calendar year after five years from the date on which this Agreement enters into force. In such event, the Agreementshall cease to have effect with respect to income derived during taxable years beginning on or after the first day ofJanuary of the year following that in which the notice of termination is given.
Done at Beijing on the 30th day of April, 1984, in duplicate, in the Chinese and English languages, the two textshaving equal authenticity.
RONALD REAGAN
FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICAZHAO ZIYANG
FOR THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA
PROTOCOL 1
PROTOCOL TO THE AGREEMENT BETWEEN THE GOVERNMENT OF THE
UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA FORTHE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF TAX EVASION WITH RESPECT
TO TAXES ON INCOME At the signing of the Agreement between the Government of the United States of America and the Governmentof the People's Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion withRespect to Taxes on Income (hereinafter referred to as \provisions which form an integral part of the Agreement:
1. This Agreement shall not restrict in any manner any tax benefit which is or may hereafter be accorded in aContracting State by the laws of that Contracting State or by any Agreement between the governments of theContracting States.
2. Notwithstanding any provision of the Agreement, the United States may tax its citizens. Except as provided inparagraph 2 of Article 8, paragraph 2 of Article 17, and Articles 18, 19, 20, 22, 23, 24 and 26 of this Agreement, theUnited States may tax its residents (as determined under Article 4).
3. The United States may impose its social security tax, its personal holding company tax and its accumulatedearnings tax notwithstanding any provision of this Agreement. However, a Chinese company shall be exempt fromthe personal holding company tax or the accumulated earnings tax in the United States during a taxable year if
during that taxable year the company is wholly-owned, directly or indirectly, either by one or more individuals whoare residents of China (and who are not citizens of the United States) or by the Government of China or any wholly-owned agency thereof.
4. The term \
5. In applying paragraph 2 of Article 4 of this Agreement, the competent authorities of both Contracting Statesshall be guided by the rules contained in paragraph 2 of Article 4 of the United Nations Model Double TaxationConvention between Developed and Developing Countries.
6. For purposes of paragraph 3 of Article 11 of this Agreement, it is agreed by both sides that, in the case ofroyalties paid for the rental of industrial, commercial or scientific equipment, the tax shall be imposed on 70 percentof the gross amount of such royalties.
7. It is agreed by both sides that the competent authorities of the Contracting States may through consultationdeny the benefits of Articles 9, 10 and 11 to a company of a third country if the company becomes a resident of aContracting State for the principal purpose of enjoying benefits under this Agreement.
8. This Agreement shall not affect the application of the agreement between the two governments with respect tomutual exemption from taxation of transportation income of shipping and air transport enterprises, signed at Beijingon March 5, 1982.
Done at Beijing on the 30th day of April, 1984, in duplicate, in the Chinese and English languages, the two textshaving equal authenticity.
RONALD REAGAN
FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICAZHAO ZIYANG
FOR THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA
NOTES OF EXCHANGE
Beijing, April 30, 1984
His Excellency:Zhao Ziyang
Premier of the People’s Republic of ChinaExcellency:
I have the honor to refer to 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 which was signed today (hereafter referred to as “the Agreement “) and toconfirm, on behalf of the Government of the United States of America, the following understanding reachedbetween the two Governments:
Both sides agree that a tax sparing credit shall not be provided in Article 22 of this Agreement at this time.However, the Agreement shall be promptly amended to incorporate a tax sparing credit provision if the UnitedStates hereafter amends its laws concerning the provision of tax sparing credits, or the United States reachesagreement on the provision of a tax sparing credit with any other country.
I have the honor to request Your Excellency to confirm the foregoing understanding on behalf of YourExcellency’s Government.
I avail myself of this opportunity to assure Your Excellency of my highest consideration.
Ronald W. Reagan
President of the United States of America
Beijing. April 30, 1984
His ExcellencyRonald W. Reagan
President of the United States of AmericaExcellency:
I have the honor to acknowledge receipt of Your Excellency’s Note of today’s date, which reads as follows:
“Excellency:
I have the honor to refer to 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 which was signed today (hereafter referred to as “the Agreement “) and toconfirm, on behalf of the Government of the United States of America, the following understanding reachedbetween the two Governments:
Both sides agree that a tax sparing credit shall not be provided in Article 22 of this Agreement at this time.However, the Agreement shall be promptly amended to incorporate a tax sparing credit provision if the UnitedStates hereafter amends its laws concerning the provision of tax sparing credits, or the United States reachesagreement on the provision of a tax sparing credit with any other country.
I have the honor to request Your Excellency to confirm the foregoing understanding on behalf of YourExcellency’s Government.
I avail myself of this opportunity to assure Your Excellency of my highest consideration.”
I have the honor to confirm the understanding contained in Your Excellency’s Note on behalf of the Governmentof the People’s Republic of China.
I avail myself of this opportunity to assure Your Excellency of my highest consideration.
Zhao Ziyang
Premier of the People’s Republic of China
PROTOCOL 2
PROTOCOL CONCERNING THE INTERPRETATION OF PARAGRAPH 7OF THE PROTOCOL TO THE 1984 TAX AGREEMENT WITH THE
PEOPLE'S REPUBLIC OF CHINA
MESSAGEFROM
THE PRESIDENT OF THE UNITED STATES
TRANSMITTING
THE PROTOCOL, SIGNED AT BEIJING ON MAY 10, 1986, CONCERNING THE INTERPRETATION OFPARAGRAPH 7 OF THE PROTOCOL TO THE AGREEMENT BETWEEN THE GOVERNMENT OF THEUNITED STATES OF AMERICA AND THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA FOR
THE AVOIDANCE OF
DOUBLE TAXATION AND THE PREVENTION OF TAX EVASION WITH RESPECT TO TAXES ON
INCOME, SIGNED AT BEIJING ON APRIL 30, 1984
LETTER OF SUBMITTAL (Protocol 2)
DEPARTMENT OF STATE,Washington, May 20, 1986.
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 Protocol Concerning the Interpretation of Paragraph 7 of the Protocol to the
Agreement between the Government of the United States of America and the Government of the People's Republicof China for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes onIncome, signed at Beijing on April 30, 1984. The new Protocol was signed at Beijing On May 10, 1986.
You signed the Agreement, with its related protocol and exchange of notes, at Beijing on April 30, 1984, andsent them to the Senate for advice and consent to ratification on August 10, 1984. While the Agreement was
favorably reported out of the Senate Foreign Relations Committee in late 1985, some Senators expressed concernthat it lacked adequate \to a full Senate vote. The new Protocol directly addresses these concerns by including rules which would prevent theuse of the income tax treaty as a conduit by third country residents to obtain unintended treaty benefits. As a furtherrelated document, it should be given Senate advice and consent at the same time as the Senate advises and consentsto the Agreement and related documents that you signed at Beijing.
A technical memorandum explaining in detail the provisions of the Protocol is being prepared by the Departmentof the Treasury and will be submitted to the Senate Committee on Foreign Relations. Respectfully submitted,
GEORGE P. SHULTZ.
LETTER OF TRANSMITTAL (Protocol 2)
THE WHITE HOUSE, June 5,1986.
To the Senate of the United States:
I transmit herewith, for Senate advice and consent to ratification, the May 10, 1986, Protocol Concerning theInterpretation of Paragraph 7 of the 1984 Protocol to the Agreement Between the Government of the United Statesof America and the Government of the People's Republic of China for the Avoidance of Double Taxation and thePrevention of Tax Evasion with Respect to Taxes on Income, signed at Beijing on April 30, 1984. I also transmit thereport of the Department of State on the new Protocol.
Senate consideration of the Agreement, which was transmitted for advice and consent to ratification by letterdated August 10, 1984, has been delayed in light of the concern expressed that it lacked strong \
shopping\third countries from investing through China in order to get the benefits of the income tax treaty.
It is most desirable that this Protocol, together with the Agreement, the 1984 Protocol thereto, and the relatedexchange of notes, be considered by the Senate as soon as possible and that the Senate give advice and consent toratification of these instruments.
RONALD REAGAN.
PROTOCOL CONCERNING THE INTERPRETATION OF PARAGRAPH 7 OFTHE PROTOCOL TO THE AGREEMENT BETWEEN THE GOVERNMENT OFTHE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE
PEOPLE'S REPUBLIC OF CHINA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THEPREVENTION OF TAX EVASION WITH RESPECT TO TAXES ON INCOME, SIGNED AT BEIJING ON
APRIL 30, 1984
The Government of the United States of America and the Government of the People's Republic of China,
desiring to conclude a Protocol in addition to the Agreement between them for the avoidance of double taxation andthe prevention of tax evasion, and the supplementary Protocol attached thereto, have agreed as follows:
Both sides have agreed, with respect to the interpretation of Paragraph 7 of the Protocol to the Agreement, thattheir understanding is as follows:
1. A person (other than an individual) which is a resident of a Contracting State shall not be entitled under thisAgreement to relief from taxation in the other Contracting State unless:
(a) (I) more than 50 percent of the beneficial interest in such person (or in the case of a company
more than 50 percent of the number of shares of each class of the company's shares) is owned, directly orindirectly, by any combination of one or more of:
(A) individuals who are residents of one of the Contracting States;(B) citizens of the United States;
(C) companies as described in subparagraph 1(b) of this protocol; and
(D) one of the Contracting States, its political subdivisions or local authorities; and
(ii) in the case of relief from taxation under Articles 9 (dividends), 10 (interest), and 11
(royalties), not more than 50 percent of the gross income of such person is used to make payments of
interest to persons who are other than persons described in clauses (A) through (D) of subparagraph (a) (I),whether directly or indirectly; or
(b) it is a company which is a resident of a Contracting State and in whose principal class of shares
there is substantial and regular trading on a recognized stock exchange. 2. Paragraph 1 shall not apply if the establishment, acquisition and maintenance of such person and the conductof its operations did not have as a principal purpose the purpose of obtaining benefits under the Agreement. 3. For the purposes of paragraph 1 (b), the term \
(a) the NASDAQ System own by the National Association of Securities Dealers, Inc. and any
stock exchange registered with the Securities and Exchange Commission as a national securities exchangefor the purposes of the Securities Exchange Act of 1934; and
(b) any national securities exchange approved to be established by the Government of the People’s
Republic of China or its authorized institution; and
(c) any other stock exchange agreed upon by the competent authorities of the Contracting States. 4. Before a resident of a Contracting State is denied relief from taxation in the other Contracting State by reasonof paragraph 1, 2 and/or 3 the competent authorities of the Contracting States shall consult each other. This Protocol is certified for addition to the Agreement and its supplemental Protocol by the undersigned. Done at Beijing on the l0th day of May, 1986, in duplicate, in the English and Chinese languages, the two textshaving equal authenticity.
James A. Baker, III
Secretary of the Treasury
Minister of Finance
United States of America
Republic of China
People’s
Wang Bingqian,State Councillor and
中美税收协定.pdf
