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February 17, 1984

Convention between the Government of the Republic of the Philippines and the Government of the German Democratic Republic for the Avoidance of Double Taxation with Respect to Taxes on Income

The Government of the Republic of the Philippines and the Government of the German Democratic Republic, desirous of promoting the economic cooperation between the two States through a Convent ion for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, have agreed as follows:

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

1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income or on elements of income including taxes on gains from the alienation of movable or immovable property, and taxes on the total amounts of wages and salaries paid by the enterprises.

3. The existing taxes to which the Convention shall apply are:

a) In the Republic of the Philippines:

the income taxes imposed by the Government 

of the Republic of the Philippines.

b) In the German Democratic Republic:

-Revenue transfer by public enterprises 

-Income tax

-Corporate income tax

-Taxes on handicraft, agricultural or commercial activities 

-Trade tax

-Tax on wages

-Tax on income from a free-lance activity 

-Royalties 

-Capital gains tax.

4. This Convention shall also apply 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. The cornpetent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.

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 the Philippines and the German Democratic Republic as the context requires;

b) the term "person" includes an individual an estate, a trust, a company and any other body of persons;

c) the term "national" means:

(i) in regard of the Republic of the Philippines :

(aa) any individual possessing the citizenship of the Republic of the Philippines;

(bb) any legal person, partnership or association created, organized or incorporated under the 1aws of the Repub1ic of the Philippines;

(ii) in regard of the German Democratic Republic

(aa) any individual who, under the laws of the German Democratic Republic, are nationals thereof;

(bb) any legal person, partnership or association deriving its status as such from the laws in force of the German Democratic Republic;

d) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;

e) the terms "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;

f) the term "competent authority" means

(i) in regard of the Republic of the Philippines, the Minister of Finance or his authorized representative; 

(ii) in regard of the German Democratic Republic, the Ministry of Finance;

g) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of one of the Contracting States  except when the ship or aircraft is operated solely between places in the other Contracting State;

h) the term "profits from the operation of a ship or aircraft" means income derived from the transportation of goods and the carriage of persons.

As regards the application of the Convention by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Convention applies.

For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. But this term does not include any person who is liable to tax in that State in respect only-of income from sources in that State.

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 State In which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the 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 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 States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;

(d) if he is a national of both States, the competent authorities of the Contracting States shall settle the question by mutual agreement.

Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed a resident of the State where it was incorporated.

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

The term "permanent establishment" includes especially:

a) a place of management;

b) a branch;

c) an office;

d) a factory ;

e) a workshop ;

f) a mine, an oil or gas well, a quarry or any other place of extract ion of natural resources;

g) a place of exploration of natural resources;

h) a building site or construction project or supervisory activities in connection therewith, where such site, project or activity continues for a period of more than 183 days;

i) an assemb1y or insta1lation project which exists for more than 183 days;

j) premises used as a sales outlet;

k) a warehouse, in relation to a person providing storage facilities for others;

l ) the furnishing of services, including consultancy services by an enterprise through employees or other personnel where activities of that nature continue (for the same or connected project) for a period or periods aggregating more than 183 days within any twelve-month period.

Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include :

a) a temporary building site or construction or installation project based on agreements concluded between the Governments of Contracting States;

b) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

d) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

e) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

f) the maintenance of a fixed place of business solely for the purpose of advertising, providing information, carrying on scientific research or other simi1ar activities or any other activity of a preparatory or auxiliary character;

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), provided, that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character;

h) establishments and offices of enterprises owned by a Contracting State which conclude in the other Contracting State contracts for the purchase and sale of goods and services on the basis or as a result of agreements concluded between the Contracting States.

An enterprise shall be deemed to have a permanent establishment in one of the Contracting States and to carry on business through that permanent establishment if substantial equipment is being used in that State for more than 133 days by, for, or under contract with, the enterprise.

A person acting in a Contracting State on behalf of an enterprise of the other Contracting State (other than an agent of an independent status to whom paragraph 7 applies) shall be deemed to be a permanent establishment in the first-mentioned State if:

a) he has and habitually exercises in that State, an authority to conclude contracts on behalf of the enterprise, unless the activities are limited to those mentioned in paragraph 3 of this Article ; or

b) he has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or

c) in so acting, he manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise,

An insurance enterprise of a Contracting State shall, except in regard to reinsurance, be deemed to have a permanent establishment in the other State if it collects premiums in the territory of that State or insures risks situated therein through an employee or through a representative who is not agent of an independent status.

An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that 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,

However, when the activities of such an agent are devoted wholly or almost wholly on behalf of the enterprise, he shall not be considered an agent of an independent status within the meaning of this paragraph if it is shown that the transaction between the agent and the enterprise were not made under arms-length conditions. In such a case, the provisions of paragraph 5 shall apply.

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 for either company a permanent establishment of the other.

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.

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.

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

The provisions of paragraphs 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 independent personal services.

The profits of an enterprise of a Contracting State shall be taxable only in that 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 profits of the enterprise may be taxed in the other State but only so much of them as Is attributable to

a) that permanent establishment; or

b) sales within that other Contracting State of goods or merchandise of the same or similar kind as those sold through that permanent establishment.

Subject to the provisions of paragraph 3, 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 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.

In determining the profits of a permanent establishment, there shall be allowed as deduction expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

Insofar as it has been customary in a Contracting State-to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

Notwithstanding the provisions of paragraph 3, no deduction shall be allowed in respect of amounts paid or charged (other than reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of:

a) royalties, fees or other similar payments in return for the use of patents or other rights;

b) commission for specific services performed or for management; and

c) interest on money lent to the permanent establishment, except in the case of banking institution.

No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment .f goods or merchandise for the enterprise.

For the purposes 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.

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 7 provisions of this Article.

Profits derived by an enterprise of a Contracting State from the operation in international traffic of ships shall be taxable in that State.

Notwithstanding the provisions of paragraph 1, profits from sources within a Contracting State derived by an enterprise of the other Contracting State from the operation of ships in international traffic may be taxed in the first-mentioned State but the tax so charged shall not exceed the lesser of

a) one and one-half per cent of the gross revenues derived from sources in that State; and

b) the lowest rate of tax that may be imposed by the Republic of the Philippines on profits of the same kind derived under similar circumstances by a resident of a third. State.

The provisions of paragraphs 1 and 2 shall also apply to profits derived from the participation in a pool, a joint business or in an international operating agency.

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 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 2. Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits.

In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall, if necessary, consult each other.

Dividends paid by a company which is a resident of a Contracting State to an enterprise owned by the other Contracting State may be taxed only in that other State.

The term ''dividends1' as used in this Article means the income from shares, "jouissance'1 shares or "jouissance" rights, mining shares, founders' shares or other rights, hot being debt-claims, participating in profits, as wo11 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.

Interest arising in a Contracting State and paid to an enterprise owned by the other Contracting State may be taxed only in that other State.

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 State in which the income arises, including interest on deferred payment sales. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

Royalties arising in a Contracting State and paid to an enterprise owned by the other Contracting State may be taxed in that other State if such resident is the beneficial owner of the royalties.

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, any patent, trademark, 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 and includes payments of any kind in respect of motion picture films and works on films or videotapes for use in connection with television or tapes for the use of radio broadcasting.

Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6, and situated in the other Contracting State may be taxed in that other State.

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 independent personal services, including such gains from the alienation of such permanent establishment (alone or with the whole enterprise) or of such fixed base may be taxed in that other State.

Gains from the alienation of ships or aircraft operated in international traffic by enterprises of a Contracting State or gains from the alienation of movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.

Gains from the alienation of shares of a company, the property of which consists principally of immovable property situated in a Contracting State, may be taxed in that State. Gains from the alienation of interest in a partnership or a trust, the property of which consists principally of immovable property situated in a Contracting State, may be taxed in that State.

Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable in that State. However, such income may be taxed in the other Contracting State:

a) if he has a fixed base regularly available to him in that other State for the purpose o± performing his activities but only so much of the income as is attributable to that fixed base; or

b) if his stay in that other State is for a period or periods aggregating 90 days or more in the calendar year.

The term "professional services" includes specially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

Subject: to the provisions of Articles 16 , 18, 19, 20 and 21, 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 State unless the employment is exercised in that other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

Notwithstanding the provisions of paragraph 1, remunerations 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 State for a period or periods not exceed in the aggregate 183 days in the calendar year concerned, and

b) the remuneration is paid by, or on behalf of a person who is not a resident of the other State, and

c) the remuneration is not borne by a permanent establishment or a fixed base which the person for whom the services are rendered has in the other State.

Notwithstanding the preceding provisions of this Article, remuneration derived of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that State.

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

The remuneration which a person to whom paragraph 1 applies derives from the company in respect of the discharge of day-today functions of a managerial or technical nature may be taxed in accordance with the provisions of Article 15.

Notwithstanding the provisions of Articles 14 and 15 income derived by a resident of a Contracting State as an entertainer, such as theater, motion picture, radio or television artiste, or a musician, from his personal activities as such exercises in the other Contracting State, may be taxed in that other State.

Where income in respect of personal activities exercised by an entertainer in his capacity as such accrues not to that entertainer 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 entertainer are exercised.

The provisions of paragraphs 1 and 2 of this Article shall not apply to income derived from activities performed in a Contracting State by an entertainer if:

the visit to that Contracting State is substantially supported by public funds of the other Contracting State, including those of any political subdivision, local authority or statutory body thereof; or

b) the income is derived by a non-profit making organization in respect of such activities, provided, no part of its income is payable to, or is otherwise available for the personal benefit of its proprietors, members or shareholders and the organization is certified as qualifying under this provision by the competent authority of the other State; or

c) the activities are exercised in the framework of cultural exchanges agreed between the Contracting States on a bilateral or multilateral basis,

Notwithstanding the provisions of Article 7, where the activities mentioned in paragraph 1 of this Article 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 unless:

a) the enterprise is substantially supported by public funds of the other Contracting State, including any political subdivision, local authority or statutory body thereof; or

b) the enterprise is a non-profit organization referred to in paragraph 3; or

c) the activities are exercised in the framework of cultural exchange agreed between the Contracting States on a bilateral or multilateral basis.

Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

However, pensions paid out of pension plans of Philippine enterprises not registered under the laws of the Republic of the Philippines may be taxed in the Republic of the Philippines

Notwithstanding the provisions of paragraph 1, social security pensions paid by a social security instrumentality of a Contracting State shall be taxable only in that State.

a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in. that State.

b) However, such remuneration 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:

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

a) Any pension paid by, or out of funds created by, a Contracting State or a po1itica1 sub-division or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State. b} However, such pension shall be taxable only in the other Contracting St ate 1f the individual is a resident of, and a national of, that State.

The provisions of Articles 15, 16 and 18 shall apply to remunerate on and tensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

An individual who was a resident of a Contracting State immediately before visiting the other Contracting State and is temporarily present in that State solely as a student at a university, college or other similar educational institution shall be exempt from tax in that other State on all remittances from abroad for purposes of his maintenance or education.

An individual who was a resident of a Contracting State immediately before visiting the other Contracting State and is temporarily present in that State solely as a trainee for the purpose of acquiring technical, professional or business experience shall be exempt from tax in that other State on all remittances from abroad for purposes of his maintenance or training.

An individual who was a resident of a Contracting State immediately before visiting the other Contracting State and is temporarily present in that State solely for the purpose of study, research or training as a recipient of, a grant, allowance or award from a scientific, educational, religious or charitable organization or under a technical assistance program entered into by the governments of the Contracting State .shall be exempt from tax in that other State on;

a) the amount of such grant, allowance or award; and

b) all remittances from abroad for the purposes of his maintenance, education or training,

Remuneration which a professor or a teacher, who is a resident of one of the Contracting States and who visits the other Contracting State for the purpose of teaching or carrying out advanced study or research at a university, college, school or other educational institution, receives from sources outside the other State for those activities shall be taxable only in the first-mentioned State.

Items of income of a resident of a Contracting State which are not expressly mentioned in the foregoing Articles of this Convention may be taxed in the State where the income arises in accordance with its domestic laws.

Double taxation shall be avoided in the following manner:

In the case of the Republic of the Philippines: Subject to the provisions of the laws of the Republic of the Philippines relating to the allowance as a credit against the tax of the Republic of the Philippines of tax payable in any country other than the Republic of the Philippines, taxes of the German Democratic Republic paid or have accrued under the laws of the German Democratic Republic and in accordance with this Convention, whether directly or by deduction, in respect of income from sources within the German Democratic Republic shall be allowed as a credit against the tax of the Republic of the Philippines payable in respect of that income.

In the case of the German Democratic Republic: Where a resident of the German Democratic Republic' derives income which, under the laws of the Republic of the Philippines and in accordance with the provisions of this Agreement, may be taxed in the Republic of the Philippines, the German Democratic Republic shall, subject to the provisions of its law relating to tax credit, allow as a credit, an amount equal to the taxes paid in the Republic of the Philippines.

Taxes which have been relieved or reduced in the Republic of the Philippines by virtue of special al incentive laws for the promotion of the economic development of the Republic of the Philippines or by virtue of the provisions of this Convention shall be allowed tax credit in the German Democratic Republic in an amount equal to the tax which would have been appropriate to the income involved if no such relief or reduction had been allowed,

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.

The taxation on a permanent establishment which an enterprise o t a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, relief and reductions for taxation purposes on account of civil status or family responsibiliti.es which it grants to its own residents.

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 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 the first-mentioned State are or may be subjected.

Notwithstanding the preceding provisions of this Article, either Contracting State may, in the promotion of necessary industry or business, limit to its nationals the enjoyment of tax incentives granted by it.

Where a person considers that the actions of one or both of the Contracting State 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 laws 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 24, to that Contracting State of which he is a national. The case must be presented within two years from the first notification of the action which gives rise to taxation not in accordance with the provisions of the Convent:; on

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 Convent ion.

A Contracting State shall not, after five years from the end of the taxable period in which the income concerned has accrued, increase the tax base of a resident of either of the Contracting States by including therein items of income which have also been charged to tax in the other Contracting State. This paragraph shall not apply in the case of fraud, wilful default or neglect.

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.

The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention and of the domestic laws of the Contracting States concerning taxes covered by the Convention. The exchanged information shall be treated as secret and disclosed only to persons involved in the assessment or collection of the taxes covered by the Convention.

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 or the 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.

Nothing in this Convention shall affect the fiscal privileges of the staff of diplomatic and consular missions under the general rules of international law or under the provisions of special agreements.

Nothing in this Convention shall be construed as preventing the Republic of the Philippines from taxing its citizens who may be residing; in the German Democratic Republic, in accordance with its domestic legislation. However, no credit shall be given for taxes paid pursuant thereto.

The competent authorities of the Contracting States may communicate with each other directly for the purpose of applying this Convention.

This Convention shall be ratified or approved in accordance with the laws valid in the two Contracting States.

The Convention shall enter into force upon the exchange of notes notifying the ratification or approval of the Convention in accordance with valid laws.

The provisions of the Convention shall apply to taxes covered by this Convention which are levied for any year beginning on or after 1st January, 1384.

This Convention is concluded for tin limited duration Either Contracting State may terminate the Convention by giving written notice after five years from the day of its entry into force, however, at least six months before the end 01 the current calendar year.

In such event, the Convention shall cease-to have effect:

a) in respect of taxes withheld at the source on amounts paid to non-residents on or after the first day of January in the calendar 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 Plenipotentiaries of the two Governments have signed this Convention.

DOME and signed at Manila this 17^th day of February, 1984, in two originals in the English and German languages, both texts being equally authentic.