Income Tax: Subsidiary Legislation

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VOLUME: XII



CHAPTER:52:01 INCOME TAX: SUBSIDIARY LEGISLATION










BOTSWANACHINA DOUBLE TAXATION AVOIDANCE AGREEMENT ORDER:



(section 53(1))

(23rd November, 2012)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPHS



1. Citation

2. Approval and effective date of commencement



SCHEDULE



S.I. 92, 2012.

WHEREAS

in the exercise of the powers conferred on him by section 53 (1) of the Income

Tax Act, the Minister of Finance and Development Planning has, on behalf of the

Government, entered into an Agreement with the Government of the People's

Republic of China for the avoidance of double taxation and the prevention

offiscal evasion with respect to taxes on income;

AND

WHEREAS in accordance with the provisions of section 53 (2) of the Income Tax

Act the said Agreement shall be laid before the National Assembly, and shall

not take effect unless approved by resolution of the National Assembly;

NOW

THEREFORE the following Order is hereby made-

1. Citation

This

Order may be cited as the Botswana-China Double Taxation Avoidance Agreement

Order.

2. Approval

and effective date of commencement

The

Double Taxation Avoidance Agreement set out in the Schedule hereto between the

Government of the Republic of Botswana and the Government of the People's

Republic of China is presented to the National Assembly for approval and shall,

upon approval, take effect from the date specified in the Agreement.

SCHEDULE

The

Government of the Republic of Botswana 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, have agreed as follows:

ARTICLE 1
Persons Covered

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 political subdivision or 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 and taxes on the total amounts of

wages or salaries paid by enterprises.

3. The existing taxes to which the Agreement shall apply are, in

particular:

(a) in

Botswana: the income tax including taxation of capital gains

(hereinafter

referred to as "Botswana tax"); and

(b) in

China:

(i) the

individual income tax, and

(ii) the

enterprise income tax

(hereinafter

referred to as "Chinese tax").

4. This Agreement shall apply also to any identical or

substantially similar taxes that 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

significant changes which have been made in their taxation laws.

ARTICLE 3
General Definitions

1. For the purposes of this Agreement, unless the context

otherwise requires:

(a) the

term "Botswana" means the Republic of Botswana;

(b) 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 and its internal law;

(c) the

term "company" means any body corporate or any entity that is treated

as a body corporate for tax purposes;

(d) the

term "competent authority" means:

(i) in

the case of Botswana, the Minister of Finance and Development Planning,

represented by the Commissioner General of the Botswana Unified Revenue Service

or his authorized representative, and

(ii) in

the case of China, the State Administration of Taxation or its authorized

representative;

(e) 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;

(f) 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;

(g) the

term "national", in relation to a Contracting State, means:

(i) any

individual possessing the nationality of a Contracting State, and

(ii) any

legal person, partnership or association deriving its status as such from the

laws in force in a Contracting State; and

(h) the

term "person" includes an individual, a company and any other body of

persons Contracting State.

2. As regards the application of the Agreement at any time by a

Contracting State, any term not defined therein shall, unless the context otherwise

requires, have the meaning which it has at that time under the law of that

State for the purposes of the taxes to which the Agreement applies, any meaning

under the applicable tax laws of that State prevailing over a meaning given to

the term under other laws of that State.

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

State, is liable to tax therein by reason of that person's domicile, residence,

place of incorporation, place of effective management or any other criterion of

a similar nature, and also includes that State and any political subdivision or

local authority thereof. This term, however, 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.

2. Where by reason of the provisions of paragraph 1 an

individual is a resident of both Contracting States, then that individual's

status shall be determined as follows:

(a) the

individual shall be deemed to be a resident only of the State in which a

permanent home available to the individual; if a permanent home available to

the individual in both States, the individual shall be deemed to be a resident

only of the State with which the individual personal and economic relations are

closer (centre of vital interests);

(b) if

the State in which the person has centre of vital interests cannot be

determined, or the person does not have a permanent home available in either

State, the individual shall be deemed to be a resident only of the State in

which the individual has a habitual abode;

(c) if

the individual has a habitual abode in both States or in neither of them, the

individual shall be deemed to be a resident only of the State of which the

individual is a national;

(d) if

the individual is a national of both States or of neither of them, the

competent authorities of the Contracting States 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 States, then it

shall be deemed to be a resident only of the State in which its place of

effective management is situated.

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 is 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 if such site, project or

activities last more than 12 months;

(b) the

furnishing of services, including consultancy services, by an enterprise

through employees or other personnel engaged for such purpose, but only if

activities of that nature continue (for the same or a connected project) within

a Contracting State for a period or periods aggregating more than 183 days

within any 12 month period.

4. 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;

and

(f) the

maintenance of a fixed place of business solely for any combination of

activities mentioned in subparagraphs (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 1 and 2, where a

person- other than an agent of an independent status to whom paragraph 6

applies- is acting in a Contracting State on behalf of an enterprise of the

other Contracting State, and has , and habitually exercises, in that

Contracting State an authority to conclude contracts in the name of the

enterprise, that enterprise shall be deemed to have a permanent establishment

in that 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 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.

7. 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

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 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 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 State, but only so much of them as is attributable to

that permanent establishment.

2. 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.

3. 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.

4. In so far 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 by an enterprise of a Contracting State shall be taxable

only in that Contracting State.

2. The provisions of paragraph 1 shall also apply to profits

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.

2. Where a Contracting State includes in the profits of an

enterprise of that State- and taxes accordingly- profits on which an enterprise

of the other Contracting State has been charged to tax in that other State and

the profits so included are profits which would have accrued to the enterprise

of the first-mentioned 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

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

that other 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 State, but if the beneficial owner of the dividends is a

resident of the other Contracting State, the tax so charged shall not exceed 5

per cent of the gross amount of the dividends.

The

competent authorities of the Contracting States shall by mutual agreement

settle the mode of application of these limitations.

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, mining 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 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 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 State or in so far 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 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.

6. The provision of this Article shall not apply if it was the

main purpose or one of the main purposes of any person concerned with the

creation or assignment of the shares or other rights in respect of which the

dividend is paid to take advantage of this Article by means of that creation or

assignment.

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 State.

2. However, such interest may also be taxed in the Contracting

State in which it arises and according to the laws of that State, but if the

beneficial owner of the interest is a resident of the other Contracting State,

the tax so charged shall not exceed 7.5 per cent of the gross amount of the

interest. The competent authorities of the Contracting States shall by mutual

agreement settle the mode of application of this limitation.

3. Notwithstanding the provisions of paragraph 2, interest

arising in a Contracting State and paid to, or on loans guaranteed or insured

by, the Government, a political subdivision or a local authority, the Central

Bank or any financial institution wholly owned by the Government of the other

Contracting State shall be exempt from tax in the first-mentioned 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. Penalty charges for late payment shall not be regarded as

interest for the purpose of this Article.

5. The provisions of paragraphs 1 and 2 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 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.

6. Interest shall be deemed to arise in a Contracting State when

the payer is a resident of that State. Where, however, the person paying the

interest, whether that person 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 State in which the permanent

establishment or fixed base is situated.

7. 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.

8. The provision of this Article shall not apply if it was the

main purpose or one of the main purposes of any person concerned with the

creation or assignment of the debt-claim in respect of which the interest is

paid to take advantage of this Article by means of that creation or assignment.

ARTICLE 12
Royalties

1. Royalties arising in a Contracting State and beneficially

owned by a resident of the other Contracting State may be taxed in that other

State.

2. However, such royalties may also be taxed in the Contracting

State in which they arise and according to the laws of that State, but if the

beneficial owner of the royalties is a resident of the other Contracting State,

the tax so charged shall not exceed 7.5 per cent of the gross amount of the

royalties. The competent authorities of the Contracting States shall by mutual

agreement settle the mode of application of this limitation.

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

cinematography films, or films or tapes or discs for radio or television

broadcasting), any patent, trade mark, design or model, plan, secret formula or

process, or for information concerning industrial, commercial or scientific

experience, or for technical and consultancy services.

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 performs in that

other 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 a resident of that Contracting State. Where, however, the

person paying the royalties, whether that person 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 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.

7. The provision of this Article shall not apply if it was the

main purpose or one of the main purposes of any person concerned with the

creation or assignment of the rights in respect of which the royalties are paid

to take advantage of this Article by means of that creation or assignment.

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 a fixed base, may

be taxed in that other State.

3. Gains from the alienation of ships or aircraft operated in

international traffic by an enterprise of a Contracting State, or movable

property pertaining to the operation of such ships or aircraft, shall be

taxable only in that Contracting State.

4. Gains derived by a resident of a Contracting State from the

alienation of shares deriving more than 50 per cent of their value directly or

indirectly from immovable property 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 a resident of a Contracting State in

respect of professional services or other activities of an independent

character shall be taxable only in that State except in the following

circumstances, when such income may also be taxed in the other Contracting

State:

(a) if

the individual has a fixed base regularly available in the other Contracting

State for the purpose of performing activities; in that case, only so much of

the income as is attributable to that fixed base may be taxed in that other

State; or

(b) if

the individual's stay in the other Contracting State is for a period or periods

amounting to or exceeding in the aggregate 183 days in any 12 month period

commencing or ending in the fiscal year concerned; in that case, only so much of

the income as is derived from that person's activities performed in that other

State may be taxed in that other 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
Income from Employment

1. Subject to the provisions of Articles 16, 18, and 19,

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 State.

2. 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 State for a period or periods not exceeding

in the aggregate 183 days in any 12 month period commencing or ending in the

fiscal year concerned;

(b) the

remuneration is paid by, or on behalf of, an employer who is not a resident of

the other State; and

(c) the

remuneration is not borne by a permanent establishment or a fixed base which

the employer has in the other 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 Contracting State.

ARTICLE 16
Directors Fees

Directors' fees and other similar payments derived by a resident

of a Contracting State in that person's capacity as a member of the board of

directors of a company which is a resident of the other Contracting State may

be taxed in that other State.

ARTICLE 17
Artistes and Sportspersons

1. Notwithstanding the provisions of Articles 7, 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

sportsperson, from that person's personal activities as such exercised in the

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

2. Where income in respect of personal activities exercised by

an entertainer or a sportsperson in that person's capacity as such accrues not

to the entertainer or sportsperson 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 sportsperson

are exercised.

3. Notwithstanding the provisions of paragraphs 1 and 2, income

derived from such activities as are referred to in paragraph 1 performed under

a cultural agreement or arrangement between the Contracting States shall be

exempt from tax in the Contracting State in which the activities are exercised

if the visit to that State is wholly or substantially supported by public or

government funds of either Contracting State.

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 State.

2. Notwithstanding the provisions of paragraph 1, pensions paid

and other similar payments made by the Government of a Contracting State or a

local authority thereof under a public welfare scheme of the social security

system of that State 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 an individual in respect of services rendered to

that State or subdivision or authority, shall be taxable only in that 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 State and the

individual is a resident of that State who:

(i) is

a national of that State, or

(ii) did

not become a resident of that State solely for the purpose of rendering the

services.

2. (a) Pensions and other similar remuneration paid by, or

out of funds created by, a Contracting State or a political subdivision or a

local authority thereof to an individual in respect of services rendered to the

Government of that State or subdivision or authority shall be taxable only in

that State.

(b) However,

such pensions and other similar remuneration shall be taxable only in the other

Contracting State if the individual is a resident of, and a national of, that

State.

3. The provisions of Articles 15, 16, 17, and 18 shall apply to

salaries, wages, pensions, and other similar remuneration in respect of

services rendered in connection with a business carried on by a Contracting

State or a political subdivision or a local authority thereof.

ARTICLE 20
Students

Payments which a student 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

receives for the purpose of the student's maintenance or education shall not be

taxed in that State, provided that such payments arise from sources outside

that State.

ARTICLE 21
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 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.

3. The provision of this Article shall not apply if it was the

main purpose or one of the main purposes of any person concerned with the

creation or assignment of the rights in respect of which the income is paid to

take advantage of this Article by means of that creation or assignment.

ARTICLE 22
Methods for Elimination of Double Taxation

Double Taxation shall be eliminated as follows:

1. In Botswana, subject to the provisions of the laws of

Botswana regarding the allowance of a credit against Botswana tax of tax

payable under the laws of a country outside Botswana, China tax payable under

the laws of China and in accordance with this Agreement, whether directly or by

deduction, on profits or income liable to tax in China shall be allowed as a

credit against any Botswana tax payable in respect of the same profits or

income by reference to which the China tax is computed. However, the amount of

such credit shall not exceed the amount of the Botswana tax payable on that

income in accordance with the laws of Botswana.

2. In China, in accordance with the provisions of the law of

China, double taxation shall be eliminated as follows:

(a) Where

a resident of China derives income from Botswana, the amount of tax on that

income payable in Botswana 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;

and

(b) Where

the income derived from Botswana is a dividend paid by a company which is a

resident of Botswana to a company which is a resident of China and which owns

not less than 20 per cent of the shares of the company paying the dividend, the

credit shall take into account the tax paid to Botswana by the company paying

the dividend in respect of its income.

ARTICLE 23
Miscellaneous Rule

Nothing in this Agreement shall prejudice the right of each

Contracting State to apply its domestic laws and measures concerning the

prevention of tax avoidance, whether or not described as such, in so far as

they do not give rise to taxation contrary to this Agreement.

ARTICLE 24
Non-Discrimination

1. 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 State in the same circumstances,

in particular with respect to residence, 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 not be less

favorably levied in that other State than the taxation levied on enterprises of

that other 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 the Article shall, notwithstanding the

provisions of Article 2, apply to taxes of every kind and description.

ARTICLE 25
Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of

the Contracting States result or will result for that person in taxation not in

accordance with the provisions of this Agreement, that person may, irrespective

of the remedies provided by the domestic law of those States, present a case to

the competent authority of the Contracting State of which the person is a

resident or, if the case comes under paragraph 1 of Article 24, to that of the

Contracting State of which the person 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 Agreement. Any

agreement reached shall be implemented notwithstanding any time limits in the

domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall

endeavor 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.

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 paragraphs 2 and 3. When it seems advisable for reaching an

agreement, representatives of the competent authorities of the Contracting

States may meet together for an oral exchange of opinions.

ARTICLE 26
Exchange of Information

1. The competent authorities of the Contracting States shall

exchange such information as is foreseeably relevant for carrying out the

provisions of this Agreement or to the administration or enforcement of the

domestic laws concerning taxes of every kind and description imposed on behalf

of the Contracting States, or of their political subdivisions or local

authorities, in so far as the taxation thereunder is not contrary to the

Agreement. The exchange of information is not restricted by Articles 1 and 2.

2. Any information received under paragraph 1 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) concerned with the

assessment or collection of, the enforcement or prosecution in respect of, the

determination of appeals in relation to the taxes referred to in paragraph 1,

or the oversight of the above. 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.

3. In no case shall the provisions of paragraphs 1 and 2 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; and

(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).

4. If information is requested by a Contracting State in

accordance with this Article, the other Contracting State shall use its

information gathering measures to obtain the requested information, even though

that other State may not need such information for its own tax purposes. The

obligation contained in the preceding sentence is subject to the limitations of

paragraph 3 but in no case shall such limitations be construed to permit a

Contracting State to decline to supply information solely because it has no

domestic interest in such information.

5. In no case shall the provisions of paragraph 3 be construed

to permit a Contracting State to decline to supply information solely because

the information is held by a bank, other financial institution, nominee or

person acting in an agency or a fiduciary capacity or because it relates to

ownership interests in a person.

ARTICLE 27
Assistance in the Collection of Taxes

1. The Contracting States shall endeavor to lend assistance to

each other in the collection of revenue claims. The competent authorities of

the Contracting States may by mutual agreement settle the mode of application

of this Article.

2. In no case shall the provision of this Article be construed

so as to impose on a Contracting State the obligations:

(a) to

carry out administrative measures at variance with the law and administrative

practice of that or of the other Contracting State; and

(b) to

carry out measures which would be contrary to public policy (ordre public).

ARTICLE 28
Members of Diplomatic Missions and Consular Posts

Nothing in this Agreement shall affect the fiscal privileges

of members of diplomatic missions or consular posts under the general rules of

international law or under the provisions of special agreements.

ARTICLE 29
Entry Into Force

1. Both Contracting States shall notify each other through

diplomatic channels that they have completed the internal legal procedures

necessary for the entry into force of this Agreement. This Agreement shall

enter into force on date of receipt of the latter notification.

2. The provisions of the Agreement shall apply:

(a) In

Botswana:

(i) with

regard to taxes withheld at source, with respect to amounts credited on or

after the thirtieth day following the date upon which the Agreement enters into

force, and

(ii) with

regard to other taxes, on taxable income derived on or after the first day of

July of the year next following that of the entry into force of this Agreement,

(b) In

China, in respect of income derived during the taxable years beginning on or

after the first day of January next following that in which this Agreement

enters into force.

ARTICLE 30
Termination

1. This Agreement shall continue in effect indefinitely but

either of the Contracting States may, after the expiration of a period of five

years from the date of its entry into force, give written notice of termination

to the other Contracting State through diplomatic channels.

2. In such event, this Agreement shall cease to have effect:

(a) In

Botswana;

(i) with

regard to taxes withheld at source, with respect to amounts credited on or

after the thirtieth day following the date on which the notice of termination

is given, and

(ii) with

regard to other taxes, on taxable income derived on or after the first day of

July of the year next following that in which the notice of termination is

given;

(b) In

China, in respect of income derived during the taxable years beginning on or

after the first day of January in the calendar year next following that in

which the notice of termination is given.

IN

WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this

Agreement.

Done

at GABORONE on the 11th day of April, 2012 in duplicate in the English and

Chinese languages, both texts being equally authentic.




HON. O.K. MATAMBO,

for the Goverment of the

Republic of Botswana.






HON. XIAO JIE,

for the Goverment of the

People's Republic of China

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