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China-Nepal DTA Protocol Finally Takes Effect
By KTM Metro Reporter
February 23, 2011: The double tax agreement (DTA) signed between China and Nepal in 2001 came into force on December 31, 2010, after the two countries completed their respective domestic legal procedures following the SAT Announcement No. 11 of 2011, China’s State Administration of Taxation announced on January 30. The DTA and its protocol apply to the income received in the tax years starting on January 1, 2011, China-briefing.com reports.
The “Protocol between the People’s Republic of China and the Government of Nepal for the Avoidance of Double Taxation and Prevention of Fiscal Evasion” was signed in Kathmandu, Nepal in 2001. The agreement applies to distinct types of income taxes that take place in the two countries. It also specifies the definition of tax residents, as well as the calculation and collection methods of taxable income from properties, business operation profits, joint ventures of both parties, dividends, interest, royalties, capital gains, independent and dependent personal services, director’s fees, pensions, social insurance, government services, individuals who are artists, athletes, teachers, researchers, students and interns, and other revenue-earning avenues according to the news posted on the website.
In order to avoid double tax collection, the protocol stipulates that between the two countries, while the tax residents of Country A work in Country B, their income tax levied by Country B in accordance with the agreement shall be exempted in Country A, as long as the total amount of tax exemption does not exceed the total amount of tax that should originally be collected on corresponding items according to Country A’s tax regulations. The same double tax avoidance method shall apply to tax residents of Country B while they work in Country A.
Foreign investors in China who find they are pertinent candidates for DTA status and who wish to know what tax reductions may be applicable to them under the terms of their specific DTA may contact Dezan Shira & Associates at tax@dezshira.com for further assistance, the websites states.
