China - Lithuania Tax Treaty

AGREEMENT

BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA AND THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA

FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

The Government of the Republic of Lithuania and the Government of the People's Republic of China,

Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital,

Have agreed as follows:

States.

Article 1

PERSONAL SCOPE

This Agreement shall apply to persons who are residents of one or
both of the Contracting

Article 2

TAXES COVERED

    This  Agreement  shall  apply  to  taxes  on  income  and  on

capital imposed on behalf of a Contracting State or of its local authorities, irrespective of the manner in which they are levied.

    There shall be regarded as taxes on income and on capital all taxes

imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, as well as taxes on capital appreciation.

    The existing taxes to which this Agreement shall apply are in

particular:

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;

(iii) the local income tax;

(hereinafter referred to as "Chinese tax");

b) in the Republic of Lithuania:

(i) the tax on profits of legal persons (juridinių¸ asmenų¸ pelno mokestis);

(ii) the tax on income of natural persons (fizinių¸ asmenų¸ pajamų¸ mokestis);

(iii) the tax on enterprises using state-owned capital (palūkanos
už valstybinio kapitalo naudojimą);

(iv) the immovable property tax (nekilnojamojo turto mokestis); (hereinafter referred to as "Lithuanian tax").

    This  Agreement  shall  apply  also  to  any  identical  or

substantially similar taxes which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting 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

    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 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 "Lithuania" means the Republic of Lithuania
and, when used in the geographical sense, means the territory of the Republic of Lithuania and any other area adjacent to the territorial waters of the Republic of Lithuania within which under the laws of Lithuania and in accordance with international law, the rights of Lithuania may be exercised with respect to the sea-bed and its sub-soil and their natural resources;

c) the terms "a Contracting State" and "the other Contracting
State" mean China or Lithuania, as the context requires;

d) the term "tax" means Chinese tax or Lithuanian 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 terms "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 "national" means:

(i) any individual possessing the nationality of a Contracting State;

(ii) any legal person, partnership, association and other entity deriving its 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 of 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, in the case of China, the State Administration of Taxation or its authorized representative, and in the case of Lithuania, the Minister of Finance or his authorized representative.

    As  regards  the  application  of  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 law of that Contracting State concerning the taxes to which this Agreement applies.

Article 4

RESIDENT

    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 of incorporation or any other criterion of a similar nature. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

    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 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 Contracting 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 State in which he has an habitual abode;

c) if he has an habitual abode in both Contracting States 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 States or of
neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

    Where by reason of the provisions of paragraph 1 a person other than

an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement and determine the mode of application of this Agreement to such person.

Article 5

PERMANENT ESTABLISHMENT

    For the purposes of this Agreement, the term "permanent

establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

    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.

    A  building  site  or  a  construction,  assembly  or  installation

project or a supervisory or consultancy activity in connection therewith constitutes a permanent establishment only if such site, project or activity lasts more than twelve months.

    Notwithstanding the preceding provisions of this Article, 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 place 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 any 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.

    Notwithstanding the provisions of paragraphs 1 and 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, and 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.

    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.

    The fact that a company which is a resident of a Contracting State

controls or is controlled by a company which is a 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

    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.

    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
provisions of this Agreement relating to immovable property shall apply also to 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.

    The provisions of paragraph 1 shall apply to income derived from the

direct use, letting, or use in any other form of immovable property.

    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

    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.

    Subject to the provisions of paragraph 3, 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.

    In determining the profits of a permanent establishment, there shall

be allowed as deductions expenses which are incurred for the purposes 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. The expenses to be allowed as deductions by a Contracting State include only expenses that are deductible under the domestic laws of that State. The application of the provisions of the domestic law shall be in accordance with
the principles contained in this paragraph.

    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.

    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.

    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.

    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

    Profits  of  an  enterprise  of  a  Contracting  State  from  the

operation of ships or aircraft in international traffic shall be taxable only in that State.

    The provisions of paragraph 1 shall also apply to profits from the

participation in a pool, a joint business or an international operating agency.

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Article 9

ASSOCIATED ENTERPRISES

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.

    Where a Contracting State includes in the profits of an enterprise

of that Contracting State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other Contracting State, and the profits so included are profits which would have accrued to the enterprise of the first-mentioned Contracting State if the
conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the
tax charged therein on those profits. In determining such adjustment, due regard shall be had to
the other provisions of this Agreement and the competent authorities of the Contracting States
shall, if necessary, consult each other.

Article 10

DIVIDENDS

    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 that other Contracting State.

    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 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.

    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.

    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.

    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 a 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 State.

Article 11

INTEREST

    Interest arising in a Contracting State and paid to a resident of

the other Contracting State may be taxed in that other Contracting State.

    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.

    Notwithstanding  the  provisions  of  paragraph  2,  interest

arising in a Contracting State and derived and beneficially owned by the Government of the other Contracting State, including its local authorities, the Central Bank or any financial institution wholly owned by that Government, or interest derived on loans guaranteed by that Government or any
financial institution owned by that Government, shall be exempt from tax in the first-mentioned Contracting State.

    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. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

    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 Article 14, as the case may be, shall apply.

    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 with 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 had to the other provisions of this Agreement.

Article 12

ROYALTIES

    Royalties arising in a Contracting State and paid to a resident of

the other Contracting State may be taxed in that other Contracting State.

    However, such royalties may also be taxed in the Contracting State

in which they arise, and according to the laws 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.

    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.

    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 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 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.

    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.

    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

    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.

    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.

    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.

    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.

    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

    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.

    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

    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 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.

    Notwithstanding  the  provisions  of  paragraph  1,  remuneration

derived by a resident of a Contracting 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 period 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.

    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

DIRECTORS' 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

    Notwithstanding  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 that other Contracting State.

    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.

    The  provisions  of  paragraphs  1  and  2  shall  not  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

    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.

    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

    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.

    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.

    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

    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 not exceeding two years from the date of his first visit for that purpose.

    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

    The provisions of this Article shall apply notwithstanding the

provisions of Articles 4 to 21 of this Agreement.

    In this Article the term "offshore 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.

    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.

    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 not 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 offshore 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 persons participates directly or indirectly in the management, control or capital of both enterprises.

    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 offshore is
carried on for a period or periods exceeding in the aggregate 30 days in any twelve-month period.

    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.

    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

    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.

    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

    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.

    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.

    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.

    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

    In China, double taxation shall be eliminated as follows:

a) Where a resident of China derives income from Lithuania the amount of tax on that income payable in Lithuania 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 laws and regulations of China.

b) Where the income derived from Lithuania is a dividend paid by a company which is a resident of Lithuania 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 Lithuania by the company paying
the dividend in respect of its income.

    In Lithuania, double taxation shall be eliminated as follows:

Where a resident of Lithuania 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, Lithuania shall allow:

a) as a deduction from the tax on the income of that
resident, an amount equal to the income tax paid thereon in China;

b) 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 Lithuania, 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.

Article 26

NON-DISCRIMINATION

    Nationals  of  a  Contracting State  shall  not  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.

    The taxation on a permanent establishment which an enterprise of a

Contracting State has in the other Contracting State shall not 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.

    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.

    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.

    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

    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.

    The competent authority shall endeavour, 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 States.

    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 not provided for in the Agreement.

    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

    The  competent  authorities  of  the  Contracting  States  shall

exchange such information as is necessary for carrying out the provisions of this Agreement or of the 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 not 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 laws
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.

    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
laws and administrative practice of that or of the other Contracting State;

b) to supply information which is not obtainable under the laws 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

    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.

    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 1st 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 1st 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 States 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 States:

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;

In witness whereof the undersigned, duly authorized thereto, have signed this Agreement.

Done at Vilnius this 3rd day of June 1996 in duplicate, each in the Lithuanian, Chinese 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
For the Government of the Republic of Lithuania People's Republic of China

PROTOCOL

At the signing of the Agreement between the Government of the Republic of Lithuania and the Government of the People's Republic of China 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.

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    With reference to Article 6:
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Where the ownership of shares or other corporate rights in a company entitles the owner of such shares or corporate rights to the enjoyment of immovable property held by the company, the income from direct use, letting, or use in any other form of such right to enjoyment may be taxed in the Contracting State in which the immovable property is situated.

    With reference to Article 6 paragraph 2:

It is understood that the term "immovable property" as defined in
paragraph 2 of Article 6 includes options (agreements granting a right, without imposing any obligation, to purchase or sell immovable property for a determined price within a specified
period of time) or similar rights to acquire immovable property.

    With reference to Article 6 paragraph 3:

It is understood that all income and gains from the alienation of immovable property referred to in Article 6 and situated in a Contracting State may be taxed in that State in accordance with the provisions of Article 13 of this Agreement.

In witness whereof the undersigned, duly authorized thereto, have signed this Protocol.

For the Government of the
For the Government of the Republic of Lithuania People's Republic of China

China - Lithuania Tax Treaty

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