Article 12 Royalties 1. Royalties 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 royalties may also be taxed in the Contracting State in which they arise, and according to the law of that Contracting State, but if the recipient is the beneficial owner of the royalties, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties. 3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of , or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and films or tapes 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 paragraphs 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 perform in that other Contracting State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties 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. Royalties 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 royalties, 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 with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base 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 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 had to the other provisions of this Agreement. 　　Article 13 Capital Gains 　 1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State. 　2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State 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 with the whole enterprise) or of such fixed base, may be taxed in that other State. 3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic by that enterprise or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State. 4. Gains derived by a resident of a Contracting State from the alienation of shares in a company the assets of which consist mainly of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State. 5. Gains from the alienation of any property other than that referred to in paragraphs 1 to 4, shall be taxable only in the Contracting State of which the alienator is a resident. Article 14 Independent Personal Services 1. Income derived by an individual who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that Contracting State. But Such income may also be taxed in the other Contracting State: (a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; but only so much of the income as is attributable to that fixed base; (b) if his stay in the other Contracting State is for a period or periods exceeding in the aggregate 183 days in any twelve-month period; in that case, only so much of the income as is derived from his activities performed in that 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 and 20, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contract State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: (a) the recipient is present in the other Contracting State for a periods or periods not exceeding in the aggregate 183 days in any twelve-month period; and (b) the remuneration is paid by, or on behalf of , an employer who is not a resident of the other Contracting State; and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other Contracting State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State, may be taxed in that State. 　Article 16 Directory' 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 or any other similar organ of a company which is a resident of the other Contracting State may be taxed in that other Contracting State. 　Article 17 Artistes and Sportsmen 1. Withstanding 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 a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in tha other Contracting State. 2. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that 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 sportsman are exercised. 3. The provisions of paragraphs 1 and 2 shall no apply to income derived from activities exercised in a Contracting State by an entertainer or a Sportsman if the visit to that State is wholly or mainly supported by public funds of the other Contracting State or a local authority thereof. In such case, the income shall be taxable only in the Contracting State of which the entertainer or sportsman is a resident. Article 18 Pensions 　 1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that Contracting State. 2. Notwithstanding the provisions of paragraph 1, and the provisions of paragraph 2 of Article 19, Pensions paid and other benefits, whether periodic or lump-sum compensation, granted under the social security legislation of a Contracting State or under any public scheme organized by a Contracting State for social welfare purposes shall be taxable only in that State. Article 19 Government Service 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a local authority thereof, to an individual in respect of services rendered to that Contracting State or authority shall be taxable only in that Contracting State. (b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other Contracting State and the individual is a resident of that other Contracting State who: (i) is a national of that other Contracting State; or (ii) did not become a resident of that other Contracting State solely for the purpose of rendering the services. 2. (a) Any pension paid by, or out of funds created by, a Contracting State or a local authority thereof, to an individual in respect of services rendered to that Contracting State or authority shall be taxable only in that Contracting State. (b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of , and a national of , that other Contracting State. 3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a local authority thereof. Article 20 Professors and Researchers 1. An individual who visits a Contracting State for the purpose of teaching or carrying out research at a university, college or other recognized educational institution in that Contracting State and who is or was immediately before that visit a resident of the other Contracting State, shall be exempted from taxation in the first-mentioned Contracting State on remuneration for such teaching or research for a period no exceeding two year from the date of his first visit for that purpose. 2. The provisions of paragraph 1 of this Article shall not apply to income from research if such research is undertaken not in the public interest, but primarily for the private benefit of a specific person or persons. 　Article 21 Students and Trainees A student, apprentice or trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education, training shall be exempt from tax in that first-mentioned State on the following payments or income received or derived by him for the purpose of his maintenance, education or training: (a) payments derived from sources outside that 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, or cultural organization. Article 22 Offshore Activities 1. The provisions of this Article shall apply notwithstanding the provisions of Articles 4 to 21 of this Agreement. 2. In this Article the term "off shore activities" means activities which are carried on Offshore in a Contracting State in connection with the exploration or exploitation of the sea-bed and sub-soiL and their natural resources situated in that Contracting State. 3. An enterprise of a Contracting State which carries on offshore activities in the other Contracting State, shall subject to paragraph 4, be deemed tO be carrying on business in that other Contracting State through a permanent establishment situated therein. 4. The provisions of paragraph 3 shall not apply where the offshore activities are carried on in the other Contracting State for a period or periods no exceeding in the aggregate 30 days in any twelve-month period. For the purposes of this paragraph: (a) where an enterprise of a Contracting State carrying on offshore activities in the other Contracting State is associated with another enterprise carrying on substantially similar off shore activities there, the first-mentioned enterprise shall be deemed to be carrying on all such activities of the other enterprise, except to the extent that those activities are carried on at the same time as its own activities; (b) an enterprise shall be considered to be associated with another enterprise if either participates directly or indirectly in the management, control or capital of the other enterprise or if the same person or group of person participates directly or indirectly in the management, control or capital of both enterprises. 5. Subject to paragraph 6, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment connected with offshore activities in the other Contracting State may, to the extent that the duties are performed offshore in that other State, be taxed in that other State provided that the employment off shore is carried on for a period or period exceeding in the aggregate 30 days in any twelve-month period. 6. Salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment exercised on board a ship or aircraft engaged in the transportation of supplies or personnel to a location where relevant activities are being carried on in a Contracting State, or in respect of any employment exercised on board a tugboat or other vessels auxiliary to such activities, may be taxed in the Contracting State of which the employer is a resident. 7. Gains derived by a resident of a Contracting State from the alienation of: (a) exploration or exploitation rights; or (b) property situated in the other Contracting State and used in connection with the exploration or exploitation of the sea-bed and sub-soil and their natural resources situated in that other State; or (c) shares deriving their value or the greater part of their value directly or indirectly from such rights or such property or from such rights and such property taken together; may be taxed in that other State. In this paragraph the term "exploration or exploitation rights" means rights to assets to be produced by the exploration or exploitation of the sea-bed and sub-soil and their natural resources in the other Contracting State, including rights to interests in or to the benefit of such assets. Article 23 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 taxable only in that State. 2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 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 that other Contracting State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is 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. Article 24 Capital 1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other Contracting State. 2. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State. 3. Capital represented by ships and aircraft operated in international traffic by an enterprise of a Contracting State and by movable property pertaining to the operation of such ships and aircraft, shall be taxable only in that Contracting State. 4. All other elements of capital of a resident of a Contracting State shall be taxable only in that Contracting State. Article 25 Methods for the Elimination of Double Taxation 1. In China, double taxation shall be eliminated as follows: (a) Where a resident of China derives income from Latvia the amount of tax on that income payable in Latvia in accordance with the provisions of this Agreement, may be credited against the Chinese tax imposed on that resident. The amount of the credit, however, shall not exceed the amount of the Chinese tax on that income computed in accordance with the taxation law and regulations of China. (b) Where the income derived from Latvia is a dividend paid by a company which is a resident of Latvia 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 credit shall take into account the tax paid to Latvia by the company paying the dividend in respect of its income. 2. In Latvia, double taxation shall be eliminated as follows: (a) where a resident of Latvia derives income or owns capital which, in accordance with this Agreement, may be taxed in China, unless a more favourable treatment is provided in its domestic law, Latvia shall allow: (i) as a deduction from the tax on the income of that resident, an amount equal to the income tax paid thereon in China; (ii) as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid thereon in China. Such deduction in either case shall not, however, exceed that part of the income or capital tax in Latvia, as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital which may be taxed in China. (b) For the purposes of sub-paragraph a) of this paragraph, where a company that is a resident of Latvia receives a dividend from a company that is a resident of China in which it owns at least 10 per cent of its shares having full voting rights, the tax paid in China shall include not only the tax paid on dividend, but also the tax paid on the underlying profits of the company out of which the dividend was paid. Article 26 Non-discrimination 1. Nationals of a Contracting State shall no 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 that other Contracting State in the same circumstances are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States. 2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall no be less favourably levied in that other Contracting State than the taxation levied on enterprises of that 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 allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements 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 under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State. 4. Enterprises of a Contracting State, 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 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 State are or may be subjected. 5. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description. Article 27 Mutual Agreement Procedure 1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 26, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement. 2. The competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, 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 Stales. 3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases no provided for in the 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 the preceding paragraphs. When it seems advisable for reaching agreement, representatives of the competent authorities of the Contracting States may meet together for an oral exchange of opinions. Article 28 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 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 evasion of such taxes. The exchange of information is no 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 law of that State and 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 covered by 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 shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: (a) to carry out administrative measures at variance with the law and administrative practice of that or of the other Contracting State; (b) to supply information which is not obtainable under the law or in the normal course of the administration of that or of the other Contracting State; (c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public). Article 29 Diplomatic Agents and Consular Officers Nothing in this Agreement shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements. Article 30 Entry into Force 1. The Governments of the Contracting States shall notify each other upon the completion of their internal legal procedures necessary for the entry into force of this Agreement. 2. This Agreement shall enter into force on the date of the latter of the notifications referred to in paragraph 1 and its provisions shall have effect in both Contracting States: (a) in respect of taxes withheld at source, on income derived on or after the last January in the calendar year next following the year in which the Agreement enters into force; (b) in respect of other taxes on income and taxes on capital, for taxes chargeable for any tax year beginning on or after the last January in the calendar year next following the year in which the Agreement enters into force. Article 31 Termination This Agreement shall continue in effect indefinitely but either of the Contracting State may, on or before the thirtieth day of June in any calendar year, give written notice of termination to the other Contracting State through the diplomatic channels. In such event, this Agreement shall cease to have effect in both Contracting State; (a) in respect of taxes withheld at source, on income derived on or after the 1st January in the calendar year next following the year in which the notice of termination is given; (b) in respect of other taxes on income and taxes on capital, for taxes chargeable for any tax year beginning on or after the 1st January in the calendar year next following the year in which the notice of termination is given. IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Agreement. DONE at Riga this 7th day of June 1996 in duplicate, each in the Chinese, Latvian and English languages, all three texts being equally authentic. In the case of any divergence of interpretation, the English text shall prevail. For the Government of the People's For the Government of the Republic of China Republic of Latvia