Corporate tax in China

Summary

Corporate Income Tax Rate (%) 25
Capital Gains Tax Rate (%) 25 (a)
Branch Tax Rate (%) 25
Withholding Tax (%) (b)
Dividends 10
Interest 10
Royalties from Patents, Know-how, etc. 10
Branch Remittance Tax 0
Net Operating Losses (Years)
Carryback 0
Carryforward 5
    a) Capital gains derived by foreign enterprises from disposals of interests in foreign investment enterprises are subject to a final withholding tax of 10% instead of income tax. This rate may be reduced by applicable tax treaties.
    b) The statutory rate is 20%, which is reduced to 10% by the Enterprise Income Tax Law Implementation Regulations.

Taxes on corporate income and gains

Corporate income tax. On 16 March 2007, China enacted the new China Enterprise Income Tax Law (the New Law), which took effect on 1 January 2008. Before the enactment of the New Law, two separate tax laws, one for domestic enterprises and the other for foreign-owned business operations, including foreign invest­ment enterprises (FIEs) and foreign enterprises, were in effect for more than 15 years. The New Law applies to all business opera­tions regardless of their ownership, except for sole proprietor­ships and partnerships to which the individual income tax law applies. FIEs that were in corporated (that is, obtained their busi­ness license) before 16 March 2007 are entitled to a five-year transitional period beginning 1 January 2008. During this transi­tional period, entitlement to tax incentives under the prior tax law can be grandfathered.

Corporate residents of China are taxed on their worldwide in – come, including income from business operations, investment and other sources. A foreign tax credit is allowed for income taxes paid in other countries. This credit is capped at the China income tax payable on the same income calculated under the New Law.

In general, a company is regarded as tax resident in China if it is incorporated in China or effectively managed in China. “Effective management” is defined as overall management and control over the production, business, personnel, accounting, and assets of a company.

Nonresident companies are taxed on China-source income only. However, if the nonresident company has an establishment in China, non-China source income effectively connected with the China establishment is also taxed.

The term “establishment” is broadly defined to include the fol­lowing:

  • A place of management
  • A branch
  • An office
  • A factory
  • A workshop
  • A mine or an oil and gas well or any other place of extraction of natural resources
  • A building site
  • A construction, assembly, installation or exploration project
  • A place for the provision of labor services
  • Business agents

Rates of corporate tax. The statutory rate of enterprise income tax is 25%, effective from 1 January 2008. The withholding tax rate on passive income (including dividends, interest, royalties and capital gains) of non-China tax residents is 10%.

A reduced tax rate applies to the following enterprises, subject to the satisfaction of certain conditions:

  • 20% rate and 50% reduction of annual taxable income for qualifying small and less-profitable enterprises, provided that they have annual taxable income not exceeding CNY100,000 (for the period of 1 January 2014 through 31 December 2016)
  • 15% for High and New Technology Enterprises
  • 15% for Technologically Advanced Service Companies in select cities (from 2009 to 2018)
  • 15% for qualifying integrated circuit production enterprises
  • 10% for key software enterprises, key animation and comics enterprises and integrated circuit designing enterprises
  • 15% for western region enterprises and enterprises in Ganzhou in Jiangxi Province engaging in and deriving 70% of their total income from certain encouraged industries as stipulated in a new western region catalog (from 1 October 2014 to 2020)
  • 15% for qualifying enterprises that are registered in the Guang­dong Hengqin New Area (Hengqin), the Fujian Pingtan Com­prehensive Pilot Zone (Pingtan) or the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (Qianhai) (for further details, see below)

Tax incentives. A five-year tax holiday (exemption for the first two years and 50% reduction for the next three years) is granted to newly established and qualified High and New Technology Enterprises that are incorporated after 1 January 2008 and that are located in the Shanghai Pudong New Area or one of the five Special Economic Zones (SEZs), which are Hainan Province, Shantou, Shenzhen and Zhuhai in Guangdong Province, and Xiamen in Fujian Province. A five-year tax holiday also applies to qualifying software enterprises, animation and comics enterpris­es, in tegrated circuit designing enterprises and integrated circuit production enterprises. For qualified integrated circuit production enterprises, the tax holiday can be extended to 10 years (exemp­tion for the first five years and 50% reduction for the next five years) under certain conditions. To enjoy the tax holidays describ­ed in the two preceding sentences, the qualifying software enter­prises, animation and comics enterprises, and integrated circuit enterprises must make profits by the end of 2017. For certain qualified integrated circuit enterprises making profits after 2017, the five-year tax holiday can apply from 1 January 2017.

During the period from 2010 to 2020, certain specified industries in selected areas of Xinjiang, such as agriculture and forestry, irrigation, coal production and related industries, electricity, new energy, oil and gas, production of certain metals and related indus­tries, petrochemical, pharmaceutical, transportation, modern lo­gistics, environmental protection and resources conservation, can also benefit from a five-year tax holiday based on the statutory rate of 25%. A five-year exemption applies to qualifying enter­prises located in the Kashi and Huoerguosi Special Economic Development Zones of Xinjiang.

During the period of 1 January 2014 through 31 December 2020, enterprises that are established in Hengqin, Pingtan or Qianhai (the covered areas) and that engage in encouraged industries can be subject to a reduced corporate income tax rate of 15%. Enter­prises engaging in encouraged industries are enterprises that sat­isfy the following conditions:

  • They have their core businesses in the covered area.
  • Their businesses relate to industries and projects stipulated in preferential corporate income tax catalogs.
  • Their income derived from such core businesses account for more than 70% of their total income.

If enterprises have establishments both inside and outside the covered areas, only the income attributable to establishments in­side the covered areas is eligible for the preferential corporate income tax rate of 15%. In determining whether enterprises meet the above-mentioned conditions for preferential corporate in­come tax rates, only their establishments inside the covered areas are counted; their establishments outside the covered areas are not considered.

Other tax incentives are available to enterprises engaged in indus­tries, projects, or activities encouraged by national policies. The incentives granted to these encouraged industries, projects and activities typically include the following:

  • Income from agriculture, forestry, animal husbandry and fish­ery projects is eligible for a full tax exemption or 50% reduc­tion of tax, depending on the type of projects.
  • Income from infrastructure projects is eligible for a full tax ex­emption for the first three years and a 50% reduction of tax for the next three years beginning with the first income-generating year. If certain requirements are met, enterprises that invest in a qualifying public infrastructure project and are approved to per­form the project in phases are allowed to calculate the corporate income tax based on the taxable income of each phase and enjoy the tax holiday for different phases of the project separately.
  • Income from environmental protection or water or energy con­servation projects is eligible for a full tax exemption for the first three years and 50% reduction of tax for the following three years.
  • Income from technology transfer is eligible for a tax exemption for the first CNY5 million and a 50% reduction for the amount over that threshold.
  • 150% of qualified costs incurred for the research and develop­ment of new technologies and products can be tax deductible.
  • 200% of qualified wages for disabled people can be tax deduct­ible.
  • Venture capital companies investing in the equity of unlisted small or medium-sized High and New Technology Companies can use 70% of its investment cost to offset the taxable income for the year in which the holding period reaches two years.
  • Income derived from recycling business is eligible for a 10% reduction in calculating taxable income.
  • 10% of the cost incurred in purchasing environmental protec­tion, water and energy saving or production safety equipment can be credited against income tax payable for the year of the purchase.

Capital gains and losses. In general, capital gains and losses are treated in the same manner as other taxable income and losses, and are taxed at the normal income tax rate of 25%. However, China-source capital gains derived by nonresident enterprises, such as gains from the disposal of an FIE, are subject to a 10% withholding tax. In addition to income tax, real property gains tax is imposed on gains derived from transfers of real properties (see Section D).

Administration. The tax year in China is the calendar year.

An annual corporate income tax return, together with audited financial statements issued by a certified public accountant reg­istered in China and a set of annual reporting forms for related-party transactions, is due within five months after the end of the tax year. Enterprises must settle all outstanding tax liabilities within the same period.

In addition, enterprises must also file quarterly provisional corpo­rate income tax returns within 15 days after the end of each quar­ter, together with payments of provisional tax based on actual profits. If an enterprise has difficulty in filing a provisional tax return based on the actual quarterly profits, it may pay tax based on estimated profits. The estimated profits are normally comput­ed by reference to one-quarter of the enterprise’s actual taxable profits for the preceding year. Otherwise, they are computed under other methods approved by the tax bureau.

Late filing or late payment triggers a surcharge of 0.05% per day and a discretionary penalty of 50% to 500% of the unpaid tax liabilities. For adjustments made under anti-avoidance provisions, such as adjustments with respect to transfer pricing, thin capital­ization and controlled-foreign corporations (see Section E), an interest charge is imposed on a daily basis, beginning on 1 June of the year following the tax year to which the tax underpayment is related and ending on the day the tax underpayment is settled. This charge is based on the renminbi yuan (CNY) loan base rate published by the People’s Bank of China (PBOC) plus 5%. If related-party transaction annual reporting forms and other pre­scribed documentation are provided or if relevant documents, such as contemporaneous documentation, can be provided in accordance with the new China State Administration of Taxation (SAT) Announcement [2014] No. 54 during a monitoring and administration period of special tax adjustments (the five-year period beginning with the year following the year in which such special adjustments are made), the interest charge may be re­duced to an amount based only on the CNY loan-based rate pub­lished by the PBOC.

Effective from 1 January 2015, the administrative approval requirements for tax incentives are removed and replaced by a record-filing mechanism.

Dividends. Profits of FIEs distributed as dividends are subject to withholding tax at a rate of 10% (this rate may be reduced under a tax treaty or arrangement) when remitted from China. The in­vestor must obtain preapproval from the tax authorities respon­sible for administering the relevant treaty reliefs. Dividends paid between qualified resident companies may be exempted. For this purpose, resident companies are qualified if one tax resident has made a direct investment in the other tax resident. Dividends at­tributable to publicly traded shares are also treated as tax-exempt investment income if the holding period of the shares is longer than 12 months.

Foreign tax relief. A tax credit is allowed for foreign income taxes paid, or indirectly borne, by China resident enterprises, but the credit is generally limited to the amount of China corporate in­come tax payable on the foreign-source portion of an enterprise’s world wide taxable income. A nonresident enterprise with an es­tablishment or place of business (generally referred to as a perma­nent establishment [PE]) in China that derives foreign-source in­come effectively connected to the PE can also claim a tax credit for income taxes paid in foreign jurisdictions, but the credit is limit ed to China corporate income tax payable on such income. Excess foreign tax credits may be carried forward for a period of five years. The tax credit limit mentioned above must be calcu­lated on a country-by-country basis with an exception for Chinese oil companies, which are allowed to select either the country-by-country method or the general deduction method. Under the general deduction method, the tax credit limit is calculated based on the taxable income derived from all foreign countries. This method applies only to a specific class of worldwide income, which is foreign-source income relating to the exploration of crude oil and relevant technical services (upstream-related activi­ties). Under the country-by-country method, the tax credit limit for each country is calculated by apportioning the total income tax on worldwide taxable income through the application of an apportionment ratio of the taxable income sourced in the relevant country to worldwide taxable income.

Determination of trading income

General. Taxable income is defined as total revenue less the fol­lowing:

  • Non-taxable income
  • Tax-exempt income
  • Allowable deductions
  • Tax losses

No major differences exist between tax and accounting methods for income computation purposes. Dividends, bonuses, interest, royalties, rent and other income are included in taxable income.

In general, all necessary and reasonable expenses incurred in car­rying on a business are deductible for tax purposes. However, specified limits apply to the deductibility of advertisement ex­penses, entertainment expenses, union fees, employee welfare costs, employee education expenses, commissions and handling fees, supplementary pensions and supplementary medical insur­ance. Charitable donations of up to 12% of the total annual profit are deductible.

Management fees paid between enterprises, rental and royalty fees paid between business units of an enterprise, and interest paid between business units of nonbank enterprises are not deductible. Interest paid on related-party borrowing that does not meet debt-to-equity ratio rules (see Section E) may not be deductible. Other nondeductible expenses include the following:

  • Sponsorship expenses
  • Dividends and returns on equity investments
  • Income tax payments including penalties and surcharges
  • Donations not fulfilling prescribed requirements
  • Provisions not yet approved
  • Other expenses not related to production or business operations

For an establishment in China of an enterprise that is not a resi­dent for tax purposes, reasonable expenses allocated from the overseas head office are deductible if these expenses are incurred by the head office for the production or business operations of such establishment and are supported by proper documents issued by the head office.

Inventories. For tax purposes, the cost of inventories is determin­ed in accordance with the following rules:

  • The cost of inventories that are paid for in cash is the sum of the purchase price and the related taxes and charges actually paid.
  • The cost of inventories that are not paid for in cash is determin­ed based on the fair market value of the consideration and the related taxes and charges actually paid.
  • The cost of agricultural products generated from biological assets (for example, animals or woods) is determined based on the necessary raw material, labor and relevant overhead expen­diture actually incurred.

Cost may be determined on a first-in, first-out (FIFO), weighted average, or specific identification basis. The last-in, first-out (LIFO) basis is not acceptable for tax purposes. The method cho­sen must be applied consistently.

Provisions. Provisions that have not been approved by the tax authorities are generally not deductible. These include various provisions and allowances for asset impairment and risk reserves.

Tax depreciation. Depreciation of tangible assets is generally com­puted using the straight-line method. The following are minimum useful lives for various assets.

 

Asset Years
Buildings and structures 20
Aircraft, trains, vessels, machinery, equipment and other production plants 10
Applioances, tools, furniture and other assets related to production and business operations 5
Means of transport other than aircraft, trains and vessels 4
Electronic equipment 3
Productive biological assets in the nature of trees 10
Productive biological assets in the nature of livestock 3
Acquired software (subject to approval) 2

Accelerated depreciation is allowed with respect to certain fixed assets subject to rapid technological obsolescence and fixed assets exposed to constant shock and erosion. A qualified company can follow either the general depreciation rule or the accelerated de­preciation rule.

Effective from 1 January 2014, accelerated depreciation or a shortened depreciation life is available with respect to specific industries, research and development (R&D) projects, and fixed assets with a unit value not exceeding CNY5,000. Effective from 1 January 2015, accelerated depreciation or a shortened depre­ciation life applies to four newly added specific industries.

Intangible assets, including technical know-how, patents and trademarks, are amortized over the contractual term or over a period of no less than 10 years if a time period is not specified.

Self-developed goodwill cannot be amortized or deducted. Acquired goodwill is deductible only if the entire business is transferred or liquidated.

Relief for losses. Tax losses may be carried forward for up to five years. Carrybacks are not allowed.

Groups of companies. In general, consolidated returns of enter­prises are not allowed, and all companies must file separate tax returns, unless specifically approved by government authorities. Tax resident enterprises in China must adopt combined filing for units (branches and establishments without legal person status) op erating in different areas of China. On approval by the relevant tax authorities, nonresident enterprises that have two or more es tablishments in China may select a main establishment to file a combined tax return.

Other significant taxes

The following table summarizes other significant taxes.

 

Nature of tax Rate (%)
Value-added tax (VAT)
Standard rate 17
Rate on specified products (primarily
basic necessities), agricultural products and utility services
13
VAT pilot arrangements; implemented nationwide,
effective from 1 August 2013; certain services
previously subject to Business Tax are now
subject to VAT under the pilot arrangements
(the nationwide VAT pilot reform will be effective
from 1 May 2016 with expanded scope to cover
the construction industry, real estate industry,
finance industry and lifestyle services industry)
Leasing of movable properties 17
Transportation services, railway transportation,
postal services, courier services (transportation
Parts) and basic telecommunication
11
Certain modern services (including R&D and
technology services, information technology
services, cultural and creative services, logistics
auxiliary services, authentication and consulting
services and radio, film and television services),
courier services (collection and delivery parts)
And value-added telecommunication
6
Other reduced rates (applicable to small
businesses or simplified VAT calculation method)
3 / 4 / 6
International transportation and space
Transportation services VAT rate
0
Postal and collection and delivery services
Provided for exportation of goods
Exempt
(VAT previously paid on the purchase of raw
materials, parts and taxable services that are
used in the production of export goods or in
the provision of certain export services is
refundable; applicable refund rates depend on
types of goods or services that are exported.)
Consumption tax (CT); on the production and
importation of certain luxury items, such as
cigarettes, gasoline, alcoholic beverages,
jewelry, cosmetics, motor vehicles, motor
vehicle tires, golf balls and equipment, luxury watches and yachts
Various
Business tax (BT); on various types of services
(except for certain modern services) and
income not derived from production, including
construction, finance, insurance, sporting
events, entertainment establishments, hotels
and restaurants, rentals, tourism and the transfer
of immovable properties; transfers of equity
Interests can be exempt from BT
General rates 3 to 5
Finance and insurance businesses 5
Entertainment establishments 5 to 20
Transfers of immovable properties 5
Real property gains tax; imposed on real property transfers (after various deductions) 30 to 60
City construction tax; based on indirect taxes
(including VAT, CT and BT) actually paid
Taxpayers located in urban areas 7
Taxpayers located in county or township areas 3
Taxpayers located in rural areas 1
Education surcharge (ES); based on indirect
Taxes (including VAT, CT and BT) actually paid
3
Local education surcharge (LES); based on
indirect taxes (including VAT, CT and BT)
Actually paid
2

Miscellaneous matters

Foreign-exchange controls. In general, the Chinese government permits the free convertibility of current account items of China incorporated enterprises. Current account items are defined as transactions occurring daily that involve international receipts and payments. Current account foreign-exchange receipts and payments include trading receipts and payments, service receipts and payments, unilateral transfers and dividends paid from after-tax profits.

Recently, China has been relaxing its foreign-exchange controls in phases by permitting settlement in renminbi yuans (CNY) for cross-border trading transactions, including cross-border trades in commodities, services and other current account items, on a nationwide basis and then extending the CNY settlement to both inbound and outbound investments. Remittances of dividends to foreign investors and other items including income derived from share transfers, capital reductions, liquidations and early with­drawals of investments may be settled in renminbi yuans.

Remittances of dividends and profits. Remittances of after-tax profits or dividends to foreign investors in FIEs must be supported by written resolutions of the board of directors, and may not be made until a tax clearance is issued by the tax authorities.

Remittances of interest and principal. Interest payments on for­eign loans are considered current account items. In general, after performing a tax-record filing with the tax authorities, these pay­ments may be made through the enterprise’s special foreign-exchange bank account or through conversion at designated foreign-exchange banks.

Since 13 May 2013, enterprises are not required to submit any formal application to the State Administration for Foreign Ex­change for the approval of principal repayments. In general, the enterprise may repay the principal from its special foreign-exchange bank account or through conversion at designated foreign-exchange banks.

Remittances of royalties and fees. Instead of applying for tax clearance for settling outbound payments that exceed USD50,000, effective from 1 September 2013, enterprises can file a record with the responsible state tax authorities by submitting copies of contracts (stamped by the official seal) together with registration forms before making payments of royalties and fees, either out of the enterprise’s special foreign-exchange bank account or through currency conversion and payment at a designated foreign- exchange bank. To enjoy treaty benefits with respect to royalties, the inves­tor must obtain pre-approval from the in-charge tax authorities. Proper documentation (such as royalty agree ments, invoices and other tax and business documents) is required for all payments of royalties and fees.

Debt-to-equity requirements. For FIEs in China, the following debt-to-equity ratios are applicable for the purpose of obtaining foreign-currency loans from foreign parties (including foreign related parties) and meeting corporate law requirements:

  • For investment projects of up to USD3 million, the capital con­tribution must equal or exceed 70% of the total investment.
  • For investment projects of over USD3 million but not exceeding USD10 million, the minimum capital requirement is 50% of the total investment, but not less than USD2,100,000.
  • For investment projects of over USD10 million but not exceed­ing USD30 million, the minimum capital requirement is 40% of the total investment, but not less than USD5 million.
  • For investment projects in excess of USD30 million, the mini­mum capital requirement is 33.3% of the total investment, but not less than USD12 million.

The New Law provides for a separate set of debt-to-equity rules for tax purposes. Subject to certain exceptions, in general, the debt-to-equity ratio for financial institutions is 5:1 and the ratio for non­financial institutions is 2:1. The interest expense on funds loaned by a related party that exceed the maximum debt calculated under the debt-to-equity ratio is not deductible for tax purposes.

In addition, the deduction of expenses on a loan from an investor may be limited if the investor has not yet paid up its committed investment capital. The nondeductible interest expense is calcu­lated by apportioning the total interest expenses based on the ratio of the outstanding capital commitment to the total loan balance.

Transfer pricing. China has introduced transfer-pricing rules under which all amounts paid or charged in business transactions be­tween related parties must be determined based on an arm’s-length standard. If the parties fail to meet this requirement, the tax bu­reau may make reasonable adjustments by using one of the fol­lowing methods:

  • Comparable uncontrolled price (CUP)
  • Resale price method (RPM)
  • Cost-plus method (CPM)
  • Transactional net margin method (TNMM)
  • Profit split method (PSM)
  • Other methods that are consistent with the arm’s-length principle

Enterprises must disclose related-party transactions in Related-Party Transaction Forms, which should be submitted to the in-charge tax bureau together with the annual tax return by the due date for the annual return. The following related-party informa­tion must be disclosed in the forms:

  • Related-party relationships
  • Sales and purchases
  • Services
  • Transfers of intangible assets and fixed assets
  • Financing
  • Outbound investments and payments

Enterprises with aggregate related-party transactions exceeding one of the following thresholds must prepare contemporaneous documentation on an entity level unless their transactions are covered by an Advance Pricing Agreement (APA) or unless they meet the “domestic transaction” exemption:

  • CNY200 million of related-party purchase or sale transactions
  • CNY40 million of other kinds of transactions such as intangi­bles, services and interest from financing transactions

The contemporaneous documentation must be completed by 31 May of the year following the year in which the related-party transactions took place and be provided to the tax authorities with in 20 days on request.

The New Law recognizes the concept of cost-sharing arrange­ments for group procurement and group marketing activities. Other types of service cost sharing are not currently entertained by the tax authorities. Entities that have executed a cost-sharing agreement must prepare and preserve contemporaneous docu­mentation regardless of the related-party transactions thresholds.

Taxpayers may apply for APAs in China.

Anti-avoidance rules. The general anti-avoidance rules (GAAR) apply to transactions if the transactions may be considered to have been undertaken or arranged primarily for other than bona fide purposes and if the sole and dominant purpose for a company to enter into such transactions was the obtaining of tax benefits. The Administration Measures of GAAR, which are procedural guide­lines on the application of the GAAR, are effective from 1 Febru­ary 2015.

Controlled foreign corporations. The New Law introduces controll­ed foreign corporation (CFC) rules, which are designed to counter income deferral strategies. A resident company that holds an inter­est in a CFC incorporated in a jurisdiction with an effective tax rate of lower than 12.5% may be taxed on its share of profits of the CFC, regardless of whether a dividend has been declared. A nonresident company is considered to be controlled by a China resi­dent company if either of the following conditions is satisfied:

  • The China resident company directly or indirectly holds 10% or more of the voting shares in the nonresident company and jointly holds an interest of 50% or more in the nonresident company.
  • The China resident company exercises effective control over the nonresident company by means of shares, capital, business oper­ations, purchases and sales or other mechanisms.

China has issued a white list showing jurisdictions that are not subject to CFC rules, including Australia, Canada, France, Ger­many, India, Italy, Japan, New Zealand, Norway, South Africa, the United Kingdom and the United States. The CFC rules do not apply if one of the following conditions is satisfied:

  • The CFC is located in one of the jurisdictions in the white list.
  • The CFC carries out substantial and positive business activities.
  • The CFC reports an annual profit of CNY5 million or less.

Treaty withholding tax rates

The following table provides Chinese withholding tax rates for dividends, interest and royalties paid from Mainland China to residents of various treaty countries and arrangement jurisdictions (Hong Kong and Macau SARs). The rates reflect the lower of the treaty rate and the rate under domestic law. The following table is for general guidance only.

  Dividends

%

Interest

%

Royalties

%

Albania 10 10 10
Algeria 5/10 (a) 7 10
Armenia 5/10 (a) 10 10
Australia 10 10 10
Austria 7/10 (d) 7/10 (h) 6/10 (i)
Azerbaijan 10 10 10
Bahrain (r) 5 10 10
Bangladesh 10 10 10
Barbados 5/10 (a) 10 10
Belarus 10 10 10
Belgium 5/10 (f) 10 7
Brazil 10 10 10
Brunei Darussalam 5 10 10
Bulgaria 10 10 7/10 (k)
Canada 10 10 10
Croatia 5 10 10
Cuba 5/10 (a) 7.5 5
Cyprus 10 10 10
Czechoslovakia (m) 10 10 10
Czech Republic 5/10 (a) 7.5 10
Denmark 5/10 (a) 10 7/10 (j)
Ecuador (s) 5 10 (v) 10
Egypt 8 10 8
Estonia 5/10 (a) 10 10
Ethiopia 5 7 5
Finland 5/10 (a) 10 7/10 (j)
France 5/10 (a) 10 10
Georgia 0/5/10 (e) 10 5
Germany (p) 10 10 7/10 (j)
Greece 5/10 (a) 10 10

 

       
  Dividends

%

Interest

%

Royalties

%

Hong Kong SAR 5/10 (a) 7 5/7 (t)
Hungary 10 10 10
Iceland 5/10 (a) 10 7/10 (j)
India 10 10 10
Indonesia 10 10 10
Ireland 5/10 (c) 10 6/10 (i)
Iran 10 10 10
Israel 10 7/10 (h) 7/10 (j)
Italy 10 10 7/10 (j)
Jamaica 5 7.5 10
Japan 10 10 10
Kazakhstan 10 10 10
Korea (South) 5/10 (a) 10 10
Kuwait 5 5 10
Kyrgyzstan 10 10 10
Laos 5 10 10
Latvia 5/10 (a) 10 7
Lithuania 5/10 (a) 10 10
Luxembourg 5/10 (a) 10 6/10 (i)
Macau SAR 5/10 (a) 7 7
Macedonia 5 10 10
Malaysia 10 10 10
Malta 5/10 (a) 10 7/10 (j)
Mauritius 5 10 10
Mexico 5 10 10
Moldova 5/10 (a) 10 10
Mongolia 5 10 10
Morocco 10 10 10
Nepal 10 10 10
Netherlands 5/10 (a) 10 6/10 (i)
New Zealand 10 10 10
Nigeria 7.5 7.5 7.5
Norway 10 10 10
Oman 5 10 10
Pakistan 10 10 10
Papua New Guinea 10 10 10
Philippines 10 10 10
Poland 10 10 7/10 (j)
Portugal 10 10 10
Qatar 10 10 10
Romania 10 10 7
Russian Federation (q) 10 10 10
Saudi Arabia 5 10 10
Seychelles 5 10 10
Singapore 5/10 (a) 7/10 (h) 6/10 (i)
Slovenia 5 10 10
South Africa 5 10 7/10 (j)
Spain 10 10 6/10 (i)
Sri Lanka 10 10 10
Sudan 5 10 10
Sweden 5/10 (a) 10 7/10 (j)
Switzerland 5/10 (a) 10 9
Syria 5/10 (a) 10 10
Tajikistan 5/10 (a) 8 8
Thailand 10 10 10

 

       
  Dividends Interest Royalties
  % % %
Trinidad and Tobago 5/10 (a) 10 10
Tunisia 8 10 5/10 (l)
Turkey 10 10 10
Turkmenistan 5/10 (a) 10 10
Ukraine 5/10 (a) 10 10
United Arab Emirates 7 7 10
United Kingdom 5/10 (a) 10 6/10 (i)
United States 10 10 7/10 (j)
Uzbekistan 10 10 10
Venezuela 5/10 (b) 5/10 (g) 10
Vietnam 10 10 10
Yugoslavia (o) 5 10 10
Yugoslavia (former) (n) 10 10 10
Zambia 5 10 5
Non-treaty countries 10 10 10
    a) The 5% rate applies if the beneficial owner of the dividends is a company that holds directly at least 25% of the capital of the company paying the divi­dends. The 10% rate applies to other dividends.
    b) The 5% rate applies if the beneficial owner of the dividends is a company that holds directly at least 10% of the capital of the company paying the divi­dends. The 10% rate applies to other dividends.
    c) The 5% rate applies if the beneficial owner of the dividends is a company that holds directly at least 25% of the voting shares of the company paying the dividends. The 10% rate applies to other dividends.
    d) The 7% rate applies if the beneficial owner of the dividends is a company that holds directly at least 25% of the voting shares of the company paying the dividends. The 10% rate applies to other dividends.
    e) The 0% rate applies if the beneficial owner of the dividends is a company that holds directly or indirectly at least 50% of the capital of the company paying the dividends and that has invested more than EUR2 million in the capital of the company paying the dividends. The 5% rate applies if the beneficial owner of the dividends is a company that holds directly or indirectly at least 10% of the capital of the company paying the dividends and that has invested more than EUR100,000 in the capital of the company paying the dividends. The 10% rate applies to other dividends.
    f) The 5% rate applies if the beneficial owner of the dividends is a company that, before the moment of the payment of the dividends, directly held for an uninterrupted period of at least 12 months at least 25% of the capital of the company paying the dividends. The 10% rate applies to other dividends.
    g) The 5% rate applies to interest paid to banks. The 10% rate applies to other interest payments.
    h) The 7% rate applies to interest paid to banks or financial institutions. The 10% rate applies to other interest payments.
    i) Payments for the use of industrial, commercial or scientific equipment are taxed on the basis of 60% of the gross payments. Consequently, the effective rate for such payments is 6%.
    j) Payments for the use of industrial, commercial or scientific equipment are taxed on the basis of 70% of the gross payments. Consequently, the effective rate for such payments is 7%.
    k) The 7% rate applies to royalties paid for the use of, or the right to use, in­dustrial, commercial and scientific equipment. The 10% rate applies to other royalties.
    l) The 5% rate applies to royalties paid for technical or economic studies or for technical assistance. The 10% rate applies to royalties paid for the use of, or the right to use, copyrights of literary, artistic or scientific works including cinematographic films, films or tapes for radio or television broadcasting, patents, trademarks, designs or models, plans, or secret formulas or processes, or for the use of, or the right to use, industrial, commercial or scientific experience.
    m) China is honoring the Czechoslovakia treaty with respect to the Slovak Republic until a new treaty is signed.
    n) After the partition of the former Yugoslavia, China is honoring the double tax treaty with the former Yugoslavia with respect to Bosnia and Herzegovina.
    o) China entered into a treaty with the Federal Republic of Yugoslavia. It has been indicated that China considers Serbia to have inherited the Yugoslavia treaty and that China is also honoring the treaty with respect to Montenegro. However, it is suggested that taxpayers check with the relevant tax authorities before relying on this treaty.
    p) On 28 March 2014, China signed a new tax treaty and new protocol with Germany, both of which have not yet been ratified.
    q) On 13 October 2014, China signed a new tax treaty with Russian Federation, which has not yet been ratified.
    r) On 16 September 2013, China signed a new protocol with Bahrain, which has not yet been ratified.
    s) On 10 March 2014, the SAT released SAT Announcement [2014] No. 16, which announced that the new tax treaty with Ecuador and its protocol, which were signed on 21 January 2013, entered into force on 6 March 2014. The Ecuador treaty and its protocol apply to income derived on or after 1 January 2015. The withholding tax rates under the new treaty are reflected in the table. In addition, the protocol states that the term “interest” also includes other income treated as income from money lent by the tax law of the contracting state in which the income arises if the income is from some type of debt-claim. In the case of divergence of interpretation, the contracting states must resort to the mutual-agreement procedure.
    t) The 5% rate applies to royalties paid to aircraft and ship leasing businesses. The 7% rate applies to other royalties.

China has signed tax treaties with Uganda (11 January 2012), Botswana (11 April 2012), Chile (25 May 2015) and Zimbabwe (1 December 2015), but these treaties have not yet been ratified. On 25 August 2015, China signed a double tax agreement with Taiwan, which has not yet been ratified.