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Beijing Local Taxation Bureau??s transmitting of the Notice of the State Adminis

[2008-12-23 16:55:42]

 
     
Beijing Local Taxation Bureau??s transmitting of the Notice of the State Administration of Taxation about Printing and Distributing the Agreement between the Government of the People??s Republic of China and the Government of the Republic of Azerbaijan on the Avoidance of Double Taxation and Getting Prepared for Its Implementation
??Jingdishuifa??2005??369
 
???? All local taxation bureaus in all districts and counties, local taxation branches, divisions and offices of the Municipal Local Taxation Bureau, and all units directly under the Bureau??

???? We are now transmitting to you the Notice of the State Administration of Taxation about Printing and Distributing the Agreement between the Government of the People??s Republic of China and the Government of the Republic of Azerbaijan on the Avoidance of Double Taxation and Getting Prepared for Its Implementation. You are asked to implement it accordingly.

???? Attachment:

???? July 28, 2005

???? State Administration of Taxation

???? Guoshuihan??2005??282

???? Notice of the State Administration of Taxation about Printing and Distributing the Agreement between the Government of the People??s Republic of China and the Government of the Republic of Azerbaijan on the Avoidance of Double Taxation and Getting Prepared for Its Implementation

???? All the bureaus of state taxation and local taxation in all provinces??autonomous regions??municipalities directly under the Central Government??and cities specifically designated in the state plan??

???? The Agreement between the Government of the People??s Republic of China and the Government of the Republic of Azerbaijan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income was signed in Beijing on Mar. 17, 2005 by Xiexuren, Chief of the State Administration of Taxation of China,and FazilMamedov, Minister of Taxes of Azerbaijan on behalf of their respective governments, and is subject to completion of the necessary legal procedures at both sides for coming into force. The text of this Agreement is now sent to you, and please make due preparations before it comes into force.

???? Attachment: AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE??S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE REPUBLIC OF AZERBAIJAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

???? April 4, 2005

???? Attachment:

???? AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE??S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE REPUBLIC OF AZERBAIJAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

???? The Government of the People??s Republic of China and the Government of the Republic of Azerbaijan

???? Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,

???? Have agreed as follows:

???? Article 1

Personal Scope

???? This Agreement shall apply to persons who are residents of one or both of the Contracting States.

???? Article 2

Tax Categories

???? 1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its local authorities, irrespective of the manner in which they are levied.

???? 2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

???? 3. The existing taxes to which the Agreement shall apply are in particular:

???? a) in China:

???? (i) the individual income tax;

???? (ii) the income tax for enterprises with foreign investment and foreign enterprises.

???? ( hereinafter referred to as ??Chinese tax??)

???? b) in Azerbaijan:

???? (i) the tax on profit of legal persons;

???? (ii) the income tax on individuals;

???? (hereinafter referred to as ??Azerbaijani tax??)

???? 4. The Agreement shall also apply to any identical or substantially similar taxes that are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes, which have been made in their respective taxation laws.

???? Article 3

General Definitions

???? 1. For the purposes of this Agreement, unless the context otherwise requires:

???? a) the term ??China?? means the People??s Republic of China; when used in geographical sense, means all the territory of the People's Republic of China, including its territorial sea, in which the Chinese laws relating to taxation apply, and any area beyond its territorial sea, 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 international law;

???? b) the term ??Azerbaijan?? means the territory of the Republic of Azerbaijan, including the Caspian Sea (Lake) sector belonging to the Republic of Azerbaijan, the air space above the Republic of Azerbaijan, within which the sovereign rights and jurisdiction of the Republic of Azerbaijan is implemented in respect to subsoil, sea bed and natural resources and any other area which has been or may hereinafter be determined in accordance with international law and legislation of the Republic of Azerbaijan;

???? c) the terms ??a Contracting State?? and ??the other Contracting State?? mean China or Azerbaijan as the context requires;

???? d) the term ??tax?? means Chinese tax or Azerbaijani tax as the context requires;

???? e) the term ??person?? includes an individual, a company and any other body of persons;

???? f) the term ??company?? means any body corporate or any entity that is treated as a body corporate for tax purposes;

???? g) the terms ??enterprise of a Contracting State?? and ??enterprise of the other Contracting State?? mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

???? h) the term ??international traffic?? means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

???? i) the term ??national?? means:

???? (i) any individual possessing the nationality of a Contracting State;

???? (ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

???? j) the term ??competent authority?? means, in the case of China, the State Administration of Taxation or its authorized representative, and, in the case of Azerbaijan, the Ministry of Taxes and the Ministry of Finance.

???? 2. As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

???? Article 4

Resident

???? 1. For the purposes of this Agreement, the term ??resident of a Contracting State?? means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of head office, place of registration, place of management or any other criterion of a similar nature, and also includes that State or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.

???? 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:

???? a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (center of vital interests);

???? b) if the State in which he has his center of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;

???? c) if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

???? d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

???? 3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, and then it shall be deemed to be a resident only of the State in which its place of effective management is situated.

???? Article 5

Permanent Establishment

???? 1. For the purposes of this Agreement, the term ??permanent establishment?? means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

???? 2. The term ??permanent establishment?? includes especially:

???? a) a place of management;

???? b) a branch;

???? c) an office;

???? d) a factory;

???? d) 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?? shall also be deemed to include:

???? a) a building site or construction or installation project, or supervisory activities in connection therewith, but only if such site, project or activities continue for more than twelve months;

???? b) an installation, structure or vessel or any other place used for the exploration of natural resources, but only if this exploration lasts for a period or periods aggregating more than three months within any twelve month period;

???? c) the furnishing of services, including consultancy services, by an enterprise through its employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue for a period or periods aggregating more than six months within any twelve month period.

???? 4. Notwithstanding the preceding provisions of this article, the term ??permanent establishment?? shall be deemed not to 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 maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

???? c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

???? d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

???? e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

???? f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs a) to e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

???? 5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 6 applies - 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 under the provisions of that paragraph.

???? 6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, he will not be considered an agent of an independent status within the meaning of this paragraph.

???? 7. 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 carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company 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 that other State.

???? 2. The term ??immovable property?? shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships and aircraft shall not be regarded as immovable property.

???? 3. The provisions of paragraph 1 shall also apply to income derived from the direct use, letting, or use in any other form of immovable property.

???? 4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

???? 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 as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

???? 2. Subject to 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, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

???? 3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether 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 an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

???? 5. No profits shall 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 preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

???? 7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

???? Article 8

Shipping and Air Transport

???? 1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

???? 2. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

???? Article 9

Associated Enterprises

???? 1. Where

a) 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

???? b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

???? and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, 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 State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

???? Article 10

Dividends

???? 1. Dividends paid by a company which 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 beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed ten percent (10%) of the gross amount of the dividends.

???? This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

???? 3. The term ??dividends?? as used in this Article means income from shares, ??jouissance?? shares or ??jouissance?? rights, mining shares, founders?? shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from 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 performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

???? 5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other 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 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 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. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

???? 2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed ten percent (10%) of the gross amount of the interest.

???? 3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and derived and beneficially owned by the Government of the other Contracting State, including its local authorities, the Central Bank thereof or any financial institution wholly owned by the Government, or interest derived on loans guaranteed by that Government or any financial institution wholly owned by that Government shall be exempt from tax in the first-mentioned State. The term ??financial institution wholly owned by the Government?? include in particular, in the case of China, the State Development Bank of China, the Export ?C Import Bank of China, the Agricultural Development Bank of China, the National Council for Social Security Fund, the Bank of China, the Construction Bank of China, the Industrial and Commercial Bank of China and the Agricultural Bank of China; and in the case of Azerbaijan, the National Bank of the Republic of Azerbaijan and the State Oil Fund of the Republic of Azerbaijan.

???? 4. The term ??interest?? as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of 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 performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

???? 6. Interest shall be deemed to arise in a Contracting State when the payer is the Government of that State, a local authority thereof or a resident of that 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 in connection with which the indebtedness on which the interest is paid was incurred, 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, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is 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 excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

???? 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 State.

???? 2. However, such royalties may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed ten percent (10%) of the gross amount of the royalties.

???? 3. The term ??royalties?? as used in this Article means 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 cinematography films, or films or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, 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 performs 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 case the provisions of Article 7 or Article 14, as the case may be, shall apply.

???? 5. Royalties shall be deemed to arise in a Contracting State when the payer is the Government of that State, a local authority thereof or a resident of that 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 which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

???? 6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to 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 excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

???? Article 13

Capital 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 State.

???? 2. Gains from the alienation of movable property forming 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 performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such a fixed base, may be taxed in that other State.

???? 3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that Contracting State.

???? 4. Gains from the alienation of shares of the capital stock of a company, the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that Contracting State.

???? 5. Gains from the alienation of any property other than that referred to in paragraphs 1 to 4, 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 character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State:

???? a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or

???? b) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the calendar year concerned; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.

???? 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

Dependent Personal Services

???? 1. Subject to the provisions of Articles 16, 18, 19 and 20, 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 Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

???? 2. Notwithstanding the provisions of paragraph 1, 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:

???? a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and

???? b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

???? c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

???? 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxed only in that State.

???? 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 State.

???? Article 17

Artists and Sportsmen

???? 1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

???? 2. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not 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 this Article, income derived by entertainers or sportsmen who are residents of a Contracting State from the activities exercised in the other Contracting State under a plan of cultural exchange between the Governments of both Contracting States shall be exempt from tax in that other State.

???? Article 18

Pensions

???? Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

???? Article 19

Government Service

????

1. a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a local authority thereof to an individual in respect of services rendered to the Government of that State or a local authority thereof, in the discharge of functions of a governmental nature, shall be taxable only in that State.

???? b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that other State who:

???? (i) is a national of that State; or

???? (ii) did not become a resident of that State solely for the purpose of rendering the services.

2. a) Any pension paid by, or out of funds created by the Government of a Contracting State or a local authority thereof to an individual in respect of services rendered to the Government of that State or authority shall be taxable only in that State.

???? b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

???? 3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a local authority thereof.

???? Article 20

Students

???? Payments which a student who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education receives for the purpose of his maintenance or education shall not be taxed in that State, provided that such payments arise from sources outside that State.

???? Article 21

Other Income

???? 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

???? 2. The provisions of paragraph 1 shall not apply to income, other than 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 performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

???? Article 22

Methods for Elimination of Double Taxation

???? 1. In China, double taxation shall be eliminated as follows:

???? Where a resident of China derives income from Azerbaijan, the amount of tax on that income payable in Azerbaijan in accordance with the provisions of this Agreement, may be credited against the Chinese tax imposed on that resident. The amount of the credit, however, shall not exceed the amount of the Chinese tax on that income computed in accordance with the taxation laws and regulations of China.

???? 2. In the case of Azerbaijan, double taxation shall be avoided as follows:

???? Where a resident of Azerbaijan derives income which, in accordance with the provisions of this Agreement, may be taxed in China, the tax on this income paid in China shall be deducted from the tax collected from this person in Azerbaijan in respect of such income. Such deduction shall not, however, exceed the tax amount computed for such income according to the legislation and taxation rules of Azerbaijan.

???? Article 23

Non-Discrimination

???? 1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

???? 2. The taxation on a permanent establishment, which an enterprise of a Contracting State has in the other Contracting State, shall not be less favorably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, relieves and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

???? 3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, 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 deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.

???? 4. 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 subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

???? 5. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

???? Article 24

Mutual Agreement Procedure

???? 1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in 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 action resulting in taxation not in accordance with the provisions of the Agreement.

???? 2. The competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation, which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

???? 3. The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

???? 4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of paragraphs 2 and 3. When it seems advisable for reaching agreement, representatives of the competent authorities of the Contracting States may meet together for an oral exchange of opinions.

???? Article 25

Exchange of Information

???? 1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2. 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 State, and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in the first sentence. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

???? 2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

???? a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

???? b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

???? c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

???? Article 26

Members of Diplomatic Missions and Consular Posts

???? Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

???? Article 27

Entry into Force

???? 1. The Governments of the Contracting States shall notify each other upon the completion of their internal legal procedures necessary for the entry into force of this Agreement.

???? 2 The Agreement shall enter into force on the date of the latter of the notifications referred to in paragraph 1 and its provisions shall have effect in both Contracting States:

???? a) in respect of taxes withheld at source, on income derived on or after January 1st in the calendar year next following the year in which the Agreement enters into force;

???? b) in respect of other taxes on income, for taxes chargeable for any tax year beginning on or after January 1st in the calendar year next following the year in which the Agreement enters into force.

????

Article 28

Termination

???? This Agreement shall continue in effect indefinitely but either Contracting State may, on or before the thirtieth day of June in any calendar year after the expiration of five years period from the entry into force of this Agreement, give written notice of termination to the other Contracting State through the diplomatic channels. In such event, this Agreement shall cease to have effect in both Contracting States:

???? a) in respect of taxes withheld at source, on income derived on or after January 1st in the calendar year next following the year in which the notice of termination of Agreement is given;

???? b) in respect of other taxes, for taxes chargeable for any tax year beginning on January 1st in the calendar year next following the year in which the notice of termination of Agreement is given.

???? IN WITNESS WHEREOF the undersigned, being duly authorized thereto, have signed this Agreement.

???? Signed in Beijing on March 17th, 2005, this agreement is in duplicate, each copy in Chinese, Azeri and English languages and the three versions have the same legal effect. In case of divergence in interpretation, the English text shall prevail.

???? Chief of the State Administration of Taxation    Minister of Taxes

???? Xiexuren, for the Government ofFazilMamedov, for the Government of 

???? The People??s Republic of China The Republic of Azerbaijan

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