(1) Interest arising in a Contracting State and paid to a re-
sident of the other Contracting State may be taxed in that other
State.
(2) However, such interest may also be taxed in the Con-
tracting State in which it arises and according to the laws of that
State, but if the beneficial owner of the interest is a resident of
the other Contracting State, the tax so charged shall not exceed
8 per cent of the gross amount of the interest.
(3) Notwithstanding the provisions of paragraph 2 above,
a) interest arising in the Federal Republic of Germany and paid
to the Government of Singapore, the Monetary Authority of
Singapore and the Board of Commissioners of Currency, the
Government of Singapore Investment Corporation Pte. Ltd.
or any other similar institution as may be agreed from time to
time between the competent authorities of the Contracting
States and interest paid in consideration of a loan guaran-
teed by ECICS Credit Insurance Ltd. shall be exempt from
German tax;
b) interest arising in Singapore and paid to the Federal Re-
public of Germany, a Land, a political subdivision or a local
authority thereof, the Deutsche Bundesbank, the Kredit-
anstalt für Wiederaufbau, the DEG – Deutsche Investitions-
und Entwicklungsgesellschaft mbH or any other similar
institution as may be agreed from time to time between the
competent authorities of the Contracting States and interest
paid in consideration of a loan guaranteed by HERMES-
Deckung shall be exempt from Singapore tax.
(4) The term “interest” as used in this Article means income
from debt-claims of every kind, whether or not secured by
mortgage, and in particular, income from government securities
and income from bonds or debentures, including premiums and
prizes attaching to such securities, bonds or debentures. Pe-
nalty charges for late payment shall not be regarded as interest
for the purpose of this Article. However, the term “interest” shall
not include income dealt with in Article 10.
(5) The provisions of paragraphs 1, 2 and 3 above shall not
apply if the beneficial owner of the interest, being a resident of
a Contracting State, carries on business in the other Contract-
ing 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 there-
in, 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 Article 14,
as the case may be, shall apply.
(6) Interest shall be deemed to arise in a Contracting State
when the payer is that State itself, a Land, a political sub-
division, a local authority or a resident of that 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 or a fixed base in connection
with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent estab-
lishment or fixed base, then such interest shall be deemed to
arise in the State in which the permanent establishment or fixed
base is situated.
(7) 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 Agreement.