Nobody should dabble in international tax. It is hugely complicated, and should be handled only by attorneys and accountants who specialize in it. Incredibly few do. Gary Tober here in Seattle is one who does and he has a great reputation. All of this is a preface for the fact that a reader just emailed me a copy of an article on the US-China tax treaty and asked me if “this guy Tober knows what he is talking about.” I wrote back, saying “yes” and I am now linking over to this article, entitled, “US Taxation of a Foreign Person’s US Activities and Income Tax Treaty Between the People’s Republic of China and the United States.” Go ahead and read this, but do NOT act without first hunting down and consulting with a legitimate international tax lawyer or international tax accountant familiar with the tax laws of your home country and China and the interaction between those laws.

In defining the concept of international tax, I can't go past Michael Graetz (probably the foremost expert on international tax policy) who said that the ‘basic task of international tax rules is to resolve the competing claims of residence and source nations’. [1] Accordingly, international tax laws are those rules that delineate a country’s taxation of cross jurisdictional income. This includes transfer pricing provisions, thin capitalisation issues, tax residency questions, income source etc. Accordingly, I consider an international tax lawyer to be a lawyer who regularly gives advice on such rules. Whether that lawyer is an expert in another country’s tax laws is not relevant. Just as with international trade lawyers, who don't have a detailed understanding of the trade rules of each country, international tax lawyers don't know the tax rules of each country back to front. However, international tax rules, as with trade laws, are sufficiently similar that, for example, a US tax lawyer with expertise in international tax (a US international tax lawyer) will know what the issues will be and know when such issues are sufficiently complex such that questions need to be asked from appropriate professionals in other jurisdictions. That is, ultimately, all one can ask.

Further, given that the client [the one who sent me the China-US tax treaty article] was referring to an article on the US-China DTA, I can't see how the interaction between two sets of accounting principles was the relevant the issue. Before we worry about accounting principles, which assist in determining the requisite amount of taxable income, the first issue is to establish liability. In terms of Chinese investing in the US, the first point to start is to look at both the domestic tax laws of the respective countries to determine how they treat the income and then to look to the DTA to see whether it alters the standard position. In many cases, the DTA will prevent one country from exercising its taxing rights over certain income. Domestic tax specialists have little experience in interpreting international tax provisions of domestic tax laws and DTAs hence why Dan was right to discuss tax lawyers with experience in international tax issues. Once it is established that there is liability for taxation in the US for a Chinese company, then the issue of the interaction between accounting principles will become relevant.

We have gotten where we are right now through a series of win-win cooperative relationships with a number of companies and people and I don't see why we can't do something similar in China. Maybe this sort of thing is not yet typical in China, but once they see our product and realize how they can participate in it in a win-win sort of relationship, I think they will be interested.

-- Accompany the factory at the beginning of the relationship, to explain clearly what is acceptable. -- Keep monitoring production quality, make sure to get written and signed records, and do not lower your standards for any reason (if possible). -- Dump regularly the worst factories: those that can’t (or won’t) be reliable enough, and those that are growing too fast. -- Give regular business to the best factories and walk your talk, as mentioned above. Make sure you are not seen as a bad customer. --Tolerate that the best factories get a reasonable premium on their prices: you will make it back easily on lower costs (better quality, less delays, faster responses, etc. all reduce your costs and help you please your customers). -- Don’t switch suppliers for a few pennies, but keep them in competition with at least another factory to avoid unreasonable quotations.

While attempting to appease a long list of utterly unappeasable foes—Iran, North Korea, Hamas, Hezbollah, and even Hugo Chávez—today the U.S. treats China, perhaps our most crucial economic partner, as an adversary because it defies us on global warming, dollar devaluation, and Internet policy.

Meanwhile, Secretary of State Hillary Clinton and the president's friends at Google are hectoring China on Internet policy. Although commanding twice as many Internet users as we do, China originates fewer viruses and scams than does the U.S. and with Taiwan produces comparable amounts of Internet gear. As an authoritarian regime, it obviously will not be amenable to an open and anonymous net regime. Protecting information on the Internet is a responsibility of U.S. corporations and their security tools, not the State Department.

A foreign policy of serious people at a time of crisis will recognize that the current Chinese regime is the best we can expect from that country. The Chinese revitalization of Asian capitalism remains the most important positive event in the world in the last 30 years. Not only did it release a billion people from penury and oppression but it transformed China from a communist enemy of the U.S. into a now indispensable capitalist partner. It is ironic that liberals who once welcomed appeasement of the monstrous regime of Mao Zedong now become openly bellicose at various murky incidents of Internet hacking. Nonetheless, with millions of Islamists on its borders and within them, China is nearly as threatened by radical Islam as we are. China has a huge stake in the global capitalist economy that Islamic terrorists aim to overthrow. And China, like the U.S., is so heavily dependent on Taiwanese manufacturing skills and so intertwined with Taiwan's industry that China's military threat to the island is mostly theater.

A Beijing-based company will soon open a Chinese-style mega shopping mall in the most unlikely of places: Milwaukee, Wisconsin. "The cost of doing business there is very low," said Wu Li, president of Toward Group. "The people are friendly, the environment is peaceful and the pace of living is slow. It is a good place for Chinese enterprises to go abroad." Loaded with cash, credit and encouraged by the government to expand overseas, Chinese companies have been investing in property abroad at an increasingly rapid clip. While most are purchasing properties in traditional commercials centers like New York, few have ventured into the Rust Belt -- until now.

The Japanese also famously purchased U.S. commercial properties -- such as New York's Rockefeller Center and Pebble Beach Golf Course in California -- while its economy was on the rise. "Did any of them turn out well?" said Steven Dickinson, a China-based lawyer with Harris & Moure, an international business firm. "No, they turned out badly. Because the Japanese were idiots? No. It just didn't work out. What does that suggest for the Chinese? Well, I won't say, but that has been the history." Dickinson advised Japanese firms that bought a spate of American "trophy malls" in the late 1980's, a period when a strong yen and growing global influence encouraged the country to invest overseas, particularly in an overvalued U.S. commercial property market. "You go into a place like Milwaukee, and you have a country that has no clue what people in Milwaukee want in a mall and when they buy it the first thing they do is change it to run like a Japanese mall or a Korean mall or a Chinese mall," Dickinson said. "Well nobody wants to go and then they bail." A Chinese mall is exactly what Wu [Toward's President] envisions for Milwaukee.

Two potential candidates include Beijing Wu Yu Tai Tea Company Ltd. and Tong Sheng He, a shoe shop. The goal, he [Wu] says, is to help Chinese brands boost their image in America while enabling American businesses to connect directly with Chinese wholesalers without having to go through a middleman. "It is only a matter of time for the U.S. to recognize Chinese products are high quality," he said. "[The mall] will represent the highest levels of Chinese manufacturing." AmAsia will also feature exhibitions to "show off the rich culture of China." "One month there will be Chinese painting, another month Peking Opera or traditional dance from Yunnan province," Wu said. "Our hope is that it will become a tourist destination for local and regional communities."

But will Milwaukeeans want to go there? "Most things made in China, if it is edible or made out of material, people won't buy around here anymore," said Joe Fall, owner of Culver's, a burger joint a few miles away from the shopping center. "All of the scandals that have erupted through lax manufacturing ... when I hear made in China, I think twice," he said

The Mintz Group is an investigative services firm that gathers hidden business facts all over the world for corporations, law firms, financial institutions and non-profits. We connect the dots by finding the critical facts our clients need before relationships. Before relationships, including business deals and executive hires, we conduct due diligence investigations into the backgrounds and reputations of companies and their executives. During disputes we find admissible evidence that law firms and in-house counsel need to prevail, whether in court or at the negotiating table. After frauds, we connect the dots by finding out what happened, how it happened and who did it.

1. DON’T say have fun. The phrase “having fun” or any other derivative of it, “have fun” “had fun”, does not translate into Chinese. Culturally, it’s simply not a concept that resonates with Chinese people. It’s not that Chinese people don’t enjoy a good time, it’s that they don’t value fun as much as an English speaker might. 2. DO speak in complete sentences. Grammar structures vary between the two languages therefore sometimes you have to flip flop a sentence around in order for it to make sense. Consider the sentence: Smoking in the elevator is prohibited. In Chinese, I’d have to translate “prohibit smoking in the elevator” for it to make sense. Go ahead and say the complete sentence so the translator can have the freedom to rearrange the structure before delivering the message. 3. DON’T use names, places, or any other words that require capitalization unless you can be certain they are something/place that is well known across both cultures. I know the Chinese name for Abraham Lincoln, but not Boise, Idaho. 4. DO stay within normal parameters of the English grammar and avoid slang. Play on words is fun when you’re speaking to other native speakers, but they do not translate well. For example: “The biggest mistake of my life was hooking up with that girl.” I can translate the meaning, that you had a relationship with this girl, but I won’t be able to convey whatever sentiment behind the usage of the phrase “hooking up” very well. 6. DON’T use sarcasm. Sarcastic humor is largely a western phenomenon. Chinese people for the most part can’t appreciate sarcasm and will take what you say literally which may easily result in offense. 7. Do tell light hearted anecdotes of human experiences which transcends both cultures. Tell stories that you know Chinese people can relate to. For example, everyone can relate to silly antics of toddlers. This will lessen the pain of listening to a translation and immediately build a connection. 8. DON’T use idioms. There are a handful of idioms that are in both English and Chinese, but unless you are extremely well read in both languages, you’re not going to know which ones they are. Instead, try conveying the meaning of the idiom you’d like to use. It may be less interesting, but what’s the point of being interesting if the audience won’t even understand the meaning? 9. DO pay attention to basic respect and civility in your words. It is very hard for me to translate for somebody who is saying something degrading about Chinese culture. The things in Chinese culture that irritates most likely will not irritate the Chinese, so a message about the discomfort of crowds will not translate well, and is simply disrespectful. 10. DON’T use affectionate words too much. Chinese people express love much differently than Westerners. I can only translate “I love you, God loves you, I love my Mom” so many times into Chinese before it starts making me squirm before my Chinese audience.

As an international business attorney, a focal point of my practice involves advising clients how to best handle cross-border disputes. The most effective mechanism by far in resolving international dispute is international arbitration. Why? International arbitration levels the playing field by taking away the home court advantage of parties on either side of a transaction. But the most attractive aspect of arbitration is that the awards issued by an international arbitration tribunal will receive worldwide recognition by countries that are members of one of the international conventions on the enforcement of tribunal awards.

1. Be Unambiguous. Unequivocally state that any dispute will be resolved through arbitration e.g. “Any dispute or difference arising out of or relating to this agreement shall be finally resolved by arbitration …” 2. Be Clear. Define whether arbitration is to be preceded by negotiation or mediation and designate a time frame e.g. “If no agreement has been reached within __ days of the delivery of written notice of the existence of a dispute, either party may serve a request for arbitration …”. 3. Be Specific. Specify the administering institution and the rules to be applied e.g. “The arbitration shall be administered by the International Center for Dispute Resolution in accordance with its International Arbitration Rules. 4. Be Careful. Carefully select the site of the arbitration taking into consideration the quality of its arbitration jurisprudence and the respect of its courts for the arbitral process. e.g. China, no. Hong Kong, yes. 5. Be Meticulous. Meticulously set forth the number of arbitrators on the panel and how they will be selected. Choose an arbitrator who demonstrates communicative proficiency, a firm appreciation of the rules of evidence and an acknowledged expertise in the industry in which the dispute arose or about the issues in dispute. 6. Be Heard. Designate the language of the proceeding. It is unsettling how many times parties overlook this provision and are forced to rely on a foreign translator to communicate every word of the proceeding. 7. Be Final. In order to prevent further review and appeals of an arbitral award once it is rendered, you must include a statement in the arbitration agreement that clearly states that the award is final e.g. “The arbitral award is binding, final, not subject to review, and not subject to appeal by the courts in any jurisdiction." This provision is particularly essential in jurisdictions where the laws allow parties to appeal an award issued in that country.