China’s State Administration of Taxation issued Announcement 11 to supplement prior guidance on China’s income tax treaties—specifically guidance concerning the application of the income tax treaty provisions to foreign partnerships and service permanent establishments (PEs).
The earlier tax treaty guidance was provided by Circular 75. The new guidance (Announcement 11) includes clarifications concerning the income tax treaty treatment of foreign partnerships and service PE timeframe calculations. There is also supplementary guidance addressing transport and entertainer articles of the income tax treaties in China’s network of tax treaties.
The new guidance is effective from 1 April 2018.
Circular 75 is viewed as a substantive item of income tax treaty guidance and draws heavily on the commentary on the OECD Model Tax Convention (MTC). While it formally applies to the interpretation of the China-Singapore income tax treaty, the guidance is also reported to be relevant to interpretation of those treaties that have provisions similar to those in the China-Singapore income tax treaty.
Read a 2018 report prepared by the KPMG member firm in China
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.