PROTOCOL TO THE AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE's REPUBLIC OF CHINA AND THE GOVERNMENT OF THE PEOPLE's REPUBLIC OF BULGARIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL At the signing of the Agreement between the Government of the People's Republic of China and the Government of the People's Republic of Bulgaria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital (hereinafter referred to as "the Agreement") the undersigned have agreed upon the following provisions, which form an integral part of the Agreement: 1. Ad Article 5 Notwithstanding the provisions of paragraph 3 of Article 5 of the Agreement, an enterprise of a Contracting State shall be deemed not to have a permanent establishment in the other Contracting State if it furnishes in that other Contracting State consultancy services in connection with the sale or lease of machinery or equipment through employees or other personnel. 2. Ad Article 8 Nothing in this Agreement shall affect the provisions of the Agreement for Maritime transport between the Government of the People's Republic of China and the Government of the People's Republic of Bulgaria signed at Sofia on 4 June 1974, to the extent that they have effect as regards taxes to which the Agreement applies. 3. Each Contracting State shall apply its internal law in matter of transfer pricing between associated enterprises, if the case occurs. Any dispute occured in connection with this matter should be settled through mutual agreement. 4. Ad Article 9 Profits derived by participants in joint ventures set up under the Decree No 535/1980 of the State Council of the People's Republic of Bulgaria and distributed according to their rights, shall not be regarded as dividends. 5. Ad Article 12 (a) Gains from the alienation of shares other than those mentioned in paragraph 4 of Article 12, representing a participation of at least 25 per cent in a company which is a resident of a Contracting State may be taxed in that Contracting State. (b) In the case of double taxation on gains from capital, other than those mentioned in paragraphs 1, 2, 3 and 4 of Article 12 and in subparagraph (a) of paragraph 5 of this Protocol, both Contracting States shall settle the question by mutual agreement. 6. Ad Article 18 The term "services rendered to the Government" includes services of employees who act on behalf of governmental institutions to perform non-commercial and non-productive activities in accordance with the internal law of the Contracting State, in which such activities are carried out, as well as press, radio or television reporters or correspondents. 7. In the case of double taxation on other income not dealt with in the Articles of this Agreement, both Contracting States shall settle the question by mutual agreement. DONE at Beijing on the 6th day of November, 1989 in duplicate in the Chinese, Bulgarian and English languages, all three texts being equally authentic. In the case of divergence of interpretation the English text shall prevail. For the Government of the People's For the Government of the People's Republic of China Republic of Bulgaria