Tag Archive for Chinese Resident

Tax Court – Taxpayer Was Not A Chinese Resident Pursuant to the US/China Tax Treaty

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The Tax Court has ruled that a Chinese citizen who had lived in the U.S. and filed a 2005 U.S. return as a resident alien, then filed an amended 2005 return, then, in 2009, received a 2005 refund and interest on that refund, was neither a Chinese resident nor a nonresident alien in 2009 and therefore was subject to tax on the interest income at regular U.S. graduated rates.

Article 10.1 of the tax treaty between the U.S. and China (the treaty) provides that interest arising in a Contracting State (in this case, the U.S.) and paid to a resident of the other Contracting State (China) may be taxed in the other Contracting State (China). Article 10.2 provides that the interest may also be taxed in the Contracting State (U.S.) according to its laws—but if the recipient is the beneficial owner of the interest, the tax may not exceed Read more