The Agreement and a Protocol to it were signed in Moscow on 13 October 2014. The Protocol to amend the Agreement was signed in Moscow on 8 May 2015.
Reference
The draft federal law On Ratification of the Agreement between the Government of the Russian Federation and the Government of the Chinese People's Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with regard to Taxes on Income and the Protocol thereto, as well as the Protocol on amending the Agreement between the Government of the Russian Federation and the Government of the Chinese People's Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with regard to Taxes on Income (hereinafter referred to as the “draft law”, or the “Agreement”, respectively) was submitted by the Ministry of Foreign Affairs and the Ministry of Finance in response to a request issued by the President.
The Agreement and the Protocol to it were signed in Moscow on 13 October 2014.
The purpose of the Agreement is to provide conditions where legal entities and individuals of each of the contracting states will not pay taxes twice on the same type of income in their state of residence and the partner state. Resolving this issue will contribute to promoting mutual investment and provide proper conditions for eliminating double taxation of legal entities and individuals.
The Protocol on amending the Agreement (hereinafter referred to as the “Protocol”) was signed in Moscow on 8 May 2015.
The purpose of the Protocol is to provide an exemption on paying withholding taxes in one contracting state on interest paid on credits and loans provided by the banks in the other contracting state.
Russia and China signed a similar agreement for the avoidance of double taxation and the prevention of fiscal evasion with regard to taxes on income on 27 May 1994, but the advancement of bilateral economic relations and international trends in the sphere of taxation, in particular, information exchanges and fighting fraud, led to the mutual consent of the competent authorities of the contracting states to amend it. Due to a significant number of submitted amendments, the parties decided to sign a new agreement.
During the talks on the new draft agreement, the Russian side was based on the Model Agreement between Russia and foreign states on the avoidance of double taxation and the prevention of tax evasion on income and property (approved by Government Resolution 84 on 24 February 2010). In their work, the parties also used model instruments recommended by the Organisation for Economic Cooperation and Development (OECD) and the United Nations (UN).
In accordance with Federal Law On International Treaties of the Russian Federation, the Agreement and the Protocol are subject to be ratified, as they contain provisions not stipulated by Russian legislation.
The Agreement is designed to promote cooperation between Russia and China, attract mutual investments, and eliminate double taxation of individuals and legal entities of the two countries.
The draft law was reviewed and approved at a Government meeting on 10 December 2015.