Issued by:    State Taxation Administration
Issue No.:    State Taxation Administration Announcement No. 6 of 2025
Release Date: March 6, 2025
Effective date:  January 1, 2026
Links: https://fgk.chinatax.gov.cn/zcfgk/c100012/c5239047/content.html

The main provisions of the Agreement are as follows:
1. Permanent Establishment
a. A building site, construction, assembly or installation project, or supervisory activities related thereto, which lasts for more than 12 months constitutes a permanent establishment.
b. Services provided by an enterprise through its employees or other hired personnel, where such activities (for the same project or connected projects) are carried out continuously or cumulatively for more than 183 days in any 12-month period in a Contracting State, constitute a permanent establishment.

2. Dividends
a. If the beneficial owner of the dividends is a resident of the other Contracting State, the tax charged on the dividends shall not exceed 5% of the gross amount of the dividends on the conditions that 1) the beneficial owner is a company; 2) it directly owns at least 25% of the capital of the dividend-paying company; 3) the ownership is held for at least 365 days including the dividend payment date. In all other cases, the tax charged shall not exceed 10% of the gross amount of the dividends.

3. Interest
a. If the beneficial owner of the interest is a resident of the other Contracting State, the tax charged on interest paid to financial institutions for loans with a term of at least three years intended for investment projects should not exceed 8% of the gross amount of the interest. In all other cases, the tax charged shall not exceed 10% of the gross amount of the interest.

4. Royalties
a. For all kinds of payments made as remuneration for the use of or the right to use, industrial, commercial, or scientific equipment, the tax charged shall not exceed 5% of the gross amount of the royalties. For other types of royalties, the tax rate shall not exceed 10%.

5. Capital Gains
a. Gains derived by a resident of one Contracting State from the transfer of shares, if more than 50% of the value of these shares directly or indirectly derives from immovable property situated in the other Contracting State, may be taxed in that other Contracting State.
b. Gains derived by a resident of one Contracting State from the transfer of shares of a company which is a resident of the other Contracting State may be taxed in that other Contracting State if, at any time during the 12-month period preceding the transfer, the transferor directly or indirectly held at least 25% of the capital of the company.