Withholding Tax and Double Tax Treaty in China

Withholding Tax in China
Updated Regulations

Relationship between Withholding Tax and Double Tax Treaty

Withholding tax & double tax treaty
Purpose of double tax treaty:
Avoid double taxation in home and foreign countries;
Prevent income tax evasion.

*The parent company needs to control more than 25% shares of the subsidiary.
** There some special requirement on Royalty

Double tax treaty will prevail over Chinese tax regulations.
Must make application to receive tax treatment under double tax treaty.

The six-month rule.
Income tax will be exempted if the loan is provided by government bodies.
Double tax treaty applies only to income taxes.

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by NCO China on Jan 19, 2011