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The Government of the People's Republic of China and the Government of Negara Brunei Darussalam, desiring to conclude an agreement on the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed to the following: Article 1. Persons Covered This Agreement shall apply to the persons who are residents of one or both of the contracting states. Article 2. Taxes Covered 1. The present Arrangement shall apply to the taxes on income imposed on behalf of either of the contracting states or any local authority thereof, irrespective of the ways in which they are levied. 2. The taxes levied on the total income, or on a certain income, including taxes on gains from the alienation of movable or immovable property, and the taxes on capital appreciation, shall all be regarded as taxes levied upon income. 3. The current tax categories to which this Agreement shall apply are: (1) in the case of China: (a) the individual income tax; and (b) the foreign-funded enterprises and foreign enterprise income tax.(hereinafter referred to "Chinese taxes") (2) in the case of Negara Brunei Darussalam: (a) the income tax (No. 35); and (b) the petroleum profit tax levied according to the (petroleum) income tax law (No. 119). (hereinafter referred to "Negara Brunei Darussalam taxes") 4. This Agreement shall also apply to the identical or substantially similar taxes that are levied after the date of signature of this Agreement as an addition or replacement to the current tax categories. The competent authorities of both contracting states shall notify each other of any substantial changes made in their respective taxation laws within a reasonable time limit after such changes are made. Article 3. General Definitions 1. For the purpose of the present Agreement, unless the context otherwise requires: (1) the term "China" means the People's Republic of China. When used in a geographical sense, it means all the territory of the People's Republic of China, in which the Chinese laws relating to taxation apply, including its territorial seas, and any area beyond its territorial seas, within which the People's Republic of China has sovereign rights of exploration for and exploitation of resources of the sea-bed and its sub-soil and superjacent water resources in accordance with the international law; (2) the term "Negara Brunei Darussalam" refers to the territory owned by Negara Brunei Darussalam according to its domestic law, and the adjacent areas over which Negara Brunei Darussalam has sovereignty and exercises its sovereign rights or jurisdiction in accordance with the United Nations Conventions on the Law of the Sea (1982); (3) the terms "a contracting state" and "the other contracting state" refers to Negara Brunei Darussalam or China, as the context requires; (4) the term "tax" refers to "Negara Brunei Darussalam taxes" or "Chinese taxes", as the context requires; (5) the term "person" refers to an individual, company or any other body; (6) the term "company" refers to any legal person entity or any entity which is treated as a legal person entity for taxation purposes; (7) the terms "enterprise of a contracting state" and "enterprise of the other contracting state" refer to an enterprise operated by a resident of a contracting state and an enterprise operated by a resident of the other contracting state, respectively; (8) the term "nationals" refers to: (a) any individual possessing the nationality of a contracting state; (b) any legal person, partnership or association deriving its status as such from the laws of a contracting state; (9) the term "international traffic" refers to any transport by a ship or aircraft operated by an enterprise of a contracting state, excluding the transport by a ship or aircraft which is operated solely between places in the other contracting state; (10) the term "competent authority" refers: (a) in the case of Negara Brunei Darussalam, to the minister of the treasury or the representatives authorized thereby; (b) in the case of China, to the minister of the Ministry of Finance or the representative authorized thereby. 2. As regards the application of the agreement by a contracting state, any term not defined herein shall, unless the context otherwise requires, have the meaning in which it has under the law of that contracting state concerning the taxes to which the agreement applies. Article 4. Residents 1. For the purposes of this Agreement, the term "resident of a contracting state" means any person who, under the law of that state, is obligatory to pay tax therein by reason of his domicile, residence, place of head office, place of control and management, 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, then his status shall be determined as follows: (1) He shall be deemed as a resident of the contracting state in which he has a permanent domicile available to him; if he has a permanent domicile available to him in each of the contracting states, he shall be deemed as a resident of the contracting state with which his personal and economic relations are closer (center of gravity); (2) if the state in which his center of gravity lies cannot be determined, or if he has not a permanent home available to him in either contracting state, he shall be deemed as a resident of the state in which he has a habitual abode; (3) if he has a habitual abode in both contracting states or in neither of them, he shall be deemed as a resident of the contracting state of which he is a national; (4) if he is a national of both or neither of the contracting states, the competent authorities of the contracting states shall settle the issue by mutual agreement. 3. Where, by reason of the provisions of Paragraph 1 of this Article, a person other than an individual is a resident of both contracting states, it shall nonetheless be subject to negotiation by the competent authorities of both contracting states for settlement. Article 5. Permanent Establishment 1. For the purposes of this Agreement, the term "permanent establishment" refers to a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term "permanent establishment", in particular, includes: (1) a place of management; (2) a branch organization; (3) a representative office; (4) a factory; (5) a workshop; (6) a mine, petroleum or gas well, quarry or any other place of extraction of natural resources; (7) an installation project or building used for exploration or exploitation of natural resources; and (8) a farm or plantation park. 3. The term "permanent establishment", likewise, encompasses: (1) a building site, a construction, assembly or installation project, or the supervisory activities in connection therewith, but only where such site, project or activities continue for a period of not less than 6 months; and (2) the provision of services, including consultancy services, by an enterprise of a contracting state through employees or other engaged personnel for the aforementioned purpose, provided that the period for such activities (for the same project or relevant project) is continually or aggregately more than 6 months within any 12-month period. 4. Notwithstanding the aforesaid provisions of this article, the term "permanent establishment" shall not include: (1) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (2) the inventory of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (3) the inventory of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (4) the fixed business place established solely for the purpose of purchasing goods or merchandise or of collecting information for the enterprise; (5) the fixed business place established solely for the purpose of carrying out, for the enterprise, any other activity of a preparatory or auxiliary nature; and (6) the fixed business place established solely for the purpose of combining the activities listed in Items (1) through (5) of the present Paragraph if such combination can attribute all the activities of the fixed business place to a preparatory or auxiliary nature. 5. Notwithstanding the provisions of Paragraphs 1 and 2, where a person (other than an agent of one with independent status to whom the provisions of Paragraph 7 apply) is acting in a contracting state on behalf of an enterprise of the other contracting state, has and habitually exercises an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in the first-mentioned contracting state in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in Paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment. 6. Notwithstanding the provisions as mentioned above, an insurance enterprise of a contracting state shall deemed to have a permanent establishment if it charges premiums or accepts insurance business, except for reinsurance, within the territory of the other contracting state through a person other than an agent with independent status as mentioned in Paragraph 7. 7. An enterprise of a contracting state shall not be deemed to have a permanent establishment in the other contracting state merely because it operates its business in that other contracting state through a broker, general commission agent or any other agent with independent status in the ordinary course of their business. However, if such agent acts wholly or nearly wholly on behalf of that enterprise, he shall not be deemed as an agent with independent status as referred to in this Paragraph. 8. The fact that a company which is a resident of a contracting state controls or is controlled by a company which is a resident of the other contracting state, or which operates business in that other contracting state (whether through a permanent establishment or not) shall not itself imply that either company constitutes a permanent establishment of the other. Article 6. Income from Immovable Property 1. Income derived by a resident of a contracting state from immovable property (including income from agriculture or forestry) situated in the other contracting state may be taxed in the other contracting state. 2. The term "immovable property" shall have the meaning it has under the law of the contracting state in which the property in question is situated. The term shall, in any case, include the property accessory to the immovable property, livestock and equipment used in agriculture and forestry. The rights to which the provisions of general law regarding land property apply, the usufruct of immovable property and the rights to variable or fixed payments as considerations for the exploitation of, or the right to exploit, the mineral deposits, water sources and other natural resources. But the ships and aircrafts shall not be regarded as immovable property. 3. The provisions of Paragraph 1 shall apply to the income derived from the direct use, lease, or use in any other form of immovable property. 4. The provisions of Paragraphs 1 and 3 shall apply to the income from immovable property of an enterprise and to the income from immovable property used for the performance of independent personal services as well. Article 7. Business Profits 1. The profits of an enterprise of a contracting state shall be taxable only in that state unless the enterprise carries on business in the other contracting state through a permanent establishment situated therein. If the enterprise carries on business in the other contracting state through a permanent establishment situated therein, the profits of the enterprise may be taxed in the other state, but only those attributable to that permanent establishment. 2. In addition to applying the provisions of Paragraph 3, where an enterprise of a contracting state carries on business in the other contracting state through a permanent establishment situated therein, the permanent establishment shall be regarded as the independent affiliated enterprise engaging in the same or similar activities under the same or similar conditions, and shall be treated completely independently from the establishment subordinated to the permanent institution. The profits of this permanent establishment that may be obtained shall belong to the permanent establishment itself in each contracting state. 3. When determining the profits of a permanent establishment, deductions of expenses occurred in the business of the permanent establishment may be allowed. The expenses include the executive and general administrative expenses, no matter whether they incurred in the state in which the permanent establishment is situated or elsewhere. 4. Insofar as it has been customary in a contracting state to determine the profits to be attributed to a permanent establishment on the basis of a distribution of the total profits of the enterprise to its various parts, the provisions in Paragraph 2 shall not preclude that contracting state from determining the profits to be taxed by this method of profit distribution. However, the result of adopting the method of profit distribution shall be in line with the principles provided in this Article. 5. No profit may be attributed to a permanent establishment by reason of mere purchase by that permanent establishment of goods or merchandise for the enterprise. 6. For the purposes of the aforesaid Paragraphs, the profits belonging to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to change. 7. If the profits include the income items that are dealt with separately in other Articles of this Agreement, the provisions of those Articles shall not be affected by the provisions of this Article. Article 8. Shipping and Air Transport 1. The profits from the operations of ships or aircrafts in international transport by an enterprise of a contracting state shall be taxable only in that contracting state. 2. The provisions of Paragraph 1 shall also apply to the profits from operations under partnership, joint operations or participation in an international operating agency. Article 9. Associated Enterprises 1. Where: (1) an enterprise of a contracting state participates directly or indirectly in the management, control or capital of an enterprise of the other contracting state; or (2) a same person participates directly or indirectly in the management, control or capital of an enterprise of a contracting state and an enterprise of the other contracting state; in either of the above cases, the commercial and financial relations between the two enterprises are different from those between two independent enterprises, so the profits which would, but for those conditions, have obtained by one of the enterprises, may be included in the profits of that enterprise and taxed accordingly. 2. Where a contracting state includes in the profits of an enterprise of that contracting state (and taxes accordingly) the profits on which an enterprise of the other contracting state has paid taxes in that other contracting state and the profits so included are profits which should have been obtained by an enterprise within the contracting state, if both enterprises are independent of each other, then that other contracting state shall make appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, the other provisions of this Agreement shall be taken into consideration, and the competent authorities of the contracting states shall consult each other, if necessary. Article 10. Dividends 1. Dividends paid by a company that is a resident of a contracting state to a resident of the other contracting state may be taxed in that other state. 2. However, such dividends may also be taxed in the contracting state of which the company paying the dividends is a resident and according to the laws of that state, but if the payee is the beneficial owner of the dividends, the tax so levied shall not exceed 5 percent of the total amount of the dividends. The competent authorities of both contracting states shall determine the way to implement the limits on tax rates by mutual agreement. The present Paragraph shall not affect the profit tax imposed on the company's profits before paying the dividends. 3. The term "dividends" as used in this Article refers to the income from shares, "enjoying" shares, "enjoying rights", "mining" shares, promoter's shares or other rights of participating in the profits not of credit relationship, as well as the income from other corporate rights that are subject to the same taxation treatment as the income from the shares by the laws of the state of which the company making the distribution is a resident. 4. The provisions of Paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a contracting state, carries on business in the other contracting state of which the company paying the dividends is a resident, through a permanent establishment situated therein, or provides in that other state the independent personal services from a fixed base situated therein, and the shares for which the dividends are paid are effectively connected with such permanent establishment or fixed base. In such cases, the application of the provisions of Article 7 or Article 14 shall depend on the concrete circumstances. 5. Where a company that is a resident of a contracting state derives profits or income from the other contracting state, that other contracting state may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other contracting state or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other contracting state, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other state. Article 11. Interest 1. The interest or income from various creditor's rights arising in a contracting state and paid to a resident of the other contracting state may be taxed in that other contracting state. 2. However, such interest may also be taxed in the contracting state in which it arises according to the laws of that contracting state, but if the payee is the beneficial owner of the interest, the tax so collected shall not exceed 10 percent of the total amount of the interest. The competent authorities of both contracting states shall determine the way to implement the limits on tax rates by mutual agreement. 3. Notwithstanding the provisions of Paragraph 2 of this Article, the interest arising in a contracting state and derived by the government of the other contracting state shall be exempted from taxation in the first-mentioned contracting state. In this paragraph, the term "government": (1) in the case of China, means (a) the People's Bank of China; (b) the State Development Bank; (c) the Import & Export Bank of China; (d) the Agricultural Development Bank of China; (e) the Council for National Social Security Foundation (f) any local government; and (g) any other financial institution whose capital is wholly owned by the government of China or a local government upon the mutual agreement between the competent authorities of the contracting states at any time. (2) while in the case of Negara Brunei Darussalam, means the government of Negara Brunei Darussalam, which shall include: (a) the Brunei Currency Board; (b) the Brunei Investment Agency (c) the Employee Trust Foundation; (d) any local government; and (e) any other financial institutions wholly owned by the government of Negara Brunei Darussalam or a local government upon the mutual agreement between the competent authorities of the contracting states at any time. 4. The term "interest" as used in this Article refers to the income from various creditor's rights, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, the income from public debts and the income from bonds or debentures, including the premiums and prizes attached to such securities, bonds or debentures. The penalty charges for late payment shall not be regarded as interest provided in this Article. 5. The provisions of Paragraphs 1, 2 and 3 shall not apply, if the beneficial owner of the interest, being a resident of a contracting state, carries on business in the other contracting state in which the interest arises through a permanent establishment situated therein, or provides in that other contracting state independent personal services from a fixed base situated therein, and the creditor's right in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such cases, the provisions of Article 7 or Article 14 shall apply in accordance with the circumstances. 6. The interest shall be deemed to arise in a contracting state when the payer is the government, a local authority or a resident of that contracting state. Where, however, the person paying the interest, whether he is a resident of a contracting state or not, has in a contracting state a permanent establishment or a fixed base, and the debts on which the interest is paid are connected with the permanent establishment or a fixed base, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the state in which the permanent establishment or fixed base is situated. 7. Where, due to any special relationship between the payer and the beneficial owner or between both of them and some other persons, the amount of the interest, regarding the credit for which it is paid, exceeds the amount which have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each contracting state, but the other provisions of this Agreement shall be taken into proper consideration. Article 12. Royalties 1. Royalties arising in a contracting state and paid to a resident of the other contracting state may be taxed in that other contracting state 2. However, such royalties may also be taxed in the contracting state in which they arise according to the laws of that state, but if the recipient is the beneficial owner of the royalties, the tax so collected shall not exceed 10 percent of the total amount of the royalties. The competent authorities of both contracting states shall determine the way to implement the limits on tax rates through mutual agreement. 3. The term "royalties" as used in this Article refers to the payments of any kind received as a remuneration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematographic films, or films or tapes for radio or television broadcasting, any patent, trademark, design or model, plan, secret formula or process, or for the use of, or the right to use, any industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience. 4. The provisions of Paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a contracting state, carries on business in the other contracting state in which the royalties arise through a permanent establishment situated therein, or provides in that other state independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such cases, the provisions of Article 7 or Article 14 shall, as the case may be, apply. 5. The royalties shall be deemed to arise in a contracting state when the payer is the government, a local authority or a resident of that contracting state. Where, however, the person paying the royalties, whether he is a resident of a contracting state or not, has in a contracting state a permanent establishment or a fixed base in connection with the liability to pay the royalties, and such royalties are borne by the permanent establishment or fixed base, then such royalties shall be deemed to arise in the contracting state in which the permanent establishment or fixed base is situated. 6. Where, due to any special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, regarding the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excessive part of the payments shall remain taxable according to the law of each contracting state, but the other provisions of this Agreement shall be taken into consideration. Article 13. Property Gains 1. Gains derived by a resident of a contracting state from the alienation of immovable property referred to in Article 6 and situated in the other contracting state may be taxed in that other contracting state. 2. Gains from the alienation of movable property forming the part of the business property of a permanent establishment which an enterprise of a contracting state has in the other contracting state or of movable property pertaining to a fixed base available to a resident of a contracting state in the other contracting state for the purpose of providing independent personal services, including the gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other state. 3. Gains of an enterprise of a contracting state from the alienation of ships or aircraft operated in international transport or movable property pertaining to the operation of such ships or aircrafts shall be taxable only in that contracting state. 4. Gains from the alienation of any property other than those as mentioned in Paragraphs 1 through 3 shall be taxable only in the contracting state of which the alienator is a resident. Article 14. Independent Personal Services 1. Income derived by a resident of a contracting state in respect of professional services or other activities of an independent nature shall be taxable only in that state except that, under any of the following circumstances, such income may also be taxed in the other contracting state: (1) if he has a fixed base regularly available to him in the other contracting state for the purpose of performing his activities, and under this circumstance, only the income attributable to that fixed base may be taxed in that other contracting state; or (2) if his stay in the other contracting state is for a period or periods amounting to or exceeding 183 days continuously or accumulatively in any 12-month period, under this circumstance, only the income derived from his activities performed in that other contracting state may be taxed in that other. 2. The term "professional services" includes especially independent scientific, literary, artistic, educational, or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. Article 15. Non-independent Personal Services 1. In addition to the provisions of Articles 16, 18, 19, 20 and 21, the salaries, wages and other similar remuneration derived by a resident of a contracting state in respect of an employment shall be taxable only in that state unless the employment is exercised in the other. If the employment is so exercised, such remuneration derived may be taxed in that other state. 2. Notwithstanding the provisions of Paragraph 1, the remuneration derived by a resident of a contracting state in respect of an employment exercised in the other contracting state shall be taxable only in the first-mentioned state if the following requirements are met simultaneously: (1) the payee is present in the other contracting state for a period or periods not exceeding 183 days continuously or accumulatively in any 12-month period; (2) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other contracting state; and (3) the remuneration is not paid by a permanent establishment or a fixed base which the employer has in the other contracting state. 3. Notwithstanding the preceding provisions of this Article, the remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international transport by an enterprise of a contracting state shall be taxed in that contracting state only. Article 16. Directors' Fees Directors' fees and other similar payments derived by a resident of a contracting state in his capacity as a member of the board of directors of a company which is a resident of the other contracting state may be taxed in that other contracting state. Article 17. Artists and Sportsmen 1. Notwithstanding the provisions of Articles 14 and 15, the income derived by a resident of a contracting state as an entertainer, such as a theatre, motion picture, radio or television artist, or a musician, or as a sportsman, from his personal activities exercised in the other contracting state, may be taxed in that other contracting state. 2. Where the income obtained through personal activities exercised by an entertainer or sportsman in his capacity will not belong to the entertainer or sportsman 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 sportsman are exercised. 3. Notwithstanding the preceding provisions of the this Article, the income derived by a resident of a contracting state as an entertainer or sportsman from the activities under a program of cultural exchange of both contracting states exercised in the other contracting state, shall be exempted from taxation in that other contracting state. Article 18. Pensions 1. In addition to the provisions of Paragraph 2 of Article 19, the pensions and any other similar remunerations paid to a resident of a contracting state in consideration of past employment shall be taxable only in that contracting state. 2. Notwithstanding the provisions of Paragraph 1, the pensions and other similar payments paid by the government of a contracting state or a local authority thereof according to a program of public welfare under the social insurance system shall be taxable only in that contracting state. Article 19. Government Services 1. (1) The remuneration other than pension, paid by the government of a contracting state or a local authority thereof for performing government duties, to an individual in respect of services rendered to that contracting state or authority thereof, shall be taxable only in that other state. (2) However, if the services are rendered in that other contracting state and the individual providing the services is a resident of that other contracting state who: (a) is a national of that contracting state; or (b) did not become a resident of that contracting state solely for the reason of rendering the services; this remuneration shall only be taxable in that other contracting state. 2. (1) Any pension paid by, or paid out of the funds established by the government of a contracting state or a local authority thereof to an individual in respect of services rendered to that contracting state or authority thereof shall be taxable only in that contracting state. (2) However, such pension shall be taxable only in the other contracting state if the individual is a resident and a national of that other contracting state. 3. The provisions of Articles 15 through 18 shall apply to the remuneration and pensions in respect of services rendered in connection with a business carried on by the government of a contracting state or a local authority thereof. Article 20. Teachers and Researchers 1. An individual who is, or immediately before visiting a contracting state, was a resident of the other contracting state and who is present in the first-mentioned state solely for the purpose of teaching, giving lectures or conducting research at a university, college, school or other similar educational institution or scientific research institution accredited by the government of the first-mentioned contracting state shall be exempted from paying taxes in the first-mentioned contracting state, for a period of 2 years from the date of his first arrival in the first-mentioned contracting state, in respect of remuneration for such teaching, lectures and research. 2. The provisions of Paragraph 1 of this Article shall not apply to the income from research if such research is undertaken not for the public interest but primarily for the private benefit of a specific person or persons. Article 21. Students A student, business apprentice or intern who is, or was a resident of the other contracting state immediately before visiting a contracting state, and who is present in the first-mentioned state solely for the purpose of his education or training shall be exempted from paying taxes in that first-mentioned state on the payments derived from sources outside that contracting state for the purpose of making a living, accepting education or training. Article 22. Other Incomes 1. Items of income of a resident of a contracting state, wherever arising, not dealt with in the above-mentioned Articles of this Agreement shall be taxable in that contracting state only. 2. The provisions of Paragraph 1 shall not apply to the income other than the income from immovable property as defined in Paragraph 2 of Article 6, if the recipient of such income, being a resident of a contracting state, carries on business in the other contracting state through a permanent establishment situated therein, or provides in that other state independent personal services form a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such cases the provisions of Article 7 or Article 14 shall apply in light of the actual circumstances. Article 23. Methods for the Elimination of Double Taxation 1. In China, double taxation shall be eliminated in the following way: Where a resident of China derives income from Negara Brunei Darussalam, the payable amount of tax in Negara Brunei Darussalam may be credited against the Chinese tax imposed on that resident. The to-be-credited amount, however, shall not exceed the amount of the Chinese tax on that income calculated in accordance with the tax laws and regulations of China. 2. In Negara Brunei Darussalam, double taxation shall be eliminated in the following way: Besides the application of the provisions of the laws of Negara Brunei Darussalam regarding the allowance of payable amount of tax in a territory outside Negara Brunei Darussalam as a credit against the Brunei Tax (which shall not affect the general principle hereof), the amount of tax paid directly or by deduction for profits or income sourced from China shall, under the law of Brunei and in accordance with this Agreement, be allowed as a credit against the Brunei tax on the same profits or income. 3. The term "payable amount of tax" as mentioned in this Article shall be deemed as the amount of tax is likely to be paid but may be exempted or deducted in accordance with laws and regulations enacted by the contracting states concerning tax preferential treatments for the purpose of promoting economic development, the other contracting state shall deem the untaxed amount as taxed in the contracting state mentioned first. The provisions of this Article shall be valid within 10 years from the day when this Agreement comes into effect. However, the competent authorities of both contracting states may extend the time period upon mutual agreement. Article 24. Non-discrimination 1. The nationals of a contracting state shall not be subject in the other contracting state to any tax or any requirement that is different from or more burdensome than the taxation or requirement to which the nationals of that other state under the same circumstance is or may be subject to taxation. Notwithstanding the provisions of Article 1, the provisions of this Article shall be applicable to a person who is a resident of either contracting state or both contracting states. 2. The tax burden of a permanent establishment, which an enterprise of a contracting state bears in the other contracting state shall not be heavier than that of the enterprises of that other contracting state engaged in the same activities. This provision shall not be understood as obligating a contracting state to grant to the residents of the other contracting state any personal allowances, preferential treatments and deductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 3. In addition to applying the provisions of Paragraphs 1of Article 9, Paragraph 7 of Article 11, or Paragraph 6 of Article 12, the interest, royalties and other disbursements paid by an enterprise of a contracting state to a resident of the other contracting state shall, for the purpose of determining the taxable profits of such enterprise, be deducted under the same conditions as if they had been paid to a resident of the first-mentioned state. 4. The enterprises of a contracting state, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other contracting state, shall not be subject in the first-mentioned state to any taxation or any requirement, which is different from or more burdensome than the taxation or requirement to which other similar enterprises of the first-mentioned state are or may be subject. 5. The term "taxes" as mentioned in this Article shall refer to any of the tax categories to which this Agreement applies. Article 25. Procedure for Mutual Agreement 1. Where a person considers that the measures taken by either or both of the contracting states lead or will lead to the taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those states, present his case to the competent authority of the contracting state of which he is a resident or, if his case comes under Paragraph 1 of Article 24, to that of the contracting state of which he is a national. The case must be presented within three years from the first notification of the taxation measures inconsistent with the provisions of the agreement. 2. If the competent authority believes that the objection is justified and no satisfactory solution could be made unilaterally, it shall try to resolve the case by mutual agreement with the competent authority of the other contracting state, with a view to the avoidance of taxation that is inconsistent with this Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the contracting states. 3. The competent authorities of both contracting states shall try to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult each other for the elimination of double taxation in cases not provided for in this Agreement. 4. The competent authorities of the contracting states may communicate with each other directly for the purpose of implementing this Agreement. Article 26. Exchange of Information 1. The competent authorities of the contracting states shall exchange such information as is necessary to implement the provisions of this Agreement or of the domestic laws of the contracting states concerning taxes covered by this Agreement (insofar as the taxation thereunder is not contrary to this Agreement), in particular for the prevention of evasion or avoidance of such taxes. The exchange of information is not restricted by Article 1. Any information received by a contracting state shall be treated as secret in the same manner as information obtained under the domestic laws of that contracting state and shall be disclosed only to the persons or authorities (including courts and administrative bodies) in relation to the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by this Agreement. Such persons or authorities shall use the information only for such purposes, but may disclose the information in public court proceedings or in judicial decisions. 2. The provisions of Paragraph 1 shall not be understood as imposing the following obligations on a contracting state under any circumstances: (1) taking any administrative measures in violation of the laws and administrative practice of that or of the other contracting state; (2) supplying information that is not available under the laws or through the normal administrative course of that or of the other contracting state; (3) supplying the information that would disclose any trade, business, industry, commerce, or professional secret or trade process, or the information, the divulgence of which would contravene public policy (public order). Article 27. Members of Diplomatic Missions and Consular Posts This Agreement shall not affect the tax privileges enjoyed by the members of diplomatic missions and consular posts under the general rules of international law or under the provisions of special agreements. Article 28. Entry into Force This Agreement shall enter into force on the thirtieth day after the date on which the diplomatic notes indicating the completion of internal legal procedures in each country for the entry into force of this Agreement have been exchanged. This Agreement shall have effect as respects income derived in the taxable years beginning on or after the first day of next January following that year in which this Agreement enters into force. Article 29. Termination This Agreement shall be effective permanently, but either of the contracting states may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give written notice of termination to the other contracting state through diplomatic channels. In such event, this Agreement shall cease to have effect as respects income derived in the taxable years beginning on or after the first day of next January following that year as respects income derived in the taxable years beginning on or after the first day of next January following that year in which the notice of termination is given. In witness where of the undersigned, being duly authorized thereto, have signed this Agreement. Done in duplicate on ( ), in Chinese, Malay and English, all texts being of equal force. In case any discrepancy exists in the interpretation of this Agreement, the English version shall prevail. Government of the People's Government of Republic of China: Representative Government of the People's Government of Negara Brunei Darussalam: Representative |
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