China Raises Thresholds for China-Singapore Double Tax Agreement

China has issued Circular Guo Shui Han [2009] No. 484 that brings about changes in the second protocol to the China-Singapore DTA (double tax agreement) — specifically the thresholds for service permanent establishment and tax credit on dividends, according to KPMG China.


KPMG says that the changes could either increase or decrease the corporate income tax burden on companies, depending on the business.


The second protocol to the China-Singapore DTA will bring about the following changes:

- The threshold period for service permanent establishment will be changed from six months to 183 days.
- The identity of financial institutions eligible for relief on interest on sovereign loans will be modified.
- The equity holding threshold for a Chinese resident enterprise to claim tax credit on dividends received from a Singapore resident company will increase from "no less than 10%" to "no less than 20%."


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