Message to the Senate Transmitting a United States-China Agreement on Taxation

August 10, 1984

To the Senate of the United States:

I transmit herewith for Senate advice and consent to ratification the Agreement between the Government of the United States of America 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, together with a supplementary protocol and exchange of notes, signed at Beijing on April 30, 1984. I also transmit the report of the Department of State on the Agreement.

The Agreement is the first complete income tax treaty between the two countries. A limited treaty concerning the taxation of income from international shipping and air transportation, signed at Beijing on March 5, 1982, was approved by the Senate on July 27, 1983 and is now in force.

The Agreement is based on model income tax treaties developed by the Department of the Treasury, the Organization for Economic Cooperation and Development, and the United Nations. The provisions of the Agreement are reciprocal and, like other tax treaties, represent a balanced package of benefits and concessions.

The Agreement will contribute to a long-run expansion of economic relations between the two countries by providing clear rules as to the tax consequences of investing or working in the other country. It reduces the tax which residents of one country must pay to the other on certain types of income, such as dividends, interest, and royalties and provides limited exemptions for visiting teachers, researchers and students. The Agreement also assures nondiscriminatory taxation in the host country, and provides a mechanism for cooperation between the tax authorities to try to resolve any potential problems of double taxation.

I recommend that the Senate give early and favorable consideration to the Agreement and give its advice and consent to ratification.

Ronald Reagan

The White House,

August 10, 1984.