Agreement between the Government of the People's Republic of China and the Government of the Lao People's Democratic Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
中华人民共和国政府和老挝人民民主共和国政府关于对所得避免双重征税和防止偷漏税的协定
ສັນຍາ ລະຫວ່າງ ລັດຖະບານ ແຫ່ງ ສາທາລະນະລັດ ປະຊາຊົນ ຈີນ ແລະ ລັດຖະບານ ແຫ່ງ ສາທາລະນະລັດ ປະຊາທິປະໄຕ ປະຊາຊົນ ລາວ ກ່ຽວກັບ ການ ຫຼີກ ລ່ຽງ ການ ເກັບ ພາສີ ສອງ ເທື່ອ ແລະ ການ ປ້ອງກັນ ການ ຫຼົບ ຫຼີກ ພາສີ ກ່ຽວ ກັບ ພາສີ ລາຍ ໄດ້
Summary
This is the bilateral tax treaty (DTA) between China and the Lao PDR for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, signed at Beijing on 25 January 1999 and in force from 23 June 1999. It applies to persons who are residents of one or both Contracting States (Article 1) and covers taxes on income — in Laos the profit (income) tax on enterprises and the individual income tax, and in China the individual income tax and the income tax on enterprises with foreign investment and foreign enterprises (Article 2). Following the OECD Model structure, it defines residence (Article 4) and the permanent establishment (a building site constitutes one if it lasts more than twelve months, Article 5), and allocates taxing rights over business profits (Article 7), international transport (taxable only in the State of the head office, Article 8) and associated enterprises (Article 9). Reduced rates cap source taxation of passive income: dividends at 5% (Article 10); interest at 5% in Laos and 10% in China, with interest paid to the other Government exempt (Article 11); royalties at 5% in Laos and 10% in China (Article 12). It also governs capital gains (Article 13), independent and dependent personal services (Articles 14-15, 183-day rule), directors' fees, artistes and sportsmen, pensions, government service, teachers and researchers (three-year exemption), students and other income (Articles 16-22). Double taxation is relieved by the credit method (Article 23), with provisions on non-discrimination (Article 24), the mutual agreement procedure (Article 25), exchange of information (Article 26) and the fiscal privileges of diplomats and consular officials (Article 27). The treaty has no fixed term and may be terminated through diplomatic channels after five years in force (Article 29). For cross-border investors and providers of services, technology and equity income between the two countries, it is the core basis for allocating taxing rights, applying reduced rates and claiming credits to eliminate double taxation.
Articles
Article 0
The Government of the People's Republic of China and the Government of the Lao People's Democratic Republic, 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
Article 1 Personal Scope
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
Article 2
Article 2 Taxes Covered
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 and taxes on the appreciation of capital.
3. The existing taxes to which this Agreement shall apply are in particular:
(a) in the Lao People's Democratic Republic:
(i) the profit (income) tax on enterprises;
(ii) the income tax on individuals;
(hereinafter referred to as "Lao tax")
(b) in the People's Republic of China:
(i) the individual income tax;
(ii) the income tax on enterprises with foreign investment and foreign enterprises.
(hereinafter referred to as "Chinese tax")
4. This Agreement shall also apply to any identical or substantially similar taxes that are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes made to their tax laws within a reasonable period of time after such changes.
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