The Double Taxation Relief (Taxes on Income) (China) Order 1996

Made: 19th December 1996

At the Court at Buckingham Palace, the 19th day of December 1996 Present, The Queen’s Most Excellent Majesty in Council

Whereas a draft of this Order was laid before the House of Commons in accordance with the provisions of section 788(10) of the Income and Corporation Taxes Act 1988[^f00001], and an Address has been presented to Her Majesty by that House praying that an Order may be made in the terms of that draft:

Now, therefore, Her Majesty, in exercise of the powers conferred upon Her by section 788 of the said Act, and of all other powers enabling Her in that behalf, is pleased, by and with the advice of Her Privy Council, to order, and it is hereby ordered, as follows:—

1

This Order may be cited as the Double Taxation Relief (Taxes on Income) (China) Order 1996.

2

It is hereby declared—

• (a) that the arrangements specified in the Protocol set out in the Schedule to this Order, which vary the arrangements set out in the Schedule to the Double Taxation Relief (Taxes on Income) (China) Order 1984[^f00002], have been made with the Government of the People’s Republic of China with a view to affording relief from double taxation in relation to income tax, corporation tax or capital gains tax and taxes of a similar character imposed by the laws of China; and

• (b) that it is expedient that those arrangements should have effect.

SCHEDULE — PROTOCOL AMENDING THE AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA FORTHE RECIPROCAL AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People’s Republic of China;

Desiring to conclude a Protocol to amend the Agreement between the Contracting Governments for the reciprocal avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains, signed at Beijing on 26th July 1984 (hereinafter referred to as “the Agreement”);

Have agreed as follows:

ARTICLE 1

Sub-paragraph (a) of paragraph (1) of Article 2 of the Agreement shall be deleted and replaced by the following:

(a) in the People’s Republic of China: (i) the individual income tax; (ii) the income tax for enterprises with foreign investment and foreign enterprises; and (iii) the local income tax; (hereinafter referred to as “Chinese tax”);

ARTICLE 2

Sub-paragraph (i) of paragraph (l) of Article 3 of the Agreement shall be deleted and replaced by the following:

(i) the term “competent authority” means, in the case of China, the State Administration of Taxation or its authorised representatives, and in the case of the United Kingdom, the Commissioners of Inland Revenue or their authorised representatives.

ARTICLE 3

Paragraph (1) of Article 4 of the Agreement shall be deleted and replaced by the following:

(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 liable to tax therein by reason of his domicile, residence, place of head office or effective management, place of incorporation or any other criterion of a similar nature.

ARTICLE 4

ARTICLE 5

ARTICLE 6

Signed

N. H. Nicholls — Clerk of the Privy Council

Explanatory note

(This note is not part of the Order)

The Protocol scheduled to this Order makes certain alterations to the Agreement set out in the Schedule to the Double Taxation Relief (Taxes on Income)(China) Order 1984.

The Protocol replaces the list of Chinese taxes covered by the Agreement (Article 1) and the meaning of “competent authority” in relation to China (Article 2) and expands the meaning of “resident of a Contracting State” so as to include a person liable to tax in a Contracting State by reason of place of incorporation (Article 3)..

Payments received for the use of, or the right to use, information concerning industrial, commercial or scientific experience are brought within the definition of royalties in Article 12 of the Agreement (Article 4).

The elimination of double taxation provisions in Article 23 of the Agreement have been amended to reflect the revision of Chinese domestic legislation in relation to the taxation of foreign investment and foreign enterprises (Article 5).

The Protocol will enter into force on the date of the later of the notifications by each country of the completion of its legislative procedures. It will then have effect in both Contracting States in respect of profits, income and capital gains arising on or after 1st January 1995. The date of entry into force will, in due course, be published in theLondon, Edinburghand Belfast Gazettes.

Footnotes

[^f00001]: 1988 c. 1; section 788 is extended by section 277 of the Taxation of Chargeable Gains Act 1992 (c. 12).

[^f00002]: S.I. 1984/1826.