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Article 1. Persons Covered The present Arrangement shall apply to the persons who are residents of either or both of the parties. Article 2. Tax Types Covered 1. The present Arrangement shall apply to the taxes on income imposed on behalf of a party 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 the present Arrangement shall apply are: (a) in the case of the Mainland of China: (1) the individual income tax; and (2) the foreign-funded enterprises and foreign enterprise income taxes; and (3) local income taxes (hereinafter referred to "Mainland taxes") (b) in the case of Macao: (1) occupation tax (2) profit tax; (3) voucher & stamp tax; and (4) housing tax (hereinafter referred to "Macao taxes") 4. The present Arrangement shall also apply to the identical or substantially similar taxes that are levied after the date of signature of the present Arrangement as an addition or replacement to the current tax categories. The competent authorities of both parties 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 Arrangement, unless the context otherwise requires: (a) the terms "a party" and "the other party" refers to the Mainland of China or Macao, as the context requires; (b) the term "tax" refers to " Mainland taxes" or "Macao taxes" as the context requires; (c) the term "person" refers to an individual, a company or any other body; (d) the term "company" refers to any legal person entity or any entity which is treated as a legal person entity for taxation purposes; (e) the terms "enterprise of a party" and "enterprise of the other party" refer to, respectively, an enterprise operated by a resident of a party and an enterprise operated by a resident of the other party; (f) the term "shipping, air and land transport" refers to any transport by a ship, aircraft or land transport vehicle operated by an enterprise of a party, excluding that by ship, aircraft or land transport vehicle which is operated solely between places in the other party; (g) the term "competent authority" refers, in the case of the Mainland of China, to the State Administration of Taxation or its authorized representatives; in the case of Macao, to the Economic and Financial Secretary or his authorized representatives. 2. In the application of the present Arrangement by a party, any term not defined herein shall, unless the context otherwise requires, have the meaning in which it has under the law of that party concerning the taxes to which the present Arrangement applies. Article 4. Residents 1. For the purposes of the present Arrangement, the term "resident of a party" means any person who, under the law of this party, is obligatory to pay tax therein by reason of his domicile, residence, place of management, place of head office or any other criterion of a similar nature. But the term doesn't include the persons who are obligatory to pay tax only because of the income sourced from this party. 2. If an individual is a resident of both parties due to the provisions of Paragraph 1, his status shall be determined according to the following provisions: (a) he shall be deemed as a resident of the party in which he has a permanent domicile available to him; if he has a permanent domicile available to him in each of the parties, he shall be deemed as a resident of the party with which his personal and economic relations are closer (center of vital interests); (b) if the party in which his center of vital interests lies cannot be determined, or if he has no permanent home available to him in both parties, he shall be deemed as a resident of the party in which he has a habitual abode; (c) if he has a habitual abode in each of the parties or in neither of them, the issue shall be settled by the competent authorities of both parties by mutual agreement; 3. Where by reason of the provisions of Paragraph 1 of the present Article a person other than an individual is a resident of both parties, then it shall be deemed to be a resident of the party in which the place of effective management of its business is located. However, where such a person has the place of effective management of its business in a party and the place of head office of its business in the other party, then the competent authorities of both parties shall determine by mutual agreement the party of which the company shall be deemed to be a resident for the purpose of this present Arrangement. Article 5. Permanent Establishment 1. For the purposes of the present Arrangement, 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: (a) a place of management; (b) a branch organization; (c) a representative 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. 3. The term "permanent establishment", likewise, encompasses: (a) 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; (b) the provision of services, including consultancy services, by an enterprise of a party through employees or other engaged personnel for the aforementioned purpose, provided that the period for such activities is continually or accumulatively more than 6 months within any 12-month period. 4. Notwithstanding the aforesaid provisions of the present Article, the term "permanent establishment" shall not include: (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the inventory of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (c) the inventory of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the fixed business places established solely for the purpose of purchasing goods or merchandise or of collecting information for the enterprise; and (e) the fixed business places established solely for the purpose of carrying out, for the enterprise, any other activity of the preparatory or auxiliary nature; (f) the fixed business place established solely for the purpose of combining the activities listed in Items (a) through (e) of the present Paragraph if such combination can attribute all the activities of the fixed business place with 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 6 apply) is acting in a party on behalf of an enterprise of the other party, 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 party 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. An enterprise of a party shall not be deemed to have a permanent establishment in the other party merely because it operates its business in that other 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 referred to in this Paragraph. 7. The fact that a company which is a resident of a party controls or is controlled by a company which is a resident of the other party, or which operates business in the other party (whether through a permanent establishment or not), shall not itself constitute either company a permanent establishment of the other. Article 6. Income from Immovable Property 1. Income derived by a resident of a party from his immovable property (including income from agriculture or forestry) situated in the other party may be taxed in that other. 2. The term "immovable property" shall have the meaning it has under the law of the party 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 respecting landed property apply, the usufruct of immovable property and the rights to variable or fixed payments as consideration for the working of, or the right to work, the mineral deposits, sources and other natural resources, 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. Article 7. Business Profits 1. The profits of an enterprise of a party shall be taxable only in that party unless the enterprise carries on business in the other party through a permanent establishment situated therein. If the enterprise carries on business in the other party through a permanent establishment situated therein, the profits of the enterprise may be taxed in the other party, but only those attributable to that permanent establishment. 2. In addition to applying the provisions of Paragraph 3, where an enterprise of a party carries on business in the other party 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 same or similar conditions. It shall be treated differently and separately as an independent establishment from the enterprise. The profits of this permanent establishment that may be obtained shall belong to the permanent establishment itself in each party. 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 occurred in the party in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of loyalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on loans granted to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of loyalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 4. Insofar as it has been customary in a party 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 party 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 the present Article. 5. No profits may be attributed to a permanent establishment by reason of the 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 the present Arrangement, the provisions of those Articles shall not be affected by the provisions of the present Article. Article 8. Shipping, Air and Land Transport 1. The incomes and profits from the operations of ships, aircrafts or land transport vehicles in transport by an enterprise of a party in the other party shall be exempt from tax in that other party. 2. The provisions of Paragraph 1 shall also apply to the incomes and profits from operations under partnership, joint operations or participation in an international operating agency. Article 9. Associated Enterprises 1. Where (a) an enterprise of a party participates directly or indirectly in the management, control or capital of an enterprise of the other party, or (b) the same person participates directly or indirectly in the management, control or capital of an enterprise of a party and an enterprise of the other party, and 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 party includes in the profits of an enterprise of that party (and taxes accordingly) the profits on which an enterprise of the other party has paid taxes in the other party and the profits so included are profits which should have been obtained by an enterprise within the first-mentioned party, then the other party shall make appropriate adjustment to the amount of the tax charged therein on those profits, where the other party considers such adjustment justifiable. When making such an adjustment, the other provisions of the present Arrangement shall be taken into consideration, and the competent authorities of both parties shall consult with each other, if necessary. Article 10. Dividends 1. Dividends paid by a company that is a resident of a party to a resident of the other party may be taxed in that other party. 2. However, such dividends may also be taxed in a party of which the company paying the dividends is a resident and according to the laws of that party, but if the recipient is the beneficial owner of the dividends, the tax so levied shall not exceed 10 percent of the total amount of the dividends. The method of applying the aforesaid restrictions shall be determined by the competent authorities of both parties 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" used in the present Article refers to the income from the 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 a party 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 party, carries on business in the other party of which the company paying the dividends is a resident, through a permanent establishment situated therein, or provides in that other 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 party derives profits or income from the other party, the other party may not collect any tax on the dividends paid by the company, unless dividends are paid to a resident of the other party or unless the shares for which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other. On the undistributed profits of the company, even if the dividends paid or the undistributed profits consist wholly or partly of the profits or income arising in such other party, which may not levy taxes. Article 11. Interests 1. The interest arising in a party and paid to a resident of the other party may be taxed in that other. 2. However, such interest may also be taxed in a party in which it arises according to the laws of that party, but if the recipient is the beneficial owner of the interest, the tax so collected shall not exceed: (a) 7 percent of the total amount of the interest regarding the interest gained by a bank or a financial institution; (b) 10 percent in any other circumstance. The application of the restricted tax rate shall be determined by the competent authorities of both parties upon mutual agreement. 3. Notwithstanding the provisions of Paragraph 2 of the present Article, the interest arising in a party and derived by the government of the other party, a local authority thereof and a financial institution wholly owned by that government or any other financial institution acknowledged by both competent authorities upon mutual agreement; or the interest derived by a resident of that other upon the consent of the governments of both contracting parties, with the creditor's right being provided indirectly with funds by the government of the other party, a local authority thereof or any financial institution wholly owned by that government, shall be exempt from taxation in that party. 4. The term "interest" used in the present 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 attaching to such securities, bonds or debentures. The penalty charges for late payment shall not be regarded as interest provided in the present 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 party, carries on business in the other party in which the interest arises through a permanent establishment situated therein, or provides in the other party 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 according to the actual circumstances. 6. The interest shall be deemed to arise in a party when the payer is the government, a local authority or a resident of that party. Where, however, the person paying the interest, whether he is a resident of a party or not, has in a party 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 party 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 later-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each party, but the other provisions of the present Arrangement shall be taken into consideration. Article 12. Royalties 1. Royalties arising in a party and paid to a resident of the other party may be taxed in that other party. 2. However, such royalties may also be taxed in a party in which they arise according to the laws of that party, 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 application of the restricted tax rate shall be determined by the competent authorities of both parties upon mutual agreement. 3. The term "royalties" used in the present Article refers to the payments of any kind received as a consideration 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 party, carries on business in the other party in which the royalties arise through a permanent establishment situated therein, or provides in that other party 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 application of the provisions of Article 7 or Article 14 shall depend on the actual circumstances. 5. The royalties shall be deemed to arise in a party when the payer is the government, a local authority, or a resident of that party. Where, however, the person paying the royalties, whether he is a resident of a party or not, has in a party 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 party 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 the present 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 party, but the other provisions of the present Arrangement shall be taken into consideration. Article 13. Property Gains 1. Gains derived by a resident of a party from the alienation of immovable property referred to in Article 6 and situated in the other party may be taxed in that other. 2. Gains from the alienation of movable property forming the part of the business property of a permanent establishment which an enterprise of a party has in the other party or of movable property pertaining to a fixed base available to a resident of a party in the other party 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 the other party. 3. Gains of an enterprise of a party from the alienation of ships, aircrafts or vehicles operated in transport or movable property pertaining to the operation of such ships, aircrafts or vehicles shall be taxable only in the party where the head office or the actual management institution is located. 4. Gains from the alienation of any property other than those mentioned in Paragraphs 1 through 3 shall be taxable only in the party of which the alienator is a resident. 5. Gains from the alienation of any other stocks other than those mentioned in Paragraph 4 which are equivalent to at least 25 percent of the total stock right of the company of the resident of A party shall be taxed in that party. 6. Gains from the alienation of any other property other than those mentioned in Paragraphs 1 through 5 shall merely be taxable in the party of which the transferor is a resident. Article 14. Independent Personal Services 1. Income derived by a resident of a party in respect of professional services or other activities of an independent nature shall be taxable only in that party except that, under any of the following circumstances, such income may also be taxed in the other party: (a) if he has a fixed base regularly available to him in the other party 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; (b) if his stay in the other party 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 the other party 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 party in respect of an employment shall be taxable only in that party unless the employment is exercised in the other party. If the employment is so exercised, such remuneration derived may be taxed in that other party. 2. Notwithstanding the provisions of Paragraph 1, the remuneration derived by a resident of a party in respect of an employment exercised in the other party shall be taxable only in the first-mentioned party if the following requirements are met simultaneously: (a) the recipient is present in the other party for a period or periods not exceeding 183 days continuously or accumulatively in any 12 months after the relevant taxable year begins or ends; (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other party; and (c) the remuneration is not paid by a permanent establishment or a fixed base which the employer has in the other party. 3. Notwithstanding the preceding provisions of the present Article, the remuneration derived in respect of an employment exercised aboard a ship, aircraft or vehicle operated in transport by an enterprise of a party shall only be taxed in the party where the head office or the actual management institution of the enterprise is located. Article 16. Directors' Fees Notwithstanding the provisions of Articles 14 and15, directors' fees and other similar payments derived by a resident of a party in his capacity as a member of the board of directors of a company which is a resident of the other party may be taxed in that other party. Article 17. Artists and Sportsmen 1. Notwithstanding the provisions of Articles 14 and 15, the income derived by a resident of a party as an entertainer, such as a theatre, film, radio or television artist, or a musician, or as a sportsman, from his personal activities exercised in the other party, may be taxed in that other party. 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 party in which the activities of the entertainer or sportsman are exercised. 3. Notwithstanding the preceding provisions of the present Article, the income derived by a resident of a party as an entertainer or sportsman from the activities under a program of cultural exchange of both parties exercised in the other party, shall be exempt from taxation in that other party. Article 18. Pensions 1. In addition to the provisions of Paragraph 2 of Article 19, the pensions and other similar remunerations paid to a resident of a party in consideration of past employment shall be taxable only in that party. 2. Notwithstanding the provisions of Paragraph 1, the pensions and other similar payments paid by the government of a party or a local authority thereof according to a program of public welfare under the social insurance system shall be taxable only in that party. Article 19. Government Services 1. (a) The remuneration other than pension, paid by the government of a party or a local authority thereof for performing government duties, to an individual in respect of services rendered to that party or authority thereof, shall be taxable only in that party. (b) However, if the services are rendered in the other party and the individual is a resident of that other and did not become a resident of that other solely for the reason of rendering the services, this remuneration shall only be taxable in that other. 2. (a) Any pension paid by, or paid out of the funds created by, the government of a party or a local authority thereof to an individual in respect of services rendered to that party or authority thereof shall be taxable only in that party. (b) However, such pension shall be taxable only in the other party if the individual is a resident and a national of that other party. 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 party or a local authority thereof. Article 20. Teachers and Researchers 1. An individual who is, or just before visiting a party, was a resident of the other party and who is present in the first-mentioned party 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 party shall be exempted from paying taxes in the first-mentioned party, for a period of 3 years from the date of his first arrival in the first-mentioned party, in respect of remuneration for such teaching, lectures and research. 2. The exemption granted under Paragraph 1 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 and Trainees 1. A student, business apprentice or trainee who is, or was a resident of the other party just before visiting a party, and who is present in that party solely for the purpose of his education or training shall be exempted from taxes in that party on the payments derived from sources outside that party for the purpose of making a living, accepting education or training. 2. In respect of grants, scholarships and remuneration from employment not covered by Paragraph 1, a student, business apprentice or trainee described in Paragraph 1 shall, in addition, be entitled during such education or training to the same exemptions, preferential treatments or reductions in respect of taxes, available to the residents of the party he is visiting. Article 22. Other Incomes 1. Items of income of a resident of a party, wherever arising, not dealt with in the above-mentioned Articles of the present Arrangement shall be taxable only in that party. 2. The provisions of Paragraph 1 shall not apply to the income, other than the income from immovable property defined in Paragraph 2 of Article 6, if the recipient of such income, being a resident of a party, carries on business in the other party through a permanent establishment situated therein, or provides in the other party 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 the Mainland of China, double taxation shall be eliminated in the following ways: Where a resident of the Mainland of China derives income from Macao, the amount of tax on that income payable in Macao in accordance with the provisions of the present Arrangement, may be credited against the Mainland taxes imposed on that resident. The to-be-credited amount, however, shall not exceed the amount of the Mainland taxes on that income calculated in accordance with the taxation laws and regulations of the Mainland of China. 2. In Macao, double taxation shall be eliminated in the following ways: (a) Where a resident of Macao derives income from The Mainland of China, the amount of tax on that income payable in the Mainland of China, in accordance with the provisions of the present Arrangement, may be deducted from Macao taxes imposed on that resident except for circumstances prescribed in Item (b). (b) Where any income of a resident of Macao may, pursuant to Articles 10 through 12, be taxed in the Mainland of China, Macao Special Administrative Region shall deduct the amount of tax paid in the Mainland. However, the amount of deduction shall not exceed the payable amount of Mainland taxes that may be imposed on that income. Article 24. Non-discrimination 1. The taxation on a permanent establishment which an enterprise of a party has in the other party shall not be less favorably levied in the other party than the taxation levied on the enterprises of the other party engaged in the same activities. The present Provision shall not be understood as obligating a party to grant to the residents of the other party 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. 2. 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 party to a resident of the other party 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 party. 3. The enterprises of a party, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other party, shall not be subject in the first-mentioned party 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 party are or may be subject to. Article 25. Procedure for Mutual Agreement 1. Where a person considers that the measures taken by one or both of the parties lead or will lead to the taxation not in accordance with the provisions of the present Arrangement, he may, irrespective of the remedies provided by the domestic law of each party, present his case to the competent authority of the party in which he is a resident. The case must be presented within three years from the first notification of the taxation measures not accordance with the provisions of the present Arrangement. 2. If the competent authority believes that the objection is justified and no satisfactory solution could be made, it shall try to resolve the case by mutual agreement with the competent authority of the other party, with a view to the avoidance of taxation that is not in accordance with the present Arrangement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of each party. 3. The competent authorities of both parties shall try to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the present Arrangement. They may also negotiate with each other for the elimination of double taxation with regard to anything not provided for in the present Arrangement. 4. The competent authorities of both parties may communicate with each other directly for the purpose of reaching an agreement provided in Paragraphs 2 and 3. In doing so, the representatives of the competent authorities of both parties may meet together for an oral exchange of opinions. Article 26. Exchange of Information 1. The competent authorities of both parties shall exchange information if it is necessary for carrying out the provisions of the present Arrangement or of the domestic laws of both parties concerning taxes covered by the present Arrangement (insofar as the taxation thereunder is not contrary to the present Arrangement), in particular, for the prevention of evasion or avoidance of such taxes. The exchange of information is not restricted by Articles 1 and 2. Any information received by a party shall be treated as secret in the same manner as information obtained under the domestic laws of that party 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 the present Arrangement. 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 party under any of the following circumstances: (a) taking the administrative measures in violation of the laws and administrative practice of a party or the other party; (b) supplying information that is not available under the laws or through the normal administrative course of a party or of the other party; or (c) supplying the information that would disclose any trade, business, industrial, commercial, or professional secret or trade process. Article 27. Entry into Force The present Arrangement shall enter into force as of the date on which the notes indicating the completion of internal legal procedures in each party for the entry into force of the present Arrangement have been exchanged. The present Arrangement shall apply in respect of the income derived during the taxable years beginning on or after the first day of January in the calendar year next following that in which the present Arrangement enters into force. Article 28. Termination The present Arrangement shall be effective permanently, but a party 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 a written notice about termination to the other party. In such event, the present Arrangement shall cease to be effective in respect of income derived during the taxable years beginning on or after the first day of January in the calendar year next following that in which the notice about termination is given. In witness where of the undersigned, the representatives, as duly authorized, have signed the present Arrangement. The present Arrangement is done in duplicate in Chinese. Representatives: The State Administration of Taxation: Xie Xuren (Signature) Government of Macao Special Administrative Region: Edmund Ho (Signature) December 27, 2003 |
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