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DTA AgreementsIn case of divergence of interpretation, the English text shall prevail.

PROTOCOL TO THE AGREEMENT BETWEEN THE GOVERNMENTOF THE PEOPLE’S REPUBLIC OF CHINA AND THE SWISS FEDERAL COUNCIL FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME ANDON CAPITAL (2013)

Document No.:

Taxes:DTA Agreements

Date of Promulgation:2015-01-01

IssueDepartment:State Administration of Taxation

Date of Implementatio:2013-09-25

Annex:

The Government of the People’s Republic of China and the Swiss Federal Council have agreed at the signing of this Agreement between the two States for the avoidance of double taxation with respect to taxes on income and on capital upon the following provisions which shall form an integral part of the said Agreement:

 

1. It is understood that in case there is any double taxation due to a capital tax that may be introduced by either Contracting State in the future, that tax shall be covered by Article 2 of this Agreement.

 

2. With reference to Article 2, it is understood that the Agreement, except for Article 25, shall not apply to taxes withheld at source on prizes in a lottery.

 

3. With respect to paragraphs 1 and 2 of Article 7, where an enterprise of a Contracting State, having a permanent establishment in the other Contracting State, sells goods or merchandise or carries on any other business activity in the other Contracting State, the profits of that permanent establishment shall be determined only on the basis of that part of the receipts which is attributable to the actual activity of the permanent establishment for such sales or business activity.

 

4. With reference to Article 8, it is understood that:

a) for residents of Switzerland carrying on the operation of ships or aircraft in international traffic , supplies of international transportation shall be exempt from Business Tax or any other similar tax imposed on the gross receipts in China, or shall be zero-rated under Value Added Tax in China and the input tax attributable to such supplies shall be creditable to the same extent as it is to business enterprises resident in China; and

b) for residents of China carrying on the operation of ships or aircraft in international traffic, supplies of international transportation shall be zero-rated under Value Added Tax in Switzerland and the input tax attributable to such supplies shall be creditable to the same extent as it is to business enterprises resident in Switzerland.

 

5. With reference to paragraph 3 of Article 10, “institution or fund wholly owned by that other State” includes, in the case of China, the China Investment Corporation (CIC) and the National Council for Social Security Fund.

 

6. With reference to Articles 18 and 19, the term “pensions” may cover both periodic payments and lump sum payments.

 

7. When, according to Article 18, pensions shall be relieved from tax in a Contracting State, and these pensions, according to the law in force in the other Contracting State, are not effectively taxed in that other Contracting State, the first-mentioned Contracting State may tax such pensions pursuant to its domestic law.

 

8. With reference to Articles 18 and 21, pensions paid and other similar payments made by the Government of a Contracting State or a political subdivision or local authority thereof under a public welfare scheme of the social security system of that State shall be taxable only in that State.

 

9. With reference to Article 27:

a) It is understood that an exchange of information will only be requested once the requesting Contracting State has pursued all reasonable means available under its internal taxation procedure to obtain the information.

b) It is understood that the tax authorities of the requesting State shall provide the following information to the tax authorities of the requested State when making a request for information under this Article:

(i) the identity of the person under examination or investigation;

(ii) the period of time for which the information is requested;

(iii) a statement of the information sought including its nature and the form in which the requesting State wishes to receive the information from the requested State;

(iv) the tax purpose for which the information is sought;

(v) to the extent known, the name and address of any person believed to be in possession of the requested information.

 

The purpose of referring to information that may be foreseeably relevant is intended to provide for exchange of information in tax matters to the widest possible extent without allowing the Contracting States to engage in “fishing expeditions” or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer. While this subparagraph contains important procedural requirements that are intended to ensure that fishing expeditions do not occur, clauses (i) through (v) nevertheless need to be interpreted with a view not to frustrate effective exchange of information.

c) Although this Article does not restrict the possible methods for exchanging information, it is understood that the Article does not require the Contracting States to exchange information on an automatic or a spontaneous basis.

d) It is understood that in case of an exchange of information, the administrative procedural rules regarding taxpayers’ rights provided for in the requested Contracting State remain applicable before the information is transmitted to the requesting Contracting State. It is further understood that these provisions aim at guaranteeing the taxpayer a fair procedure and not at preventing or unduly delaying the exchange of information process.

 

10. With reference to Articles 27 and 29, this Agreement shall be applicable to information that relates to taxable years beginning on or after the first day of January next following that in which this Agreement enters into force.

 

IN WITNESS whereof the undersigned, duly authorized thereto, have signed this Protocol.

 

Done at Beijing on the 25th day of September, 2013, in duplicate in the Chinese, German and English languages, all texts being equally authentic. In case of divergence in interpretation, the English text shall prevail.

 

For the Government of the People’s Republic of China 

Zhang Zhiyong 

For the Swiss Federal Council

Jacques de Watteville

 

 

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