UNITED STATES-THE PEOPLE'S REPUBLIC OF CHINA INCOME TAX CONVENTION
Agreement And Related Protocol Signed at Beijing on April 30, 1984;
Second Protocol Signed at Beijing on May 10, 1986;
Ratification Advised by The Senate of The United States of America on July 24, 1986;
Instruments of Ratification Exchanged on October 22,1986;
Entered into Force on January 1, 1987.
GENERAL EFFECTIVE DATE UNDER ARTICLE 27: 1 JANUARY 1987
TABLE OF ARTICLES
Article 1---------------------------------Persons CoveredArticle 2---------------------------------Taxes CoveredArticle 3---------------------------------DefinitionsArticle 4---------------------------------Residence
Article 5---------------------------------Permanent EstablishmentArticle 6---------------------------------Income from Real PropertyArticle 7---------------------------------Business ProfitsArticle 8---------------------------------Related EnterprisesArticle 9---------------------------------DividendsArticle 10--------------------------------InterestArticle 11--------------------------------RoyaltiesArticle 12--------------------------------Gains
Article 13--------------------------------Independent Personal ServicesArticle 14--------------------------------Dependent Personal ServicesArticle 15--------------------------------Directors’ Fees
Article 16--------------------------------Artistes and AthletesArticle 17--------------------------------Pensions and Annuities
Article 18--------------------------------Government Employees and PensionsArticle 19--------------------------------Teachers, Professors and ResearchersArticle 20--------------------------------Students and TraineesArticle 21--------------------------------Other Income
Article 22--------------------------------Elimination of Double TaxationArticle 23--------------------------------NondiscriminationArticle 24--------------------------------Mutual Agreement
Article 25--------------------------------Exchange of Information
Article 26--------------------------------Diplomats and Consular OfficersArticle 27--------------------------------Entry into ForceArticle 28--------------------------------Termination
Protocol 1--------------------------------of 30 April, 1984Letter of Submittal---------------------of 24 July, 1984Letter of Transmittal-------------------of 10 August, 1984Notes of Exchange ---------------------of 30 April, 1984Protocol 2--------------------------------of 10 May, 1986Letter of Submittal (Protocol 2)------of 20 May, 1986Letter of Transmittal (Protocol 2)----of 5 June, 1986
The “Saving Clause”-------------------Paragraph 2 of the Protocol 1 of 30 April, 1984
TAX AGREEMENT WITH THE PEOPLE'S REPUBLIC OF CHINA
MESSAGEFROM
THE PRESIDENT OF THE UNITED STATES
TRANSMITTING
THE AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE
GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA FOR THE AVOIDANCE OF DOUBLETAXATION AND THE PREVENTION OF TAX EVASION WITH RESPECT TO TAXES ON INCOME,TOGETHER WITH A SUPPLEMENTARY PROTOCOL AND EXCHANGE OF NOTES, SIGNED AT BEIJING
ON APRIL 30, 1984
LETTER OF SUBMITTAL
DEPARTMENT OF STATE,Washington, July 24, 1984.
THE PRESIDENT,The White House.
THE PRESIDENT: I have the honor to submit to you, with a view to its transmission to the Senate for adviceand consent to ratification, the Agreement between the Government of the United States of America and theGovernment of the People's Republic of China for the Avoidance of Double Taxation and the Prevention of TaxEvasion with Respect to Taxes on Income, together with a supplementary protocol and exchange of notes, whichyou signed at Beijing on April 30, 1984.
The agreement is the first complete income tax treaty to be signed with the People's Republic of China. Alimited treaty affecting the taxation of income from international shipping and aircraft operations was signed atBeijing on March 5, 1982, (97th Cong. 2d. Sess., Senate Treaty Doc. No. 97-24, June 16, 1982) and is presently inforce.
The present agreement is based on model income tax treaties prepared by the Department of the Treasury, theUnited Nations, and the OECD. Like other United States tax treaties, it provides rules for determining the extent towhich each country may tax particular types of income. Where the host country may tax, it agrees to impose its
income tax in a non-discriminatory manner. The agreement provides that the country of residence will give a foreigntax credit for income tax paid to the other country. If any potential problems of double taxation should arise, the taxofficials of the two countries agree to consult to try to resolve them.
All provisions of the agreement are reciprocal. Some will benefit especially United States investors. For
instance, investors will know before undertaking a transaction in China what the income tax consequences will be.Business profits will not be taxable by China unless attributable to a \agreement. Taxation by China of the remuneration of United States citizens who are self-employed or employed byprivate firms is generally permissible only if they remain in China more than six months a year. In addition, theagreement limits the tax which each country may impose on dividends, interest and royalties derived by residents ofthe other country to no more than 10 percent in each case.
The protocol clarifies certain provisions of the agreement and also provides for cooperation between the taxofficials of the two countries to prevent tax evasion.
In the accompanying exchange of notes, the United States agrees to amend the treaty with China to include a\the United States does not permit a \
foreign tax even if, in fact, that tax has been reduced or waived as an incentive. It is a firm element of U.S. policythat a foreign tax credit be given only for foreign income taxes actually paid.
The agreement provides that the Contracting States shall notify each other in writing, through diplomatic
channels, upon the completion of their respective legal procedures to bring the agreement into force. The agreementwill enter into force on the thirtieth day after the date of the latter of such notifications and shall take effect withrespect to income derived during taxable years beginning on or after the first day of January next following the dateon which the agreement enters into force.
A technical memorandum explaining in detail the provisions of the agreement is being prepared by theDepartment of the Treasury and will be submitted separately to the Senate Committee on Foreign Relations. The Department of the Treasury, with the cooperation of the Department of State, was primarily responsible forthe negotiation of the agreement. It has the full approval of both Departments. Respectfully submitted,
George P. Schultz
LETTER OF TRANSMITTAL
THE WHITE HOUSE, August 10,1984.
To the Senate of the United States:
I transmit herewith for Senate advice and consent to ratification the Agreement between the Government of theUnited States of America and the Government of the People's Republic of China for the Avoidance of DoubleTaxation and the Prevention of Tax Evasion with Respect to Taxes on Income, together with a supplementary
protocol and exchange of notes, signed at Beijing on April 30, 1984. I also transmit the report of the Department ofState on the Agreement.
The Agreement is the first complete income tax treaty between the two countries. A limited treaty concerningthe taxation of income from international shipping and air transportation, signed at Beijing on March 5, 1982, wasapproved by the Senate on July 27,1983 and is now in force.
The Agreement is based on model income tax treaties developed by the Department of the Treasury, theOrganization for Economic Cooperation and Development, and the United Nations. The provisions of the
Agreement are reciprocal and, like other tax treaties, represent a balanced package of benefits and concessions. The Agreement will contribute to a long-run expansion of economic relations between the two countries byproviding clear rules as to the tax consequences of investing or working in the other country. It reduces the taxwhich residents of one country must pay to the other on certain types of income, such as dividends, interest, androyalties and provides limited exemptions for visiting teachers, researchers and students. The Agreement also
assures nondiscriminatory taxation in the host country, and, provides a mechanism for cooperation between the taxauthorities to try to resolve any potential problems of double taxation.
I recommend that the Senate give early and favorable consideration to the Agreement and give its advice andconsent to ratification.
RONALD REAGAN.
AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE
GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINAFOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF TAX EVASION WITH RESPECT TO TAXES ON INCOME The Government of the United States of America and the Government of the People's Republic of China, Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of tax evasion withrespect to taxes on income, Have agreed as follows:
ARTICLE 1(Persons Covered)
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2(Taxes Covered)
1. The taxes to which this Agreement applies are
(a) in the People's Republic of China:
(I) the individual income tax;
(ii) the income tax concerning joint ventures with Chinese and foreign investment;(iii) the income tax concerning foreign enterprises;
(iv) the local income tax (herein after referred to as \
(b) in the United States of America: the Federal income taxes imposed (hereinafter referred to as
\ 2. The Agreement shall apply also to any identical or substantially similar taxes which are imposed after the dateof signature of the Agreement in addition to, or in place of, those referred to in paragraph 1. Within an appropriatetime period, the competent authorities of the Contracting States shall notify each other of any substantial changeswhich have been made in their respective taxation laws.
ARTICLE 3(Definitions)
1. In this Agreement, unless the context otherwise requires,
(a) the term \
territory of the People's Republic of China, including its territorial sea, in which the laws relating to
Chinese tax are in force, and all the area beyond its territorial sea, including the sea-bed and subsoil thereof,over which the People's Republic of China has jurisdiction in accordance with international law and inwhich the laws relating to Chinese tax are in force;
(b) the term \
territory of the United States of America, including its territorial sea, in which the laws relating to UnitedStates tax are in force, and all the area beyond its territorial sea, including the seabed and subsoil thereof,over which the United States of America has jurisdiction in accordance with international law and in whichthe laws relating to United States tax are in force;
(c) the terms \
of China or the United States of America, as the context requires;
(d) the term \
(e) the term \
persons;
(f) the term \
corporate for tax purposes;
(g) the terms \
mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried onby a resident of the other Contracting State;
(h) the term \
legal persons, partnerships and other bodies of persons deriving their status as such from the law in force ina Contracting State;
(I) the term \
(I) in the People's Republic of China, the Ministry of Finance or its authorized
representative; and
(ii) in the United States of America, the Secretary of the Treasury or his authorized
representative.
2. As regards the application of the Agreement by a Contracting State any term not defined therein shall, unlessthe context otherwise requires, have the meaning which it has under the laws of that Contracting State concerningthe taxes to which the Agreement applies.
ARTICLE 4(Residence)
1. For the purposes of this Agreement, the term \the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of head office,place of incorporation or any other criterion of a similar nature.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, thenthe competent authorities of the Contracting States shall determine through consultations the Contracting State ofwhich that individual shall be deemed to be a resident for the purposes of this Agreement.
3. Where by reason of the provisions of paragraph 1 a company is a resident of both Contracting States, then thecompetent authorities of the Contracting States shall determine through consultations the Contracting State of whichthe company shall be deemed to be a resident for the purposes of this Agreement, and, if they are unable to so
determine, the company shall not be considered to be a resident of either Contracting State for purposes of enjoyingbenefits under this Agreement.
4. Where by reason of the provisions of paragraph 1 a company is a resident of the United States of America,and, under a tax agreement between the People's Republic of China and a third country is also a resident of that thirdcountry, the company shall not be considered to be a resident of the United States of America for purposes ofenjoying benefits under this Agreement.
ARTICLE 5
(Permanent Establishment)
1. For the purposes of this Agreement, the term \through which the business of an enterprise is wholly or partly carried on.
2. The term \
(a) a place of management;(b) a branch;(c) an office;(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
中美税收协定.pdf
