

b) the income is attributable to a fixed base which the individual has or had

regularly available to him in that other Contracting State; and

c) such individual is present or was present in the other State for a period or

periods exceeding in the aggregate 183 days in the calendar year.

In such a case, the income attributable to that fixed base may be taxed in that

other State in accordance with principles similar to those of Article 7 (Business

Profits) for determining the amount of business profits and attributing business

profits to a permanent establishment.

2. The term "professional services" includes especially independent scientific,

literary, artistic, educational or teaching activities, as well as the independent

activities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 15 Dependent Personal Services

1. Subject to the provisions of Articles 16, 18, 19 and 20 of this Convention

salaries, wages and other similar remuneration derived by a resident of a

Contracting State in respect of an employment shall be taxable only in that

Contracting State, unless the employment is exercised in the other Contracting

State. If the employment is so exercised, such remuneration may be taxed in

that other Contracting State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by

a resident of a Contracting State in respect of an employment exercised in the

other Contracting State shall be taxable only in the first-mentioned 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 remuneration is paid by, or on behalf of, an employer who is not a

resident of the other Contracting State; and

c) the remuneration is not borne by a permanent establishment or fixed base

which the employer has in the other Contracting State.

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

employment exercised aboard a ship, boats, aircraft or any other means of

transportation operated in international traffic by a resident of a Contracting State,

shall be taxable only in that State.

Article 16 Directors' fees

Directors' fees and other similar payments derived by a resident of a Contracting

State in his capacity as a member of the board of directors or similar body of a

company which is a resident of the other Contracting State may be taxed in that other

Contracting State.

Article 17 Artists and Athletes

1. Notwithstanding the provisions of Articles 14 and 15, income derived by a

resident of a Contracting State as an entertainer, such as a theatre, motion picture,

radio or television artist, or a musician, or as an athlete, from his personal activities

as such exercised in the other Contracting State, may be taxed in that other

Contracting State.

2. Where income in respect of personal activities exercised by an artist or an

athlete in his capacity as such accrues not to the artist or athlete himself but to

another person, that income may, notwithstanding the provisions of Articles 7, 14

and 15, be taxed in the Contracting State in which the activities of the artist or

athlete are exercised.

3. Notwithstanding the provisions of paragraphs 1 and 2, income derived by

artists or athletes who are residents of a Contracting State from the activities

exercised in the other Contracting State under an agreement of cultural exchange

between the Governments of both Contracting States shall be exempt from tax in

that other Contracting State.

Article 18 Pensions

1. Any pension paid by, or out of funds created by, a Contracting State, its

subdivision or local authority thereof to an individual in respect of services rendered

to that State shall be taxable only in that Contracting State. However, such pension

shall be taxable only in the other Contracting State if the individual is a resident of,

and a national of, that State.

2. All the other types of pensions and similar remunerations paid to a resident

of a Contracting State in consideration of past activities may be taxed only in that

Contracting State.

Article 19 Government Service

1. Remuneration, excluding a pension, paid by the Government of a Contracting

State, or subdivision or local authority of the Republic of Korea or any republic or

local authority of Russia to an individual in respect of services rendered in the

discharge of functions of governmental nature shall be taxable only in that State.

2. However, remuneration mentioned in paragraph 1 shall be taxable only in

the other Contracting State, if the services are rendered in that State and the

individual is a resident of that State who:

a) is a national of that State; or

b) did not become a resident of that State solely for the purpose of rendering

the services.

3. The provisions of paragraphs 1 and 2 of this Article shall not apply to, and

the provisions of Articles 15, 16 and 18 shall apply to remuneration paid by a

Contracting State or its subdivision or a local authority thereof if such

remuneration is paid in respect of services rendered in connection with any

business activities carried on in the other Contracting State.

4. The provisions of paragraphs 1 and 2 of this Article shall likewise apply in

respect of remuneration paid, in the case of the Republic of Korea, by the Bank of

Korea, the Export-Import Bank of Korea, the Korea Development Bank, the Korea

Trade Promotion Corporation and other government owned institutions performing

functions of a governmental nature, and in the case of Russia, by the Central

Bank of the Russian Federation.

Article 20 Teachers, Researchers, Students

and Business Apprentices

Notwithstanding the provisions of the corresponding Articles of this Convention,

a) an individual who is or was 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 as nonprofitable by the Government of the other State

in accordance with its laws and regulations, visits that other State for a

period not exceeding two years from the date of his first arrival in that other

State, solely for the purpose of teaching or research or both at such

educational institution, shall be exempt from tax in that other State on his

remuneration for such teaching or research.

b) payments which a student or business apprentice who is or was immediately

before visiting a Contracting State a resident of the other Contracting State

and who is present in the first-mentioned State solely for the purpose of his

education or training receives for the purpose of his maintenance, education

or training, shall not be taxed in the first-mentioned State, provided that such

payments arise from sources outside that State.

Article 21 Other Income

1. Items of income of a resident of a Contracting State, wherever arising, not

dealt with in the foregoing Articles of this Convention shall be taxable only in that

Contracting State.

2. The provisions of paragraph 1 of this Article shall not apply to income, other

than income from immovable property as defined in paragraph 2 of Article 6, if the

recipient of such income, being a resident of a Contracting State, carries on

business in the other Contracting State 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 income is

paid is effectively connected with such permanent establishment or fixed base.

In such case, the provisions of Article 7 or 14, as the case may be, shall apply.

Article 22 Elimination of Double Taxation

1. In the case of a resident of the Republic of Korea, double taxation shall be

avoided as follows:

Subject to the provisions of the tax law of the Republic of Korea regarding the

allowance as a credit against the Korean tax of tax payable in any country other

than the Republic of Korea (which shall not affect the general principle hereof),

the Russian tax payable (excluding in the case of a dividend, tax payable in respect

of the profits out of which the dividend is paid) under the laws of the Russian

Federation and in accordance with this Convention, whether directly or by deduction,

in respect of income from sources within Russia, shall be allowed as a credit

against the Korean Tax payable in respect of that income. The credit shall not,

however, exceed that proportion of the Korean tax which the income from sources

within Russia bears to the entire income subject to the Korean tax.

2. In the case of a resident of Russia, double taxation shall be avoided as follows:

Where a resident of the Russian Federation derives income from the Republic of

Korea which, in accordance with the provisions of this Convention, may be taxed in

the Republic of Korea, the amount of tax on that income payable in the Republic of

Korea may be credited against the tax levied in Russia imposed on that resident.

The amount of credit, however, shall not exceed the amount of the tax of Russia on

that income computed in accordance with its taxation laws and regulations.

Article 23 Non-Discrimination

1. Individuals which are nationals of a Contracting State shall not be subjected

in the other Contracting State to any taxation or requirement connected therewith,

which is other or more burdensome than the taxation or requirement connected

therewith to which nationals of that other Contracting State in the same circumstances

are or may be subjected. This provision shall not be construed as obliging a

Contracting State to grant to residents of the other Contracting State any personal

allowances, reliefs and deductions for taxation purposes on account of civil status

or family responsibilities which it grants to it own residents.

2. A resident of a Contracting State which has a permanent establishment in

the other Contracting State shall not, in that other State and with respect to income

attributable to that permanent establishment, be subjected to more burdensome

taxes than are generally imposed on residents of that other State or of a third state

carrying on the same activities.

3. Except where the provisions of Article 9, paragraph 4 of Article 11, or

paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by

a resident of a Contracting State to a resident of the other Contracting State shall,

for the purpose of determining the taxable profits of the first-mentioned resident, be

deductible under the same conditions as if they had been paid to a resident of the

first-mentioned State.

4.. A company which is a resident 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

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

companies which are residents of the first-mentioned State under the same

conditions are or may be subjected.

5. The provisions of this Article shall, notwithstanding the provisions of

Article 2, apply to taxes of every kind and description.

Article 24 Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the Contracting

States result or will result for him in taxation not in accordance with the provisions

of this Convention, he may, irrespective of the remedies provided by the domestic

law of those States, present his case to the competent authority of the Contracting

State of which he is a resident or, if his case comes under paragraph 1 of Article

23, to that of the Contracting State of which he is a national. The case must be

presented within three years from the first notification of the action resulting in

taxation not in accordance with the provisions of the Convention.

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 a satisfactory 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

Convention. Any agreement reached shall be implemented notwith- standing any

time limits in the domestic laws of the Contracting States.

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 Convention. They may also consult together for the elimination

of double taxation, in cases not provided for in this Convention.

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 25 Exchange of Information

1. The competent authorities of the Contracting States shall exchange

information necessary for implementation of the provisions of this Convention or of

the domestic laws of the Contracting States concerning taxes covered by the

Convention, insofar as the taxation thereunder is not contrary to this Convention.

Any information received by a Contracting State shall be treated as confidential in

the same manner as information obtained under the domestic laws of that State,

and shall be disclosed only to persons or authorities (including courts and

administrative bodies) involved in the assessment or collection of, the enforcement

or prosecution in respect of, or the determination of appeals in relation to, the

taxes covered by the Convention. Such persons or authorities shall use the

information only for such purposes. They may disclose the information in public

court proceedings or in court decisions.

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

impose on a Contracting State the obligation:

a) to carry out administrative measures at variance with the laws and

administrative practice of that or of the other Contracting State;

b) to supply information which is 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 or trade process or information, the

disclosure of which would be contrary to public policy.

Article 26 Diplomatic Agents and Consular Officers

Nothing in this Convention shall affect the fiscal privileges of diplomatic agents or

consular officers under the general rules of international law or under the provisions

of special agreements.

Article 27 Entry into Force

1. This Convention shall be subject to ratification in each Contracting State.

2. This Convention shall enter into force on the thirtieth day after the date of

exchange of the instruments of ratification and its provisions shall have effect:

a) in respect of tax withheld at source, for amounts paid or credited on or after

the first day of January in the calendar year, following the year in which the

Convention enters into force;

b) in respect of other income taxes, for taxable period beginning on or after

the first day of January in the calendar year, following the year in which the

convention enters into force.

Article 28 Termination

This Convention shall remain in force indefinitely, but either of the Contracting

States may, on or before the thirtieth day of June in any calendar year from the

fifth year following that in which the instruments of ratification have been exchanged,

give to the other Contracting State, through diplomatic channels, written notice of

termination, and in such event, this Convention shall cease to have effect:

a) in respect of tax withheld at source, for amounts paid or credited on or

after the first day of January in the calender year next following that in which

the notice is given; and

b) in respect of other taxes, for taxation years beginning on or after the first

day of January in the calendar year next following that in which the notice

is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their

respective Governments, have signed this Convention.

Done at Seoul, this 19th day of November of the year one thousand nine hundred

and ninety-two, in duplicate each, in the Korean, Russian and English languages,

all texts being equally authentic. In case of any divergence of interpretations,

interpretation shall be made in accordance with the English text.

FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF

THE REPUBLIC OF KOREA THE RUSSIAN FEDERATION

/Sgd./ /Sgd./

Lee Sang-ock Andrei Kozyrev