Foreign tax relief
Foreign taxes paid on non-China-source income may be claimed as a credit on the China tax return, but only to the extent of the IIT payable on the same category of income derived from the same country. Unused excess credits are non-refundable and can only be carried forward for a maximum of five years. Documentary evidence of the tax payment (e.g. tax payment certificate, tax clearance certificate) to substantiate claims of foreign tax credits is required by the Chinese tax authorities.
As of 31 December 2019, China has concluded tax treaties/arrangements with 110 countries/regions.
As of 31 December 2019, China has signed tax information exchange agreements with Argentina, Bahamas, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, Liechtenstein, and San Marino.
As of 31 December 2019, China has totalisation agreements in force with ten countries, including Canada, Denmark, Finland, Germany, the Republic of Korea, Luxembourg, the Netherlands, Spain, Japan and Switzerland. China has also signed totalisation agreements with France and Serbia, which have not entered into force.