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