China Tightens Royalty Payments via Double Tax Treaty Residency

The State Administration of Tax moved last week to clarify the treatment of royalties under the nation’s double tax treaties.

Guo Shui Han (2009) No. 507, published on September 23 and taking effect October 1, sets out the scope of permitted royalties under double tax treaties (DTAs) as well as what should not be treated as royalties. It also clarifies the application of royalty clauses of a DTA to resident beneficiaries only.