China Tax Treaties with other countries
China has signed Double Taxation Agreements (DTA) with about 107 countries.
Tax treaties currently in force in China generally follow OECD Model Convention.
Treaty benefit application should be made between 7-10 working days.
Please see China Tax Treaties with Taiwan
Send an Email to: xmn4ww@evershinecpa.com
or
Contact us in working hours (China Time Zone GMT+8)
Manager Bing Weng, UK Graduate School Alumni and a well-English speaker
Mobile: +86-180-5008-2372
Tel No.: +86-592-573-4710
Wechat ID: yaoren01522
We set up below judgment criteria on Treaty application:
Scenario:
If you are not a China legal resident, and if your resident country has DTA with China, and if you are without PE (Permanent Establishment), please go to Section A.
If you are not a China legal resident, and if your resident country has DTA with China, and if you are with PE (Permanent Establishment) please go to Section B.
If you are not a China legal resident, and if your resident country has no DTA with China, please go to Section C.
Section A:
Scenario: If you are not a China legal resident, and if your resident country has DTA with China, and if you are without PE (Permanent Establishment), it will be redeemed as “non-China Domestic Sourced Income”.
That means China will levy zero-tax.
However, you still need to send the zero-tax application to China Tax Bureau for being approved.
Below, we will let you understand through Q&A.
DTA-Q-10:
中國的哪些外國法律居民公司可以依DTA申請沒有常設機構(PE)下零稅率?
In China, which foreign legal resident company can apply for a zero tax rate without PE under DTA?
DTA-A-10:
China has signed DTA with about 107 countries:
| Albania | Egypt | Lithuania | Singapore |
| Algeria | Estonia | Luxembourg | Slovak Republic |
| Armenia | Ethiopia | Macao | Slovenia |
| Argentina* | Finland | Macedonia | South Africa |
| Australia | France | Malaysia | Spain |
| Austria | Gabon* | Malta | Sri Lanka |
| Azerbaijan | Georgia | Mauritius | Sudan |
| Bahrain, | Germany | Mexico | Sweden |
| Bangladesh, | Greece | Moldova | Switzerland |
| Barbados, | Hong Kong | Mongolia | Syria |
| Belarus, | Hungary | Morocco | Taiwan |
| Belgium | Iceland | Nepal | Tajikistan |
| Bosnia | India | Netherlands | Thailand |
| Botswana | Indonesia | New Zealand | Trinidad and Tobago |
| Brazil | Iran | Nigeria | Tunisia |
| Brunei | Ireland | Norway | Turkey |
| Bulgaria | Israel | Oman | Turkmenistan |
| Cambodia | Italy | Pakistan | Uganda* |
| Canada | Jamaica | Papua New Guinea | Ukraine |
| Chile | Japan | Philippines | United Arab Emirates |
| Congo* | Kazakhstan | Poland | United Kingdom |
| Croatia | Kenya* | Portugal | United States |
| Cuba | South Korea | Qatar | Uzbekistan |
| Cyprus | Kuwait | Romania | Venezuela |
| Czech Republic | Kyrgyzstan | Russia | Vietnam |
| Denmark | Laos | Saudi Arabia | Yugoslavia |
| Ecuador | Latvia | Seychelles | Zambia |
| Herzegovina | Zimbabwe |
*Not yet effective.
DTA-Q-20:
為什麼在DTA下該國外資沒有常設機構 (PE)之外資所得，可以享受零稅率?
Why does the Country’s foreign capital without a permanent establishment (PE) in China, under the DTA enjoy zero tax rate?
DTA-A-20:
It follows Article 5 and Articles 7 in the DTA Treaty. The article defines if the foreign entity has PE in China. Article 7 regulates if no PE, non-China domestic sourced income will not be levied tax in China.
DTA-Q-30:
哪些情況被視為沒有PE，外資在該國設立子公司會被視為外資的在該國的子公司嗎? Under what circumstances are deemed to have no PE, and will the establishment of a foreign-funded subsidiary in China be regarded as a foreign-funded subsidiary in China?
DTA-A-30:
According to DTA Article 5 item 7, A Wholly Foreign Owned subsidiary in China will not be treated as PE because it is a separate legal entity.
That means if a China Subsidiary pays a service fee to non-China Parent Company through a service contract signed between a subsidiary and non -China Parent company as an investor, a non-China Parent Company can apply zero tax.
As for if the paid amount is reasonable, it will get involved TP (Transfer Pricing) judgment by China Tax Bureau.
Please see China Transfer Pricing webpage.
DTA-Q-40:
外資在中國設立分公司或辦事處，可否適用沒有PE下的零稅率?
If a foreign company establishes a branch or office in China, can the zero-tax rate without PE be applied?
DTA-A-40:
According to DTA Article 5 item 2, If a foreign company sets up a branch or Office in China, then will be considered as China’s domestic Income.
But According to DTA Article 5 item 4，if an Office is only doing preparatory or auxiliary activity, will apply a zero-tax rate.
DTA-Q-50:
中國依DTA沒有PE下零稅率申請的程序為何?
What is the procedure for China to apply for a zero tax rate under DTA without PE?
DTA-A-50:
- Non-resident taxpayer meets the requirements for enjoying treaty benefits, he should submit the “Report Form for Non-resident Taxpayers Enjoying Treaty Benefits” to a withholding agent and collect and retain materials for future reference.
- Retained materials include:
- Tax Residency Certificate (TRC) from the country in which the non-resident is the resident.
- Contracts, agreements, BOD or shareholders meeting resolutions, payment vouchers, and other proof of ownership related to the acquisition of relevant income.
- A No PE declaration letter (prescribed format), to prove the Foreign Company does not have a “PE” in China.
Section Ｂ:
Scenario: If you are not a China legal resident, and if your resident country has DTA with China, and if you are with PE (Permanent Establishment), your income will be considered as China domestic sourced income.
As for levying Tax Rate, please be aware:
if China Tax rate > DTA Rate, adopt DTA Rate; if China Tax rate < DTA Rate, adopt China Rate
Below, we will let you understand through Q&A.
DTA-Q-60:
被視為中國來源所得的判定要素?
What are the factors that are deemed to be the country’s domestic source income?
DTA-A-60:
The following are China-source income, regardless of whether the payments are made within China or not.
- Income derived from employment or contracted labor services performed within China.
- Rental income in relation to property used within China.
- Income derived from the transfer of real property located within China.
- Income derived from grants of various franchises to be used within China.
- Interest and dividend income are paid by companies within China.
- Business income is derived from business activities performed within China.
DTA-Q-70:
DTA第五條及第七條優先於中國來源所得的判定要素?
Do Article 5 and Article 7 in the DTA take precedence over the China determination factors on China domestic sourced income?
DTA-A-70:
When DTA is applied, in the event of a different PE definition between China domestic tax laws and Article 5 in the DTA, the definition under the DTA shall prevail over the domestic regulations.
When DTA is applied, if a foreign company is defined as without PE (Permanent Establishment) in China, then will be considered non-China domestic sourced income, in the event business profit is relevant to this issue, the clause in Article 7 in the DTA zero-rate tax can be applied accordingly.
In this scenario, please see section A.
DTA-Q-80:
當非中國稅務居民有中國來源所得，不考慮DTA 情況下，中國稅法扣繳稅率多少?
When non-tax residents of China have China domestic sourced income, what is the withholding tax rate according to China tax regulations excluding DTA?
DTA-A-80:
The withholding tax rates under domestic law are:
Business Profits – 25%
Dividend – 10%
Interest (General loan) – 10%
Royalties fee – 10%
Technical services – 25% (on a deemed-profit basis range from 15%-50%)
Professional services – 20% (RMB 20,000), 30% (RMB 20,001 to 50,000), 40% (over RMB 50,000)
DTA-Q-90:
If DTA Tax Rate is higher than China tax rate, apply which tax rate?
DTA-A-90
As for levying Tax Rate, please be aware:
if China Tax rate > DTA Rate, adopt DTA Rate; if China Tax rate < DTA Rate, adopt China Rate.
DTA-Q-A0:
當非中國稅務居民有中國來源所得，依DTA優惠稅率申請的程序為何?
When non-tax residents of China have China’s domestic sourced income, what is China’s application procedure based on the DTA preferential tax rate?
DTA-A-A0:
- Non-resident taxpayer meets the requirements for enjoying treaty benefits, he should submit the “Report Form for Non-resident Taxpayers Enjoying Treaty Benefits” to a withholding agent and collect and retain materials for future reference.
- Retained materials include:
- Tax Residency Certificate (TRC) from the country in which the non-resident is the resident.
- Contracts, agreements, BOD or shareholders meeting resolutions, payment vouchers, and other proof of ownership related to the acquisition of relevant income.
Section C:
DTA-Q-B0:
As an investor, if your country has not signed DTA with China, what kinds of tax rates when you have China relevant income?
DTA-A-Q0:
If you are not a China legal resident, and if your resident country has no DTA with China,
Whatever you are with PE or without PE, all kinds of income will be levied according to China domestic sourced income.
Besides, it will be levied by China Tax Rates.
The withholding tax rates under domestic law are:
Business Profits – 25%
Dividend – 10%
Interest (General loan) – 10%
Royalties fee – 10%
Technical services – 25% (on a deemed-profit basis range from 15%-50%)
Professional services – 20% (RMB 20,000), 30% (RMB 20,001 to 50,000), 40% (over RMB 50,000)
Contact Us
Send an Email to: xmn4ww@evershinecpa.com
or
Contact us during working hours (China Time Zone GMT+8)
Manager Bing Weng, UK Graduate School Alumni and a well-English speaker
Mobile: +86-180-5008-2372
Tel No.: +86-592-573-4710
Wechat ID: yaoren01522
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