China: Tax treaty signed with Taiwan

Tax treaty signed between China, Taiwan

Representatives of the People’s Republic of China (PRC) and Taiwan on 25 August 2015 concluded six years of negotiations and signed, for the first time, an income tax treaty. Assuming the remaining approval and ratification procedures are completed by both countries during 2015, the new China-Taiwan income tax treaty and the accompanying “appendix” could be effective beginning as early as 1 January 2016—thereby applying to 2016 and subsequent tax years.

Related content

The income tax treaty between China and Taiwan provides for reduced levels of dividend, interest, royalties, and capital gains withholding tax (relative to domestic rates) and are competitive rates when compared to the withholding tax rates in other treaties in China’s network of income tax treaties.

KPMG observation

Taken together with its double tax mitigation features, the China-Taiwan income tax treaty is expected to enhance “cross-straits” trade and investment in the form of mutual direct investment. It is anticipated the agreement will lead to the use of simpler investment holding and operating structures, and the door may also be opened to potential tax efficiency gains through restructuring.

 

Read an August 2015 report prepared by the KPMG member firm in China: New PRC-Taiwan double tax arrangement expected to encourage cross-straits trade and investment

 

Read a September 2015 report prepared by the KPMG member firm in Taiwan: Tax Treaty with PRC Signed

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.