THE CONVENTION BETWEEN THE GOVERNMENT OF THE RUSSIAN FEDERATION AND THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND

of February 15, 1994

About avoidance of double taxation and prevention of evasion from the taxation concerning taxes on the income and increase in value of property

Government of the Russian Federation and Government of the United Kingdom of Great Britain and Northern Ireland,

wishing to sign the Convention on avoidance of double taxation and prevention of evasion from the taxation concerning taxes on the income and the income from property increase in value,

agreed as follows:

Article 1 of Person to which the Convention is applied

This Convention is applied to persons who are persons with the permanent residence in one or in both Contracting States.

Article 2 Taxes to which the Convention extends

1. This Convention extends to taxes on the income and the taxes on the income from property increase in value levied on behalf of the Contracting State, its political divisions or local authorities irrespective of method of their collection.

2. As taxes on the income and increase in value of property all taxes levied from total of income or from its separate elements including the income from alienation of personal and real estate, and taxes on the total amount of the salary paid by the companies will be considered.

3. Taxes to which this Convention extends are:

a) in relation to the United Kingdom:

i) income tax;

ii) tax on corporations;

iii) tax on the income from property increase in value (further the referred to as "taxes of the United Kingdom");

b) in relation to the Russian Federation - taxes on the income and profit levied according to the following laws:

i) "About the income tax of the companies and organizations";

ii) "About the taxation of the income of banks";

iii) "About the taxation of the income from insurance activity";

iv) "About the income tax from physical persons" (further the referred to as "taxes of the Russian Federation").

4. This Convention is applied also to any identical or in essence to similar taxes which will be levied by each Contracting State after signature date of the Convention in amendment or instead of the taxes of this Contracting State specified in Item 3 of this Article. Competent authorities of Contracting States will notify each other on any essential changes in their relevant tax laws.

Article 3 General determinations

1. For the purposes of this Convention if other does not follow from context:

a) the term "United Kingdom" means Great Britain and Northern Ireland and includes any zone out of the territorial sea of the United Kingdom which according to international law was determined or can be determined further according to the legislation of the United Kingdom concerning the continental shelf as zone where the rights of the United Kingdom concerning seabed, its subsoil and natural resources can be performed;

b) the term "Russian Federation" when using in geographical sense means its territory, including territorial waters, and also economic zone and the continental shelf where this State performs the sovereign rights or the rights and jurisdiction according to rules of international law and where its tax legislation is effective;

c) the term "citizen" means:

i) in relation to the United Kingdom - any British citizen or any British citizen who does not have nationality of any other country or the territory of the British Commonwealth provided that he has the right to residence in the United Kingdom;

ii) in relation to the Russian Federation - any physical person having the Russian citizenship;

d) the terms "Contracting State" and "other Contracting State" mean the United Kingdom or the Russian Federation depending on context;

e) the term "person" includes physical person, the company and any other consolidation of persons except for of partnership;

f) the term "company" means any corporate consolidation or any education which for the tax purposes is considered as corporate consolidation;

g) expressions "the company of the Contracting State" and "the company of other Contracting State" mean respectively the company managed by person with the permanent residence in one Contracting State and the company managed by person with the permanent residence in other Contracting State;

h) the term "international delivery" means any transportation sea or the aircraft, managed enterprise of one Contracting State, except cases when sea or the aircraft is operated only between Items in other Contracting State;

i) the term means "competent authority":

in relation to the United Kingdom - the Internal revenue service or the representative authorized by it and

in relation to the Russian Federation - the Ministry of Finance or the representative authorized by it.

2. In case of application of this Convention by the Contracting State any term which is not determined in the Convention has that significance which is attached to it by the legislation of this State concerning taxes to which the Convention extends if other does not follow from context.

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