The government of the People's Republic of China and the Government of the Republic of Korea, 　　Desiring to conclude an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, Have agreed as follows： Article l Personal Scope This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 Taxes Covered 1．This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its local authorities, irrespective of the manner in which they are levied． 　　2. There shall be regarded as taxes on income all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property, as well as taxes on capital appreciation. 　　3.The existing taxes to which the Agreement shall apply are : 　　(a) in the People's Republic of China: 　　(i) the individual income tax; 　　(ii) the income tax for enterprises with foreign investment and foreign enterprises; and 　　(iii) the local income tax; (hereinafter referred to as "Chinese tax"); 　　(b) in the Republic of Korea: 　　(i) the income tax; 　　(ii) the corporation tax; and 　　(iii) the inhabitant tax; 　　(hereinafter referred to as "Korean tax"). 　　4. This Agreement shall also apply to any identical or substantially similar taxes which are imposed after the date of signature of this Agreement in addition to, or in place of , the existing taxes referred to in paragraph 3. The competent authorities of the Contraction States shall notify each other of any substantial changes which have been made in their respective taxation laws within a reasonable period of time after such changes. 　　Article 3 General Definitions. 　　1. For the purposes of this Agreement, unless the context otherwise requires: 　　(a) the term "China" means the People's Republic of China; when used in a geographical sense, means all the territory of the People's Republic of China, including its territorial sea, in which the Chinese laws relating to taxation apply , and any area beyond its territorial sea, within which the People's Republic of China has sovereign rights of exploration for and exploitation of resources of the sea-bed and its sub-soil and superjacent water resources in accordance with international law; 　　(b)the term "Korea", means the Republic of Korea; when used in geographical sense, means all the territory of the Republic of Korea, including its territorial sea, in which the Korean laws relating to taxation apply, and any area beyond its territorial sea, within which the Republic of Korea has sovereign rights of exploration for and exploitation of resources of the sea-bed and its sub-soil and superjacent water resources in accordance with international law; 　　(c)the terms "a Contraction State" and "the other Contraction State" mean China or Korea as the context requires; 　　(d) the term "tax "means Chinese tax or Korean tax ,as the context requires; 　　(e)the term "person" includes an individual ,a company and any other body of persons; 　　(f)the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes; 　　(g) the term "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean, respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; 　　(h)the term "nationals" means: 　　(i) all individuals possessing the nationality of a Contracting State; 　　(ii) all legal persons, partnerships and associations deriving their status as such from the laws in force in a Contracting State; 　　(i) The term "international traffic" means any transport by a ship or aircraft operated by An enterprise which has its place of head office of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; 　　(j)the term "competent authority" means: 　　(i) in the case of china, the State Tax Bureau or its authorized representative; 　　(ii)in the case of Korea, , the Minister of Finance or his authorized representative. 　　2. As regards the application this Agreement by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State concerning the taxes to which this Agreement applies. 　　Article 4 Resident 　　1. For the purposes of this Agreement , the term "resident of a Contracting State" means any person who, under the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of head office , place effective management, or any other criterion of a similar nature. 　　2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: 　　(a) He shall be deemed to be a resident solely of the Contracting State in which he has a permanent home available to him ; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests); 　　(b) If the State in which he has his centre of vital interests cannot be determined , or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting the State in which he has a habitual abode; 　　(c) If he has a habitual abode in both Contracting State or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national; 　　(d) If he is a national of both Contracting State or of neither of them, the competent authorities of the Contracting State shall settle the question by mutual agreement. 　　3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting State, the competent authorities of the Contracting State shall by mutual agreement endeavour to settle the question and to determine the mode of application of this Agreement to such person. 　　Article 5 Permanent Establishment 　　1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise in wholly or partly carried on. 　　2. The term "permanent establishment" includes especially: 　　(a) a place of management; 　　(b ) a branch; 　　(c) an office; 　　(d) a factory; 　　(e) a workshop; and 　　(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources. 　　3.The term "permanent establishment "likewise encompasses: 　　(a)a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than 6 months; 　　(b) the furnishing of services, including consultancy services, by an enterprise of a contracting State through employees or other engaged personnel in the other contracting State, provided that such activities continue for the same project or a connected project for a period or periods aggregating more than 6 months within any 12 month period. 　　4. Notwithstanding the provisions of paragraphs 1 to 3, ,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 merchandise belonging to the enterprise; 　　(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; 　　(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; 　　(d)the maintenance of a fixed palace of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; 　　(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; 　　(f) the maintenance of a fixed place of business solely for nay combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. 　　5.Notwithstanding the provisions of paragraphs 1and 2, where a person-other than an agent of an independent status to whom the provisions of paragraph 6 apply-is acting in a Contracting State on behalf of an enterprise of the other Contracting State, has and habitually exercises an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in the first-mentioned contracting State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph. 　　6.An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other Contracting State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph. 　　7.The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. 　　Article 6 Income from Immovable Property 　　1.Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other Contracting State. 　　2.The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work mineral deposits, sources and other natural resources. Ships and aircraft shall not be regarded as immovable property. 　　3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property. 　　4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. 　　Article 7 Business Profits 　　1.The profits of an enterprise of a Contracting State shall be taxable only in that Contracting State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein . If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other Contracting State but only so much of them as is attributable to that permanent establishment. 　　2. Subject to the provisions of paragraph3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.. 　　3.In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. 　　4.Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article. 　　5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 　　6.For the purposes of the preceding paragraphs , the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 　　7.Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. 　　Article 8 Shipping and Air Transport 　　1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of head office or effective management of the enterprise is situated. 　　2. If the place of head office or effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident. 　　3.The provisions of paragraph 1 shall also apply to profits derived from the participation in a pool, a joint business or an international operating agency. 　　Article 9 Associated Enterprises 　　1. Where 　　(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or 　　(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, 　 and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would ,but for those conditions, have accrued to one of the enterprises, but , by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 　　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 tat 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 that Contracting State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed: 　　(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends; 　　(b)10 per cent of the gross amount of the dividends in all other cases. 　　This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 　　3. The term "dividends" as used in this Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 　　4. The provisions of paragraphs 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 that other Contracting State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base.. In such case the provisions of 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, that other Contracting State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other Contracting State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or fixed base situated in that 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 　　1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that 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 that Contracting State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent of the gross amount of the interest. 　　3. Notwithstanding the provisions of paragraph2, interest arising in a Contracting State and derived by the Government of the other Contracting State including local authorities thereof, the central bank of the other Contracting State or any financial institution performing functions of a governmental nature or by any resident of the other Contracting State with respect to debt-claims guaranteed or indirectly financed by the Government of that other Contracting State including local authorities thereof, the central bank of that other Contracting State or any financial institution performing functions of a governmental nature shall be exempt from tax in the first-mentioned Contracting State. 　　4. The term "interest "as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. 　　5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other Contracting State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or 14, as the case may be, shall apply. 　　6. Interest shall be deemed to arise in a Contracting State when the payer is the Government of that Contracting State , a local authority thereof or a resident of that Contracting State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not , has in a Contracting State a permanent establishment or a fixed base in connection which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 　　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 interest, having regard to the debt-claim for which it is 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 last-mentioned amount,. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being bad to the other provisions of this Agreement.