How to Conduct Business in China Without Paying Tax

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Double tax treaties are a starting point for understanding your position

By Chris Devonshire-Ellis, Dezan Shira & Associates

Jul. 19 – Many international corporations successfully trade and effectively ‘do business’ with China without the need to establish a permanent presence in the country. However, there remains a number of issues to be aware of to make sure that firstly, you don’t cross the barrier into “illegally” operating, and secondly, when the right time arises to consider an investment into the country in terms of funding an office.

One of the key aspects to be aware of is whether or not your home country has a double tax avoidance agreement (DTA or DTAA) with China. Much of the legalese concerning the treatment of conducting business with China, and the parameters that this includes, can be found within these documents. Key to these are the concepts of “Residency”, “Permanent Establishment” and “Business Profits,” and how such treaties determine these issues. Continue reading…

China-Syria DTA Takes Effect

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Nov. 24 – The “Agreement between the Government of the People’s Republic of China and the Government of the Syrian Arab Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (China-Syria DTA)” – signed on October 31, 2010 – came into effect on September 1, 2011, according to the State Administration of Taxation.

The China-Syria DTA – which specifies the definition of a permanent establishment (PE), lists the taxation on different types of incomes, and clarifies the exchange of tax information – will apply to incomes obtained by both countries’ residents from January 1, 2012. The details of the agreement can be found below. Continue reading…

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