AGREEMENT

BETWEEN

THE GOVERNMENT OF THE KINGDOM OF SAUDI ARABIA

AND THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF CHINA

FOR THE AVOIDANCE OF DOUBLE TAXATION

AND THE PREVENTION OF TAX EVASION

WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

 

The Government of the Kingdom of Saudi Arabia and the Government of the People’s Republic of China,

 

DESIRING to conclude an Agreement for the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and on capital,

 

HAVE AGREED as follows:

 

Article 1

Personal Scope

 

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

 

Article 2

Taxes Covered

 

1. This Agreement shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

 

2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

 

3. The existing taxes to which this Agreement shall apply are in particular:

 

a) in the case of the Kingdom of Saudi Arabia:

(i) the Zakat;

(ii) the income tax including the natural gas investment tax;

(hereinafter referred to as  “Saudi tax”). 

 

b) in the case of 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 apply also to any identical or substantially similar taxes which 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 which have been made in their respective taxation laws.

 

Article 3

General Definitions

 

1. For the purposes of this Agreement, unless the context otherwise requires:

 

a) the term “Kingdom of Saudi Arabia” means the territory of the Kingdom of Saudi Arabia which also includes the area outside the territorial waters, where the Kingdom of Saudi Arabia exercises its sovereign and jurisdictional rights in their waters, seabed, subsoil and natural resources by virtue of its law and the international law;  

 

b) the term “ China” means the People’s Republic of China ; when used in geographical sense, means all  the territory of the People’s Republic of China, including its territorial sea, in which the Chinese laws  relating  to taxation apply, and any area beyond its territorial sea, within which the People’s Republic of China has sovereign rights of exploration for and exploitation of resources of the seabed and its subsoil and superjacent water resources in accordance with  international law;

 

c) the terms “a Contracting State” and “the other Contracting State” mean the Kingdom of Saudi Arabia or China as the context requires;

 

d) the term “person” includes an individual, a company and any other body of persons;

 

e) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;

 

f) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

 

g) the term “national” means:

(i) any individual possessing the nationality of a Contracting State;

(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

 

h) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise that has its place of effective management or head office  in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

 

i) the term “competent authority” means:

(i) in the case of the Kingdom of Saudi Arabia, the Ministry of Finance represented by the Minister of Finance or his authorised representative;

(ii) in the case of the People’s Republic of China, the State Administration of Taxation , or its authorised representative.

 

2. As regards the application of this Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

 

Article 4

Resident

 

1. For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of management or head office, or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

 

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

 

a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

 

b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either state, he shall be deemed to be a resident only of the State in which he  has an habitual abode;

 

c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only  of the  State of which he is a national;

 

d) if he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

 

3. Where by reason of the provisions of paragraph 1 herein, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management or head office is situated.

 

 

Article 5

Permanent Establishment

 

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

 

2. The term “permanent establishment” includes especially:

 

a) a place of management;

b) a branch;

c) an office;

d) a factory;

e) a workshop, and

f) a mine, a quarry or any other place of extraction of natural resources.

 

3. The term “permanent establishment” likewise encompasses:

 

a) a building site, a construction, assembly or installation project or  supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than six months;

 

b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods aggregating more than  six months within any twelve-month period. 

 

4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

 

a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

 

b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

 

c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

 

d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;