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How do you qualify for DTA benefits in China?

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.

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