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ARTICLE 17
INCOME EARNED BY ENTERTAINERS AND ATHLETES
(1) Notwithstanding the provisions of Articles 14 and 15, income
derived by a resident of a Contracting State as an entertainer, such as a theatre, motion
picture, radio or television artiste, or a musician, or as an athlete, from his personal
activities as such exercised in the other Contracting State, may be taxed in that other
State.
.(2) Where income in respect of personal activities exercised by an entertainer or an
athlete in his capacity as such accrues not to the 'entertainer or athlete 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 or athlete
are exercised.
93A. Scope
Tax treatments accorded to residents of the Contracting States are covered in various
Articles. Professional services are of two types:
- Independent professional services - business
- Dependent professional service - employment income
Income derived from the independent professional activity is dealt with in Article 14 of
the UN Model and dependent professional activity in Article 15. However, professional
entertainers and sports persons are dealt with separately in Article 17. The non obstante
clause at the beginning of the Article excludes the activities of such entertainers from
the applicability of Articles 14 and 15. Income from their activities is generally taken
to be trading income. The term 'non-resident entertainers' generally encompasses, a
theatre, motion picture, radio or television artiste or a musician, or an athlete.
94. Source State has the right to tax
The State where the activities of an entertainer are exercised has the right to tax
income arising from such exercise. His residence, his stay or the period of stay are all
irrelevant for investing the jurisdiction with the source country to tax his income. The
possibility of the residence State to tax such income cannot be ignored. The expression
used in the UN Model is 'may be taxed' in place of the expression usually used 'shall be
taxable'. Taxability of such income either by the source or the residence country has been
left to be decided by the negotiating States.
Paragraph (2) of the UN Model conveys that the 'entertainer' may be a company, or other
person or body of persons where the performer is a principal or employee of that company
or of the other person, etc. The business or trading of that enterprise is to provide
entertainment and for that purpose it engages artistes for remuneration. Since the
establishment has been carrying on business or may be deemed to be exercising independent
personal services, the right to tax income could be linked to the establishment of a
permanent establishment or a fixed' base. But paragraph (2) of Article 17 overrides the
provisions dealing with such situations (Articles 7 and 14), as also it overrides Article
15 and provides that income of that establishment be taxed in the Contracting State in
which the activities of the entertainer are exercised.
Some of the agreements provide exemption to the income if it is derived from any activity
or performance pursuant to a cultural programme sponsored by an overseas Government or the
Pakistani Government, or pursuant to a programme of an overseas non-profit foundation,
trust or any other non-profit organisation. For example, agreement between Pakistan and
Malaysia provides that income 'shall not be taxed' in the said Contracting State if the
visit of the public entertainers or athletes to that State is directly or indirectly
supported, wholly or substantially from the public funds of the Government of the other
Contracting State. For that purpose the term ‘Government’ includes a State
Government, a political sub-division, or a local or statutory authority of either
Contracting State. The agreement with Kenya provides that income would not be taxable
which is derived from the activities of public entertainers and athletes if their visit to
a Contracting State is supported wholly or substantially from the public funds of the
other Contracting State. Similar provisions are found in the agreements with Sri Lanka,
Hungary, Singapore, Mauritius and UK.
Paragraph (2) contains an exception to general rule contained in paragraph (1). It
excludes the applicability of paragraph. (1) under the circumstances as specified in it,
that income would not be taxable in the State where the employment is exercised which
otherwise could have been done. The presence of the recipient of income in the State for a
short period (not exceeding 183 days in a fiscal year) and the remuneration being not
sourced by a person who is not resident of that State and being not borne by a permanent
establishment or fixed base, may also entitle the State where the activities are exercised
to. tax income of the enterprise.
