Laws of the People's Republic of China

Circular of the State Administration of Taxation on the Relevant Issues Concerning the Implementation of the Interest Clauses in Sino-Canada Agreement on Taxation

Guo Shui Fa [2006] No. 126

The state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and the cities under separate state planning:

Upon the request of the taxation authorities of Canada, the representatives of the taxation authorities of China and Canada have negotiated on the problems that existed during the implementation of Paragraph 3, Article 11 of Sino-Canada Agreement on Taxation, and have reached the following consensuses:

I.

Paragraph 3 of Article 11 of the Chinese version shall be amended to be:

"Notwithstanding the provisions of Paragraph 2, the interests occurred in one of the contracting states shall be exempted from taxation in the state when the interests are:

i.

In respect of Canada:

1.

Paid to the Canadian Government;

2.

Paid to the Bank of Canada;

3.

Paid due to the direct or indirect loans or loans guaranty by Export Development Canada;

4.

Paid to the financial institutions owned by the Canadian Government and recognized by both of the competent authorities of the contracting states s;

ii.

In respect of the People's Republic of China:

1.

Paid to the government of the People's Republic of China;

2.

Paid to the People's Bank of China;

3.

Paid due to the direct or indirect loans or loans guaranty by the Bank of China or China International Trust and Investment Corporation (CITIC);

4.

Paid to the financial institutions owned by the government of the People's Republic of China and recognized by both of the competent authorities of the contracting states.

II.

The English name of "Canadian Export Development Corporation" in the text of the Agreement shall be changed to be "Export Development Canada".

Please carry out the present notice accordingly.

The State Administration of Taxation

August 18, 2006