ARTICLE 12

Dividends

1. The tax imposed by Trinidad and Tobago on dividends derived from sources within Trinidad and Tobago by a resident of the United States shall not exceed (a) Twenty-five percent of the gross amount actually distributed; or (b) When the recipient is a corporation, 10 percent of the gross amount actually distributed if (i) During the part of the paying corporation's taxable year which precedes the date of payment of the dividend and during the whole of its prior taxable year (if any), at least 10 percent of the outstanding shares of the voting stock of the paying corporation was owned by the recipient corporation, and

(ii) Not more than 25 percent of the gross income of the paying corporation for such prior taxable year (if any) consisted of interest and dividends (other than interest derived in the conduct of a banking, insurance, or financing business or dividends and interest received from subsidiary corporations having 50 percent or more of the outstanding shares of their voting stock owned by the paying corporation at the time such dividends or interest is received).

2. The provisions of paragraph 1 shall not apply if the recipient of the dividends is a resident of the United States and has a permanent establishment in Trinidad and Tobago and the stock giving rise to the dividends is effectively connected with the permanent establishment. In such case Article 8 (Business Profits) shall apply.

3. Subject to the provisions of paragraph 5 of Article 13 (Interest), for purposes of this Convention:

(a) The term “dividends” in the case of Trinidad and Tobago includes any item which under the law of Trinidad and Tobago is treated as a distribution of a company except that this term does not include any redeemable share capital or security issued by a corporation in respect of shares in the corporation otherwise than wholly for new

consideration, or such part of any redeemable share capital or security so issued as is not properly referable to new consideration.

(b) The term “dividends” in the case of the United States includes any item which under the law of the United States is treated as a distribution out of earnings and profits.

4. Dividends paid by a corporation of one of the Contracting States to a person other than a resident of the other Contracting State (and in the case of dividends paid by a Trinidad and Tobago corporation, other than to a citizen of the United States) shall be exempt from tax by that other Contracting State, unless such dividends are treated as income from sources within that other Contracting State under paragraph 1(b) or 8 of Article 5 (Source of Income).

5. Notwithstanding the provisions of paragraphs 2 and 4, where a corporation of one of the Contracting States has a permanent establishment in the other Contracting State and derives profits or income which is effectively connected with that permanent establishment, any remittance of such profits or income by that permanent establishment may be taxed as a distribution in accordance with the law of the other Contracting State, but the rate so charged shall not exceed 10 percent.