China, People's Republic of

Non-TREs without establishments or places of business in China shall be subject to a WHT at 10% on gross income from dividends, interest, lease of property, royalties, and other China-source passive income unless reduced under a tax treaty.

If a non-TRE shareholder uses dividends distributed from a China TRE to make direct investment into China or acquire a China TRE from third parties, the non-TRE shareholder is eligible for WHT deferral treatment on the dividends, provided that certain conditions are met. The non-TRE shareholder shall report and settle the deferred tax if it later recoups the investment through equity transfer, equity buyback, liquidation of the China TRE, etc.

Dividends distributed by a foreign investment enterprise out of its pre-2008 profit to non-TRE shareholders are still exempted from WHT.

WHT rates under China’s tax treaties with other countries/nations are as follows (as of 31 December 2023):

Source: State Administration of Taxation, China

Notes

This table is a summary only and does not reproduce all the provisions relevant in determining the application of WHT in each tax treaty/arrangement.

1. 0% is due on interest paid to government bodies, except for Australia, Bosnia and Herzegovina, Brunei, Chile, Cyprus, Israel, and Slovenia. Reference should be made to the individual tax treaties.
2. The lower rate on royalties applies for the use of or right to use any industrial, commercial, or scientific equipment.
3. The following notes apply to dividend WHT:
   1. The lower rate applies where the beneficial owner of the dividend is a company (not a partnership) that directly owns at least 25% of the capital of the paying company.
   2. The lower rate applies where the beneficial owner of the dividend is a company that directly owns at least 25% of the voting shares of the paying company.
   3. The lowest rate (i.e. 0%) applies where the beneficial owner is a company that directly or indirectly owns at least 50% of the capital of the paying company and the investment exceeding 2 million euros (EUR). The lower rate (i.e. 5%) applies where the beneficial owner is a company that directly or indirectly owns at least 10% of the capital of the paying company and the investment exceeding EUR 100,000.
   4. The lower rate applies where the beneficial owner of the dividend is a company that directly owns at least 25% of the capital of the paying company.
   5. The lower rate applies where the beneficial owner of the dividend is a company that directly or indirectly owns at least 25% of the capital of the paying company.
   6. The lower rate applies where the beneficial owner of the dividend is a company that owns at least 10% of the voting stock of the paying company.
   7. The lower rate applies where the beneficial owner of the dividend is a company that directly owns at least 10% of the capital of the paying company.
   8. The lower rate applies where the beneficial owner is a company (other than a partnership) that directly owns at least 10% of the capital of the paying company.
   9. The lower rate applies where the beneficial owner of the dividend is a company (not a partnership) that directly owns at least 25% of the capital of the paying company within at least 12 consecutive months before the payment takes place.
   10. The lowest rate (i.e. 0%) applies if the beneficial owner of the dividends is the governmental bodies specified in the treaty, any of its institutions, or other entity the capital of which is wholly owned, directly or indirectly, by that contracting state. The lower rate (i.e. 5%) applies if the beneficial owner is a company (other than a partnership) that directly holds at least 25% of the capital of the company paying the dividends. The 10% rate applies in all other cases.
   11. The 0% rate applies if the beneficial owner of the dividends is the government of the other contracting state. The 5% rate applies if the beneficial owner of the dividends is a company that directly holds at least 25% of the capital of the company paying the dividends. The 15% rate applies where those dividends are paid out of income or gains derived directly or indirectly from immovable property within the meaning of Article 6 by an investment vehicle that distributes most of this income or gains annually and whose income or gains from such immovable property is exempted from tax. The 10% rate applies in all other cases.
   12. The lower rate (i.e. 0%) applies where the beneficial owner of the dividend is (i) the government of the other contracting state or any of its institutions or other entity wholly owned, directly or indirectly, by the government of the other contracting state or (ii) a company that is a resident of the other contracting state whose shares are at least 20% owned, directly or indirectly, by the government of the other contracting state.
   13. The lowest rate (i.e. 0%) applies where the beneficial owner of the dividend is the government of the other contracting state or any of its institutions or other entity wholly owned, directly or indirectly, by the government of the other contracting state.
   14. In the case of Papua New Guinea, the WHT shall be limited to 10% of the dividend while the Chinese tax law existing on the date of the signing of the tax treaty regarding dividends still applies; otherwise, the tax rate shall be 15%.
   15. The lowest rate (i.e. 5%) applies if the beneficial owner of the dividends is a company (other than a partnership) that directly holds at least 25% of the capital of the company paying the dividends. The highest rate (i.e. 15%) applies where those dividends are paid out of income or gains derived directly or indirectly from immovable property within the meaning of Article 6 by an investment vehicle that distributes most of this income or gains annually and whose income or gains from such immovable property is exempted from tax. The 10% rate applies in all other cases.
   16. The lower rate (i.e. 5%) applies if the beneficial owner of the dividends is a company (other than a partnership) that directly holds at least 25% of the capital of the company paying the dividends and this holding amounts to at least EUR 80,000 or its equivalent in any other currency.
   17. The lowest rate (i.e. 0%) applies if the dividends are derived by a sovereign wealth fund specified in the treaty. The lower rate (i.e. 5%) applies if the beneficial owner of the dividends is a company (other than a partnership) that directly holds at least 25% of the capital of the company paying the dividends. The 10% rate applies in all other cases. However, the dividends may be taxed at the rate under the domestic law if the dividends are paid out of income or gains derived from immovable property within the meaning of Article 6 by an investment vehicle that distributes most of this income or gains annually, whose income or gains from such immovable property is exempted from tax, and where the beneficial owner of those dividends holds, directly or indirectly, 10% or more of the capital of the vehicle paying the dividends.
   18. The lower rate (i.e. 0%) applies if the dividends arise in a contracting state and are paid to the other contracting state or a political subdivision, local authority, or administrative - territorial unit thereof, or any entity wholly or mainly owned by the other contracting state.
   19. The lower rate (i.e. 0%) applies in Gabon if the dividend is derived by the China-Africa Development Fund from Gabon.
   20. The lowest rate (i.e. 5%) applies if the beneficial owner is an institution owned or controlled by the other contracting state. The lower rate (i.e. 10%) applies if the beneficial owner is a company that directly holds at least 25% of the capital of the company paying the dividends throughout a 365 day period that includes the day of the payment of the dividend (for the purpose of computing that period, no account shall be taken of changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that holds the shares or that pays the dividend).
   21. The lowest rate (i.e. 0%) applies in the contracting state of which the company paying the dividends is a resident if the beneficial owner of the dividends holds, together with any associated enterprises, directly or indirectly, no more than 25% of the voting power in the company paying the dividends, and the beneficial owner is the government of the other contracting state. The lower rate (i.e. 5%) applies if the beneficial owner is a company that directly holds at least 25% of the capital of the company paying the dividends throughout a 365-day period that includes the day of the payment of the dividend (for the purpose of computing that period, no account shall be taken of changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that holds the shares or that pays the dividend).
   22. The lowest rate (i.e. 0%) applies in the contracting state of which the company paying the dividends is a resident if the beneficial owner of the dividends is the other contracting state or political subdivisions, local authorities thereof, or the Central Bank of the other contracting state or any entity the capital of which is wholly owned directly or indirectly by the other contracting state. The lower rate (i.e. 5%) applies if the beneficial owner is a company (other than a partnership) that directly holds at least 25% of the capital of the company paying the dividends throughout a 365-day period that includes the day of the payment of the dividend.
   23. The lowest rate (i.e. 0%) applies in the contracting state of which the company paying the dividends is a resident if the beneficial owner of the dividends is the government of the other contracting state or political subdivisions, local authorities thereof, or the Central Bank of the other contracting state or any entity the capital of which is mainly owned by the other contracting state. The lower rate (5%) applies if the beneficial owner is a company that directly holds at least 10% of the capital of the company paying the dividends throughout a 365-day period that includes the day of the payment of the dividend (for the purpose of computing that period, no account shall be taken of changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that holds the shares or that pays the dividend). The 8% rate applies in all other cases.
4. The following notes apply to interest WHT:
   1. The lower rate applies to interest payable to banks or financial institutions.
   2. The lowest rate of 4% applies if the beneficial owner of the interest is: (i) a bank, (ii) an insurance company or financial institution; (iii) an enterprise substantially deriving its gross income from the active and regular conduct of a lending or finance business involving transactions with unrelated persons, provided that it is unrelated to the payer of the interest and that the interest is not derived from a back-to-back loan; or (iv) an enterprise that sells machinery or equipment if the interest is paid concerning indebtedness arising as part of the credit sale of that machinery or equipment. The rate of 5% applies to interest arising from bonds or securities regularly traded on recognised exchanges. The rate of 10% applies in other cases. The highest rate of 15% applies for a period of two years from the date on which the treaty takes effect.
   3. The 0% rate applies to the interest that is paid: (i) in respect of indebtedness arising as a consequence of the sales on credit of any equipment, merchandise, or service; (ii) on any loan granted by a financial institute of that contracting state; or (iii) to that other state or a political subdivision, local authority, or administrative - territorial unit thereof, or any entity wholly or mainly owned by that other state. The 3% rate applies to all other cases.
   4. The interest shall be exempted from tax if (i) interest is on commercial debt-claims, including debt-claims represented by commercial paper, resulting from deferred payments for machinery or equipment supplied by an enterprise, except where such interest is paid between associated enterprises; (ii) interest is on loans of any nature not represented by bearer instruments granted on preferential terms for a period of at least three years by a banking enterprise; or (iii) interest is paid to the other contracting state, a political subdivision, or a local authority thereof, or to the Central Bank of that contracting state or to an institution owned or controlled by that state, or by a political subdivision or a local authority thereof.
   5. The interest shall be exempt from tax if (i) the interest is paid to the other contracting state or political subdivisions, local authorities thereof, the Central Bank of the other contracting state, or any entity the capital of which is wholly owned directly or indirectly by the other contracting state, or paid on loans guaranteed or insured by the other contracting state, or political subdivisions, local authorities thereof, the Central Bank of the other contracting state, or any entity the capital of which is wholly owned directly or indirectly by the other contracting state; or (ii) the interest is paid in connection with the sale of commercial or scientific equipment on credit.
5. The following notes apply to royalties WHT:
   1. The higher rate applies to trademarks.
   2. The higher rate applies to copyright of literary, artistic, or scientific work, including cinematography films or tapes for television or broadcasting.
   3. The lower rate applies to royalties paid for technical or economic studies or for technical assistance.
   4. The lower rate applies to royalties paid to an aircraft and ship leasing business.
   5. The higher rate applies to copyright of literacy, artistic, or scientific work, including cinematography films, or films or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial, or scientific experience; the lower rate applies for studies, technical, financial, accounting, or tax support.
   6. The lowest rate (3%) applies to royalties paid for the use of, or the right to use, any item of news; the lower rate (5%) applies to royalties paid for the use of, or the right to use, any copyright of literary, artistic, or scientific work; the 7% rate applies to royalties paid for the use or the right to use containers.
6. The lower rates apply in cases where the dividend, interest, or royalty paid from Ecuador to China is applicable to the Foreign Exchange Control Tax in Ecuador.
7. The tax treaty with the former Socialist Federal Republic of Yugoslavia is now applicable to Bosnia and Herzegovina.
8. The tax treaty with the former Federal Republic of Yugoslavia is now applicable to the nations of Serbia and Montenegro.
9. These tax treaties have not yet entered into force as of 31 December 2023.

In addition to the above tax treaties, China has also entered into tax information exchange agreements (TIEAs) with a few countries. For example:

• Argentina.
• Bahamas.
• Bermuda.
• British Virgin Islands (BVI).
• Cayman Islands.
• Guernsey.
• Isle of Man.
• Jersey.
• Liechtenstein.
• San Marino.

China also signed special agreements in respect of international transportation with a few counties (e.g. Belgium, Chile, Denmark, Sweden, the United States).