The Double Taxation Relief (Taxes on Income) (The Hashemite Kingdom of Jordan) Order 2001

PART II EXCHANGE OF NOTES

Amman 22nd July 2001

Your Excellency

I have the honour to refer to the Convention between the Government of the Hashemite Kingdom of Jordan and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains which has been signed today, and to make on behalf on the Government of the Hashemite Kindgom of Jordan the following proposals:

(1) With respect to paragraph (1) of Article 3 (General Definitions), it is understood that in the event that either Contracting State introduces legislation whereby a partnership is to be regarded as a taxable entity it will notify the other state of this fact, and the two States will without delay enter into the negotiation of any amendment of the Convention necessitated by this change.

(2) With respect to paragraph (1) of Article 4 (Resident), it is understood that in relation to Jordan the term “resident” means, in the case of individuals, those who are resident by virtue of the rules under the domestic tax law of Jordan.

(3) With respect to paragraph (5) of Article 5 (Permanent Establishment), it is understood that where a person holds a stock of goods or merchandise belonging to an enterprise and also habitually canvasses for orders on behalf of that enterprise in Jordan, that enterprise shall be treated as having a permanent establishment in Jordan, notwithstanding that contracts of sale are formally concluded outside Jordan.

(4) With respect to paragraph (6) of Article 5 (Permanent Establishment), it is understood for the purposes of the second sentence that transactions are not made at arm’s length if the conditions made or imposed between the agent and the enterprise or associated enterprises in their commercial or financial relations differ from those which would have been made or imposed if the agent’s activities had not been wholly or almost wholly devoted on behalf of the enterprise or associated enterprises.

(5) With respect to paragraph (1) of Article 25 (Mutual Agreement), it is understood that a case presented to the competent authority of Jordan shall only be accepted if it is presented within a period of three years beginning from the date of notification of the action resulting in taxation not in accordance with the provisions of the Convention.

If the foregoing proposals are acceptable to the Government of the United Kingdom of Great Britain and Northern Ireland, I have the honour to suggest that the present Note and Your Excellency’s reply to that effect should be regarded as an integral part of the Convention between the two States in this matter, which shall enter into force at the same time as the entry into force of the Convention.

I avail myself of this opportunity to extend to Your Excellency the assurance of my highest consideration.

Your Excellency

I have the honour to acknowledge receipt of Your Excellency’s Note of today which reads as follows:—

“I have the honour to refer to the Convention between the Government of the Hashemite Kingdom of Jordan and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains which has been signed today, and to make on behalf of the Government of the Hashemite Kingdom of Jordan the following proposals:

(1) With respect to paragraph (1) of Article 3 (General Definitions), it is understood that in the event that either Contracting State introduces legislation whereby a partnership is to be regarded as a taxable entity it will notify the other state of this fact, and the two States will without delay enter into the negotiation of any amendment of the Convention necessitated by this change.

(2) With respect to paragraph (1) of Article 4 (Resident), it is understood that in relation to Jordan the term “resident” means, in the case of individuals, those who are resident by virtue of the rules under the domestic tax law of Jordan.

(3) With respect to paragraph (5) of Article 5 (Permanent Establishment), it is understood that where a person holds a stock of goods or merchandise belonging to an enterprise and also habitually canvasses for orders on behalf of that enterprise in Jordan, that enterprise shall be treated as having a permanent establishment in Jordan, notwithstanding that contracts of sale are formally concluded outside Jordan.

(4) With respect to paragraph (6) of Article 5 (Permanent Establishment), it is understood for the purposes of the second sentence that transactions are not made at arm’s length if the conditions made or imposed between the agent and the enterprise or associated enterprises in their commercial or financial relations differ from those which would have been made or imposed if the agent’s activities had not been wholly or almost wholly devoted on behalf of the enterprise or associated enterprises.

(5) With respect to paragraph (1) of Article 25 (Mutual Agreement), it is understood that a case presented to the competent authority of Jordan shall only be accepted if it is presented within a period of three years beginning from the date of notification of the action resulting in taxation not in accordance with the provisions of the Convention.

If the foregoing proposals are acceptable to the Government of the United Kingdom of Great Britain and Northern Ireland, I have the honour to suggest that the present Note and Your Excellency’s reply to that effect should be regarded as an integral part of the Convention between the two States in this matter, which shall enter into force at the same time as the entry into force of the Convention.”

The foregoing proposals being acceptable to the Government of the United Kingdom of Great Britain and Northern Ireland, I have the honour to confirm that Your Excellency’s Note and this reply shall be regarded as an integral part of the Convention between the two States in this matter, which shall enter into force at the same time as the entry into force of the Convention.

I take this opportunity to renew to Your Excellency the assurance of my highest consideration.