Q&A

China charges a 10 percent dividends tax on the overseas repatriation of profits, in addition to a 25 percent corporate income tax (CIT). However, many of China’s bilateral DTAs (such as that with Hong Kong) provide for a clause that reduces the dividends tax rate by 50 percent. This potential reduction, entailing considerable savings for enterprises, is not something that the taxation authorities will bring to the attention of taxpayers. In order to secure these savings, it is essential that investors plan far in advance, as applying for DTA benefits is just one step in the larger procedure of declaring and repatriating dividends.