US AND CHINA (PEOPLE'S REP.) - AGREEMENT REGARDING PROFESSORS AND TEACHERS
The US Internal Revenue Service (IRS) has released the text of a competent authority agreement entered between the United States and China (People's Rep). The agreement addresses the application of the 3-year income tax exemption granted to visiting professors and teachers under Article 19 (Professors and Teachers) of the treaty. According to the competent authority agreement, the following understandings have been reached:
- the 3-year exemption period begins to run from the first day a resident of a contracting state enters the other contracting state (host state) to teach, give lectures, or conduct research; and ends from the first day of the 4th year, while such an individual's remuneration for the first 3 years remains exempt;
- the 3-year exemption period is suspended when an individual discontinues teaching, giving lectures or conducting research and departs the host state;
- the 3-year exemption period resumes when an individual returns to the host state to teach, give lectures or conduct research, provided the individual is, or immediately before returning to the host state was, a resident of the other contracting state; and the exemption is not available for research not undertaken in the public interest but undertaken for the private gain of a specific person or persons.