AGREEMENT

BETWEEN THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF VIETNAM AND THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA ON THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF TAX EVASION FOR TAXES ON INCOME (1995).

Government of the Socialist Republic of Vietnam and the Government of the People's Republic of China,

Desiring to sign an Agreement on avoidance of double taxation and prevention of tax evasion for taxes on income,

Therefore, the two parties have agreed as follows:

Article 1. Scope of application

This Agreement shall apply to the subjects are residents of one or both of the contracting States.

Article 2. The taxes in the Agreement include:

1/ This Agreement applies to taxes implemented by a contracting State or its grass roots authorities or local authorities of such State on income regardless of the application form of such taxes.

2/ All taxes on total income or on parts of income, including taxes on profits from the alienation of movable personal estate or immovable estate and taxes on the part of added assets value are regarded as taxes on income.

3/ The current taxes to be applied in this Agreement are:

a. At the Socialist Republic of Vietnam:

i. Personal income tax;

ii. Profit tax;

iii. Tax on profit transfer abroad;

(Hereinafter referred to as "Vietnamese Tax");

b. At the People's Republic of China:

i. Personal income tax;

ii. Income tax for enterprises with foreign investment and foreign enterprises;

iii. Local income tax;

(Hereinafter referred to as "Chinese tax").

4/ Agreement will also apply to taxes of similar nature or substantially similar to the above taxes promulgated after the date of the signing of this Agreement to supplement or replace the current taxes. The competent authorities of the two Contracting States shall notify each other the important changes in the tax laws of each country.

Article 3. The general definitions

1/ According to the contents of this Agreement, unless the context requires a different explanation:

a. The word "Vietnam" means the Socialist Republic of Vietnam, when used by a geographical sense, this word means that the entire territory of the Socialist Republic of Vietnam, including Vietnam's territorial waters in which the laws of Vietnam relating to taxation to be applied, and all areas beyond the territorial waters of Vietnam in which the Socialist Republic of Vietnam has sovereign rights for exploration and exploitation of natural resources of the seabed, underground in the seabed and water body above in accordance with international law;

b. The word "China" means the People's Republic of China; when used by a geographical sense, this word means that the entire territory of the People's Republic of China, including China's territorial waters in which the laws of China relating to taxation to be applied, and all areas beyond the territorial waters of ​​China in which the People's Republic of China has sovereign rights for exploration and exploitation of natural resources of the seabed, underground in the seabed and water body above in accordance with international law;

c. The term "Contracting State" and "other Contracting State" mean Vietnam or China, depending on the context requires

d. The word "tax" means tax of Vietnam or tax of China, depending on the context requires;

e. The term "person" includes individual, company or any organization, many other body of person;

f. The term "company" to refer to organizations of companies or any entity considered as company organization under the tax angle;

g. The term "enterprise of a Contracting State" and "enterprise of the other Contracting State" by order means an enterprise operated by a resident of a Contracting State and an enterprise operated by resident of the other Contracting State.

h. The term "nationals" means:

i. in the case of Vietnam, as the Minister of Finance or an authorized representative of the Minister of Finance; and

ii. in the case of China, as the General Department of State Tax Administration or an authorized representative of the General Department of State Tax Administration.

2/ As a Contracting State applies this Agreement, any term not defined in this Agreement shall have the meanings as defined in the law of that country for the taxes that apply to this Agreement, except for the context requires a different explanation.

Article 4. Residents

1/ According to the content of this Agreement, the term "residents of a Contracting State" means any subject who, under the laws of that State, is subject to tax based on home, residence, registered office, headquarters or any other criteria having similar natures.

2/ Where under the provisions of clause 1, when an individual is a resident of both Contracting States, then such individual’s resident status will be identified as follows:

a. The individual will be considered as resident of a Contracting State in which such individual has a permanent home. If the individual has a permanent home in both Contracting States, such individual shall be deemed a resident of the Contracting State of which he/she has personal relations and closer economic relations (center of the vital interests);

b. if it is unable to identify the country where the individual has his/her center of vital interests, or if he/she does not have a permanent home in both Contracting States, such individual shall be deemed a resident of the Contracting State of which he/she usually lives;

c. if such individual usually lives in both Contracting States or does not permanently live in any country, such individual would be considered as a resident of the Contracting State of which he/she is a national;

d. If he/she is a national of both Contracting States or of neither of them, the competent authorities of both Contracting States shall settle the matter by mutual agreement.

3/ In case of the provisions of clause 1 when an subject is not the individual, as resident of both Contracting States, then, the competent authorities of the Contracting States shall determine such subject as resident of a Contracting State within the meaning of this Agreement by mutual agreement.

Article 5

1/ According to contents of this Agreement, the term "permanent establishment" means a fixed establishment of business through which the enterprise implements all or part of its business activities.

2/ The term "permanent establishment" includes:

a. head office;

b. branch;

c. office;

d. plant;

e. Workshop;

f. mines, oil or gas well, quarry or any other place of exploitation of natural resources.

3/ The term "permanent establishment" also includes:

a. construction site, construction work, assembly or installation or supervisory activities related to the works, location above, but only when the location, works or activities extended in the above period of more than six months;

b. the provision of services, including service of consultancy implemented by an enterprise of a Contracting State through employees or other individuals assigned to carry out in the other Contracting State by the enterprise, provided that the above activities extend (in the same project or related project) in a period or many periods aggregating more than 6 months in a period of 12 months.

4/ Notwithstanding the above 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 assets of the enterprise;

b. the maintenance of a storage of goods or assets of the enterprise solely for the purpose of storage, display or delivery of goods;

c. the maintenance of a stock of goods or assets of the enterprise solely for the purpose of letting the other enterprise process;

d. the maintenance of a fixed establishment of business solely for the purpose of purchasing goods or property or collecting information for the enterprise;

e. the maintenance of a fixed establishment of business solely for the purpose of conducting any activity with preparatory or auxiliary character for the enterprise.

5/ Notwithstanding the provisions of clauses 1 and 2, in case a subject - other than an agent of an independent status which is governed by clause 7 - operating in a Contracting State on behalf of an enterprise of an other Contracting State, has and regularly exercises in the State that is competent to conclude the activities in the name of the enterprise, that enterprise shall be deemed to have permanent establishment in the first-mentioned Contrating State for the activities that the subject made for the enterprise, unless the activities of this subject which is limited in the scope of the activities referred to in clause 4 which, if they are done through a fixed establishment of business, it would not make such establishment of business into a permanent establishment under the provisions of that clause.

6/ Notwithstanding the above provisions of this Article, an insurance institution of a Contracting State, except for reinsurance, shall be deemed to have permanent establishment in the other Contracting State if the organization collects premiums in the territory of the other Contracting State through an subject not being an agent of independent status governed by clause 7.

7/ An enterprise of a Contracting State shall not be deemed to have permanent establishment in the other Contracting State if such enterprise only does business in the other Contracting State through a brokerage agent, a commission agent or any other agent with independent status, provided that the subjects only active within their framework of ordinary business. However, when the activities of such agent serve all or almost all of the activities of representing the enterprise, that agent will not be considered as the agent of independent status within the meaning of this clause.

8/ A company as a resident of a Contracting State controls or is controlled by a company to be a resident of the other Contracting State or which is carrying on business in other State (with through a permanent establishment or otherwise) will not make any company to become a permanent resident of the other company.

Article 6. Income from real estate

1/ Income derived by a resident in a Contracting State from real estate (including income from agriculture or forestry) in the other Contracting State may be taxed in the other Contracting State.

2/ The term "real estate" shall mean under the law of the Contracting State where the assets locate. In any case the term will include the assets associated with real estate, livestock and equipment used in agriculture and forestry, the rights to apply under the provisions of general law respecting real and personal estate, rights to use the real estate and the rights to be enjoyed the changed or fixed payments for the exploitation or the right of exploiting mines, mineral resources and other natural resources; the ships, boats and planes will not be regarded as real estate.

3/ The provisions of clause 1 shall apply to income derived from the direct use, leasing, or use of real estate in any other form.

4/ The provisions of clauses 1 and 3 shall also apply to income derived from real estate of an enterprise and for income derived from real estate used to perform activities of independent personal services.

Article 7. Profits of enterprises

1/ The profits of an enterprise of a Contracting State shall be taxable only in such Contracting State unless the enterprise carries on business in the other Contracting State through a permanent establishment in the other State. If the enterprise operates business as aforesaid, the profits of the enterprise may be taxed in the other Contracting State, but on the part of income attributable to such permanent establishment.

2/ Pursuance to the provisions of clause 3, when an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment in the other State, in each Contracting State shall have the profits allocated to the aforesaid permanent establishments, which such establishments can be obtained, if it is a separate, private enterprise participating in similar activities within the same similar conditions and with the completely independent relationships with the enterprise that the establishment is considered as permanent establishment.

3/ While determining the profits of a permanent establishment or this establishment will be allowed to deduct expenses incurred for the operation of this permanent establishment including operating costs and expenses of general management arising in the State where the permanent establishment locates or in any other place. However, it would not allow to calculate into the costs to be deducted from any amount of money, if any, paid by the permanent establishment to (except for payment of actual expenses) the head office of the enterprise or any other office of the enterprise in the form of royalties, fees or other similar payments for use of patents or other rights, or under the form of commission paid for the implementation of the specific services or for the management jobs or under the form of interest on money lent the permanent establishment, except for the interest of banking institutions. Similarly, while determining the profits of a permanent establishment, it shall not include amounts (except for the payment of actual expenses) collected by the permanent establishment from the headquarter of the enterprise or any other office of the enterprise, in the form of royalties, fees or similar payments for use of patents or other rights, or in the form of commission paid for the implementation of the specific services or for management jobs or in the form of interest on money lent the headquarter of the enterprise or any other office of the enterprise, unless the interest of banking institutions.

4/ Where a Contracting State often determines the profits to be attributed to a permanent establishment on the basis of distribution of the profits of the enterprise into various parts, nothing contained in clause 2 shall preclude that Contracting State from determining the taxable profits by attribution as the above practices. However, methods of distribution accepted will have results consistent with the principles set out in this Article.

5/ There is no profits to be attributed to a permanent establishment if such permanent establishment merely buys goods or property for the enterprise.

6/ According to the above clauses, the profits allocated to the permanent establishment shall be determined by the same method between years unless there is sufficient legitimate reason to determine by other methods.

7/ When profit consisting of income which are mentioned separately in other Articles of this Agreement, the provisions of the Articles are not affected by the provisions of this Article.

Article 8. Shipping and air transport

1/ Profits derived by a resident of a Contracting State from the operation of ships or aircraft in international transport shall be taxed only in that Contracting State.

2/ The provisions in clause 1 shall also apply to profits deprived from participation in a pool, a joint venture or an international operating agency.

Article 9. The associated enterprises

1/ When:

a. an enterprise of a Contracting State participates directly or indirectly in the management, control or capital contribution into an enterprise of the other Contracting State, or;

b. the same persons participating directly or indirectly in the management, control or capital contribution into an enterprise of a Contracting State and an enterprise of the other Contracting State.

And in both cases, in the relation of finance and trade between the two above enterprises, there are the conditions given or imposed different from conditions given between independent enterprises, then any profits that an enterprise can be obtained without these conditions, but now by reason of these conditions that the enterprise is not obtained, will be included in the profits of the enterprise by a Contracting State and taxed accordingly.

2/ When a Contracting State includes the profits of an enterprise of such State - and taxes accordingly - the profits that an enterprise of the other Contracting State has been taxed in the other Contracting State and such calculated profits are the profits that ought to belong to the enterprise of the first-mentioned Contrating State if the conditions given between the two above enterprises are the conditions given between two independent enterprisess, meanwhile the other Contracting State shall adjust the taxes in its State respect to above income accordingly. In determining the adjustment, it will be considered the other provisions of this Agreement and, if necessary, the competent authorities of the Contracting States shall consult each other.

Article 10. Dividends

1/ Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in the other Contracting State.

2/ However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of those

Contracting States, but if the recipient is the beneficial owner of the dividends, the tax charged shall not exceed 10 per cent of total amount of the dividends.

This clause shall not affect the taxation of the company in respect of the profits used for the dividends.

3/ The term “dividends” used in this Article means income from shares, or other rights, not including debt-claims, enjoying profits, as well as income from other enterprise rights which is subjected to the same taxation policy treatment for income from shares by the laws of the Contracting State of which the company paying the dividends is a resident.

4/ The provisions of clauses 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in the other Contracting State the independent personal service activities from a fixed establishment situated therein, and the right to hold shares in respect of which the dividends are paid which is connected actually with such permanent establishment or fixed establishment  in Article 7 or Article 14, as the case may be, shall apply.

5/ Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, the other Contracting State may not impose any tax on the dividends paid by the company, except for such dividends are paid to a resident of the other Contracting State or the right to hold in respect of which the dividends are paid is actually connected with a permanent establishment or a fixed establishment situated in the other Contracting State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other Contracting State.

Article 11. Interest from loans

1. Interest from loans arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in the other Contracting State.

2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of such Contracting State, but if the recipient is the beneficial owner of the interest, the tax rate so charged shall not exceed 10 per cent of the amount of the interest from the loans.

3. Notwithstanding the provisions of clause 2, interest arising from loans in a Contracting State and paid to the Government of the other Contracting State shall be exempted from tax in the first-mentioned Contracting State.

For the contents of this clause, the term “Government”:

(a) in the case of Vietnam, means the Government of the Socialist Republic of

Vietnam and shall include:

(i) the State banks of Vietnam;

(ii) the grass roots authorities or the local authorities; and

(iii) such financial institutions, the capital of which is wholly owned by the Government of the Socialist Republic of Vietnam or grass roots authorities or the local authorities thereof, as may be agreed upon from time to time between the competent authorities of the Contracting States;

(b) in the case of China, means the Government of the People’s Republic of China and shall include:

(i) the Chinese state banks;

(ii) the grass roots authorities or the local authorities; and

(iii) such financial institutions, the capital of which is wholly owned by the Government of the People’s Republic of China or the grass roots authorities or the local authorities thereof, as may be agreed upon from time to time between the competent authorities of the Contracting States.

4. The term “interest from loans” used in this Article means income from loans of any kind, whether or not secured by mortgage and whether or not carrying a right to enjoy the debtor’s profits, and in particular, income from government’s securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest from loans for the purpose of this Article.

5. The provisions of clauses 1, 2 and 3 shall not apply if the beneficial owner of the interest from the loans, being a resident of a Contracting State, carries on business in the Contracting State in which the interest from loans arises, through a permanent establishment situated in the other Contracting State, or performs in the other Contracting State the independent personal service activities from a fixed establishment situated therein, and the debt-claim in respect of which the interest is paid which is actually connected with such permanent establishment or fixed establishment. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

6. Interest from loans shall be deemed to arise in a Contracting State when the payer is the Government of that Contracting State, the grass roots authority or the local authority thereof or a resident of that Contracting State. However, the person paying the interest, has in a Contracting State, a permanent establishment or a fixed establishment in connection with which the debts on which the interest was incurred, and such interest is borne by such permanent establishment or fixed establishment, then no matter such person is a person of a Contracting State or not, such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed establishment is situated.

7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other persons, the amount of the interest from loans, regarding to the loan for which its interest paid exceeds the amount which would have been agreed upon by the debtor and the beneficial owner in the absence of such relationship, then the provisions of this Article shall apply only to the payment upon  the absence of such special relationship. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, regarding to the other provisions of this Agreement.

Article 12. Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the other Contracting State.

2. However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of the Contracting State, but if the recipient is the beneficial owner of the royalties, the tax rate so charged shall not exceed 10 per cent of the total amount of the royalties.

3. The term “royalties” used in this Article means payments of any kind paid

for the use of, any copyright of literary, artistic or scientific work including cinematograph films or other types of films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

4. The provisions of clause 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in the other Contracting State the independent personal services through a fixed establishment situated therein, and the right or property in respect of which the royalties are paid is actually connected with such permanent establishment or the fixed establishment. In this case the provisions of Article 7 or Article 14, as the case may be, shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is the Government of that Contracting State, the grass roots authorities, or a local authority thereof or a resident of that Contracting State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed establishment in connection with which the liability to pay the royalties incurred, and such royalties are borne by such permanent establishment or fixed establishment, then such royaities shall be deemed to arise in the Contracting State in which the permanent establishment or fixed establishment is situated.

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the amount as absence of such relationship. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, with consideration to the other provisions of this Agreement.

Article 13. Gains from the alienation of Property rights

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and such immovable property situated in the other Contracting Stare may be taxed in the other Contracting State.

2. Gains from the alienation of movable propelty forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or movable property pertaining to a fixed establishment of a resident of a Contracting State has in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or such fixed establishment may be taxed in the other Contracting State.

3. Gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that Contracting State.

4. Gains derived from the alienation of shares of the capital stock of a company with the property of which consists directly or indirectly, principally of immovable property situated in a Contracting State may be taxed in that Contracting State.

5. Gains derived from the alienation of shares other than those mentioned in clause 4 and such shares representing at least 25 per cent of contributed capital in a company which is a resident of a Contracting State may be taxed in the Contracting State.

6. Gains derived from the alienation of any property other than thoase referred to in clauses from 1 to 5, shall be taxed only in the Contracting State of which the alienator is a resident.

Article 14. Independent personal services

1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxed only in the Contracting State except for the following circumstances, when such income may also be taxed in the other Contracting State:

(a) If the person has regularly a fixed establishment available in the other Contracting State for the purpose of performing these activities; in those cases, only part of the income as is attributable to the fixed establishment may be taxed in the other Contracting State; or

(b) If the person stay in the other Contracting State for a period or periods Aggregated from 183 days or more in the concerned calendar year; in that case, only part of the income as is derived from his/her activities performed in the other Contracting State may be taxed in the other Contracting State.

2. The term “professional services” includes especially independent scientific, literary, artistic, educational, or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists, and accountants.

Article 15. Dependent personal services

1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxed only in the Contracting State unless his/her employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in the other Contracting State.

2. Notwithstanding the provisions of clause 1, wage derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxed only in the first-mentioned Contracting State if:

(a) the recipient is present in the other Contracting State for a period or periods in the aggregate not exceeding 183 days in the concerned calendar year; and

(b) the wage is paid by, or on behalf of. an employer who is not a resident of the other Contracting State; and

(c) the wage is not borne by a permanent establishment or a fixed establishment which the employer has in the other Contracting State.

3. Notwithstanding the preceding provisions of this Article, wage derived in respect of an employment exercised on a ship or aircraft operated in international transport by a resident of a Contracting State shall be taxed only in the Contracting State.

Article 16. Directors' fees

Directors’fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in the other Contracting State.

Article 17. Artistes and athletes

1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in the other Contracting State.

2. Where income in respect of personal activities exercised by an entertainer or an athlete in his capacity, however, it is not to be paid to the entertainer or athlete himself but to another person, such income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.

3. Notwithstanding the provisions of paragraphs 1 and 2, income derived by entertainers or athletes who are residents of a Contracting State from the activities exercised in the other Contracting State under a plan of cultural exchange between the Governments of both Contracting States shall be exempted from tax in the other Contracting State.

Article 18. Pensions

1. Subject to the provisions of clause 2 of Article 19, pensions and other similar wage paid to a resident of a Contracting State in consideration of past employment shall be taxed only in the Contracting State.

2. Notwithstanding the provisions of clause 1, pensions and other similar payments paid by the Government of a Contracting State, a grass roots authority or a local authority thereof under a public welfare program of the social security system of the Contracting State shall be taxed only in the Contracting State.

Article 19. Government service

1. (a) Wage, other than pension, paid by the Government of a Contracting State or a grass roots authority or a local authority thereof to an individual in respect of services rendered to the Government of the Contracting State or a grass roots authority or a local authority thereof, in the performance of functions of a governmental nature, shall be taxed only in the Contracting State.

(b) However, such wage shall be taxed only in the other Contracting State if the services are rendered in the other Contracting State and the individual is a resident of the other Contracting State and who:

(i) is a national of the other Contracting State;

(ii) do not become a resident of the other Contracting State solely for the purpose of rendering the above services.

2. (a) Any pension paid by the Government of a Contracting State or a grass roots authority or a local authority thereof or funds made by these agencies to an individual in respect of services rendered to the Government of the Contracting State or a grass roots authority or a local authority thereof shall be taxed only in the Contracting State.

(b) However, such pension shall be taxed only in the other Contracting State if the individual is a resident of, and a national of, the other Contracting State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to wage and pensions in respect of services rendered in connection with a business carried on by the Government of a Contracting State or the grass roots authority or the local authority thereof.

Article 20. Students, apprentices and trainees

A student, business apprentice, or trainee who is or was a resident of the other Contracting State immediately before visiting a Contracting State and who is present in the first-mentioned Contracting State solely for the purpose of his education, training shall be exempted from tax in the first-mentioned Contracting State on the following payments or income received or derived by him/her for the purpose of his maintenance, education or training:

(a) payments derived from sources outside the Contracting State for the purpose of his maintenance, education, study, research or training;

(b) grants, scholarships or awards supplied by the Government, or a scientific, educational, cultural organization or other tax-exempted organization; and

(c) any wage not exceeding 2, 000 US dollars or the equivalent in Vietnamese Dong or the equivalent in Chinese RMB per calendar year in respect of personal services in connection with his/her studies or training.

Article 21. Teachers, professors and researchers

An individual who is, or immediately before visiting a Contracting State was, a resident of the other Contracting State and is present in the first-mentioned Contracting State for the primary purpose of teaching, giving lectures or conducting research at a university, college, school or educational institution or scientific research institution accredited by the Government of the first-mentioned Contracting State shall be exempted from tax in the first-mentioned Contracting State, for a period of two years from the date of his first arrival in the first-mentioned Contracting State, in respect of wage for such teaching, lectures or research.

Article 22. Other income

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxed only in the Contracting State.

2. However, any such income derived by a resident of a Contracting State from sources in the other Contracting State may also be taxed in the other Contracting State.

3. The provisions of clause 1 shall not apply to income, other than income from immovable property as defined in clause 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in the other Contracting State the independent personal services from a fixed establishment situated therein, and the right or property in respect of which the income is paid is actually connected with such permanent establishment or fixed establishment. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

Article 23. Methods for elimination of double taxation

1. In Vietnam, double taxation shall be eliminated as follows:

Where a resident of Vietnam derives income, profits or gains from assets transfer which under the law of China and in accordance with this Agreement may be taxed in China, Vietnam shall allow deducting on the Vietnamese tax on the income, profits, or gains from assets transfer an amount equal to the tax paid in China. The amount of being deducted, however, shall not exceed the amount of the Vietnamese tax on that income, profits, or gains from assets transfer calculated in accordance with the taxation laws and regulations on tax of Vietnam.

2. In China, double taxation shall be eliminated as follows:

(a) When a resident of China derives income from Vietnam the amount of tax on such income payable in Vietnam in accordance with the provisions of this Agreement, may be deducted against the Chinese tax imposed on that resident. The amount of being deducted, however, shall not exceed the amount of the Chinese tax on that income calculated in accordance with the taxation laws and regulations on tax of China;

(b) When the income derived from Vietnam is a dividend paid by a company which is a resident of Vietnam to a company which is a resident of China and which owns not less than 10 per cent of the shares of the company paying the dividend, the tax deduction shall take into account the tax paid in Vietnam by the company paying the dividend in respect of its income.

3. According to contents of clauses 1 and 2, the tax payable in Vietnam or in China, as the context requires, shall be deemed to include the tax which is otherwise payable in a Contracting State but has been reduced or waived by the Contracting State under its legal provisions for economic development. In the case of the provisions of clause 2 of Article 10, clause 2 of Article 11 and clause 2 of Article 12, such tax shall be deemed to be 10 per cent of the total amount of dividends, interest and royalties.

Article 24. Non-discrimination

1. The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of the other Contracting State in the same circumstances are or may be subjected.

2. The taxation on a permanent establishment of an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in the other Contracting State than the taxation levied on enterprises of the other Contracting State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal exemption, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

3. Except for the cases applying the provisions of clause 1 of Article 9, clause 7 of Article 11, or clause 6 of Article 12, interest from loans, royalties and other payments paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible on costs under the same conditions if they had been paid to a resident of the first-mentioned Contracting State.

4. Enterprises of a Contracting State, that the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned Contracting State are or may be subjected.

5. Notwithstanding the provisions from clauses 1 to 4 of this Article, when a Contracting State imposes any taxation on its nationals which is other than the taxation it imposes on nationals of the other Contracting State for the purposes to promote economic development in accordance with its taxation laws, the imposition as such shall not be construed as discrimination under the meaning of this Article.

6. The provisions of this Article shall apply only to the taxes which are the subject of this Agreement.

Article 25. Bilateral agreement procedure

1. Where a person considers that the actions of one or both of the Contracting States make or will make for him/her pay tax not in accordance with the provisions of this Agreement, he/she may, present his case to the competent authority of the Contracting State of which he is a resident or of the Contracting State where he/she is national, if his/her case comes under clause 1 of Article 24, although the domestic law of those Contracting States provided for the regime of handling complaints. The case must be explained within three years from the first notification of the action resulting in taxation applicable not in accordance with the provisions of the Agreement.

2. The competent authority shall endeavor if the complaint is reasonable and if it is not itself able to arrive at a satisfactory solution, to coordinate with the competent authority of the other Contracting State to resolve the case by mutual agreement, with a view to the avoidance of taxation which is not in accordance with the provisions of this Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising in the interpretation or application of the Agreement. The competent authorities of the Contracting States may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of clauses 2 and 3. When it seems necessary for reaching agreement, representatives of the competent authorities of the Contracting States may meet together for an oral exchange of opinions.

Article 26. Exchange of information

1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement insofar as the taxation thereunder is not contrary to the Agreement, in particular for the prevention of fraud or evasion of such taxes. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that Contracting State. However, if the information is originally regarded as secret in transmitting Contracting State it shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes which are the subject of the Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

2. In no case of the provisions of clause 1 shall be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of such Contracting State or of the other Contracting State;

(b) to supply information which can not disclosed under the laws or in the normal course of the administration of such Contracting State or of the other Contracting State;

(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade method, or information, the disclosure of which would be contrary to the State policy.

Article 27. Diplomatic agents and consular officers

Nothing in this Agreement shall affect the tax privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements.

Article 28. Entry into force

Each Contracting State shall notify to the other in writing through the diplomatic channel the completion of the required internal procedures applied by the law in the Contracting State for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications. This Agreement shall have effect as respects income derived during the taxable years beginning on the first day of January in the calendar year following the effective year of this Agreement.

Article 29. End

This Agreement shall be effective until the declaration of end of a Contracting State. Each Contracting State may, on or before June 30 of any calendar year that begins after the expiration of five years from the date the Agreement takes effect, submit a written end to the other Contracting State through diplomatic channel. In such case, this Agreement shall invalid for income arising in the taxable year beginning on the first day of January of the calendar year following the year of end notification.

As evidence, the following persons authorized by each Government, have signed in this Agreement.

This Agreement made in two sets in Beijing May 17, 1995, each of which includes the languages: Vietnamese, Chinese, and English, all three documents are equally valid. In case of different interpretations, the English version will prevail for decision.

(This Agreement takes effect from October 18, 1996)

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