Q&A

The first step in qualifying for DTA benefits is to determine whether you are a tax resident of a country that has an effective DTA agreement with China (i.e. a non-resident with respect to China). Following this, the qualification requirements as set out in the specific DTA should be examined. These are typically organized in terms of the following:

 

• Persons covered;

• Taxes covered;

• Definitions of key terms (e.g. resident, permanent establishment);

• Taxation of income;

• Taxation of capital;

• Elimination of double taxation; and

• Exchange of information.

 

Accordingly, the DTA applicant must be a person covered by the DTA; the benefits to be claimed must be a tax exemption or reduction stipulated by the DTA; and other relative details in the DTA must be satisfied for a positive ruling to be issued on the application of treaty benefits. Among these criteria, permanent establishment and beneficial owner status are of critical importance for understanding the workings of DTAs.