Double Taxation, Double Trouble
Last week we mentioned apparent Chinese discontent with the rules that were being developed for the Hwanggumpyong, Wihwa, and Rason special economic zones. Ironically, double taxation was apparently one source of dispute. While terms under discussion for Chinese activities in the zones (the right to use Chinese currency and cell phones; the establishment of independent banks; internet access; and the right to lend and sub-lease leased land) compared favorably to those that exist at the South Korea-oriented Kaesong Industrial Complex. In 2000 North and South Korea reached an agreement on double taxation (as well as pacts on account settlement, repatriation of profits, and dispute settlement), and the North has concluded double taxation treaties with a number of other countries including Egypt, home of its biggest foreign investor, Orascom Telecom, but apparently it has not reached a similar agreement with its largest trade and investment partner, China.
Given the country’s demonstrated ability to reach such agreements with other countries, presumably it is just a matter of time. In the meantime, we can content ourselves with Otis Rush doing “Double Trouble,” surely all the justification this Friday blog post needs: