China-Turkmenistan DTA Takes Effect

The double tax agreement (DTA) between China and Turkmenistan and its corresponding protocol came into force on May 30, 2010, the State Administration of Taxation (SAT) announced on January 30, 2011. The DTA will apply to taxes withheld at source from income derived on or after January 1, 2011, as well as other taxes collected in any taxable year starting January 1, 2011.

The tax treaty was originally signed on December 13, 2009, in Turkmenistan’s capital city of Ashgabat. According to the SAT Announcement No.10, China and Turkmenistan have both completed the necessary domestic legal procedures and informed each other on March 3, 2010 and April 30, 2010, respectively.

The DTA clarified the definition of tax residents and criteria to determine valid permanent establishment. It also specified the calculation and collection methods on taxable income from properties, business profits, international transport, joint ventures, dividends, interest, royalties, capital gains, independent and dependent personal services, director’s fees, pensions, government services and other avenues. The tax liabilities of certain types of individuals such as artists, athletes, teachers, researchers and students are elucidated, too.

The agreement stipulated the methods to avoid double taxation in the other’s country and confirmed both parties’ obligations to exchange information that might be related to the DTA implementation.

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