Laws of the People's Republic of China

Circular of the State Administration of Taxation on Correcting the Relevant Clauses in the Chinese Version of the Tax Agreement between the People's Republic of China and the Government of Georgia

Guo Shui Fa [2006] No. 124

The state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government, and the cities specifically designated in the state plan, and all entities under the State Administration of Taxation:

The Agreement on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Incomes and Properties between the Government of the People's Republic of China and the Government of Georgia was subscribed in due form in Beijing on June 22, 2005. It shall enter into force on November 10, 2005 and be implemented as of January 1, 2006. The text of the aforesaid agreement has been printed and distributed to all the regions by the State Administration of Taxation through the Document of Guo Shui Fa [2005] No. 114 on July 6, 2005. Recently, the State Administration of Taxation found in the process of implementing the aforesaid agreement that there were misrepresentations in Paragraph 2 of Article 10 (Dividends) in the Chinese version. In accordance with the English version on which both parties has reached consentaneously, we hereby correct three items on collecting taxes on dividends as prescribed in Paragraph 2 of Article 10 (Dividends) in the Chinese version, the corresponding English of which is as follows:

(1)

if the beneficial owner holds directly or indirectly at least 50% of the shares of the company paying the dividends or has invested in the said company for up to two million euros, zero per cent of the gross amount of the dividends shall be assessed upon;

(2)

if the beneficial owner holds directly or indirectly at least 10% of the shares of the company paying the dividends or has invested in the said company for up to 100,000 euros, five per cent of the gross amount of the dividends shall be assessed upon; and

(3)

in other circumstances, 10 per cent of the gross amount of the dividends shall be assessed upon.

The State Administration of Taxation

August 16, 2006