THE CONVENTION BETWEEN THE GOVERNMENT OF THE AZERBAIJAN REPUBLIC AND THE GOVERNMENT OF THE FRENCH REPUBLIC

of December 20, 2001

About avoidance of double taxation and prevention of tax avoidance on the income and the capital

The government of the Azerbaijan Republic and the Government of the French Republic for the purpose of the conclusion of the Convention on avoidance of double taxation and prevention of tax avoidance on the income and the capital, agreed as follows:

Article 1. Persons to whom the Convention is applied

This Convention extends to persons who are residents of one or both Contracting States.

Article 2. Taxes to which the Convention extends

1. This Convention is applied to taxes on the income and on the capital, the collectable Contracting State or its administrative-territorial divisions or regional authorities, irrespective of taxation method.

2. All taxes levied from the total amount of the income, total cost of property or from separate elements of the income or property including taxes on the income from alienation of personal or real estate, taxes levied from the total amount of the salary or salary paid by employers and also the taxes levied from the income from increase in capital value belong to taxes on the income and on the capital.

3. The convention, generally extends to the following existing taxes:

a) in the Azerbaijan Republic:

(i) income tax of legal entities;

(ii) income tax;

(iii) property tax

(further the referred to as "Azerbaijani taxes").

b) in the French Republic:

(i) tax on the income;

(ii) corporate tax;

(iii) the tax levied from salaries;

(iv) property tax;

including all collectable taxes relating to the above-stated taxes, the amounts paid in advance or in advance

(further the referred to as "French taxes").

4. This Convention is applied also to identical or in essence to similar taxes which will be levied in addition to the existing taxes or instead of them after signature date of this Convention. Competent authorities of Contracting States shall notify each other on any essential changes which will be made to their tax legislations.

Article 3. General determinations

1. For the purposes of this Convention the following terms are applied if other sense is not provided in context:

a) the terms "Contracting State" and "other Contracting State" - mean France or Azerbaijan depending on context;

b) the term "Azerbaijan" - means the territory of the Azerbaijan Republic;

c) the term "France" - means the territory of the French Republic;

d) the term "person" - means physical person, the company and any other consolidation of persons;

The partnership ("partnership") or joint business ("joint-venture") which received the status according to the Azerbaijani legislation and considered as taxable unit according to the Azerbaijani legislation is considered "face" for the purposes of this Convention.

e) the term "company" - means any corporate consolidation or the organization which are considered as corporate consolidation for the purposes of the taxation;

f) the terms "company of the Contracting State" and "company of other Contracting State" - mean respectively the company managed by resident of the Contracting State and the company managed by resident of other Contracting State;

g) the term "international carriages" - means all transportations sea or the aircraft, performed by the company which is resident of the Contracting State except cases when sea or the aircraft is operated between Items of other Contracting State;

h) the term means "competent authority":

(i) in Azerbaijan - the Ministry of Finance and the Ministry of Taxes or their authorized representatives;

(ii) in France: the minister dealing with issues of the budget or its authorized representative

i) the term "national person" means:

(i) any physical person who is the citizen of the Contracting State;

(ii) any legal entity, partnership or consolidation which received the corresponding status under the existing legislation of the Contracting State.

2. In case of application of this Convention by the Contracting State any term which is not determined in it will have that value which is stipulated by the legislation this State in connection with the taxes specified in the Convention. The sense provided in the corresponding tax legislation of this State will have advantage over the sense provided in other laws of this State.

Article 4. Resident

1. For the purposes of this Convention the term "resident of the Contracting State" means person who by the legislation of this Contracting State is subject to the taxation in it based on its residence, the permanent residence, the place of management, the place of creation or other similar criteria, and also this State, its administrative-territorial division or municipal authority. This term, at the same time, does not include person who is subject to the taxation in this State only based on the fact that this person gains income from sources in this State or from the capital placed in this State.

2. According to provisions of Item 1 of this Article in case the physical person is resident of both Contracting States, its status is determined as follows:

a) it is considered resident only of that Contracting State in which it has the permanent dwelling. If it has the permanent dwelling in both Contracting States, it is considered resident of that Contracting State in which has more close personal and commercial relations (the center of vital interests);

b) if the Contracting State in which it has the center of vital interests cannot be determined or if it has no the permanent dwelling in one of Contracting States, it is considered resident of that Contracting State in which usually lives;

c) if it usually lives in both Contracting States or if it usually does not live in one of them, it is considered resident only of that Contracting State which national face it is;

d) if it is citizen of both Contracting States or if it is not national face of any of them, competent authorities of Contracting States resolve this issue by mutual consent.

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