Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Double Taxation Relief Manual

Guidance by country: China: Notes

The treaty that entered into force in 2013 replaced a previous agreement. Apart from a general updating to reflect changes in the OECD Model Tax Convention and the domestic laws of both states, notable changes include:

Taxation of services

Technical fees are no longer taxable at source in China. There is, however, now a provision in Article 5 (Permanent establishment) which deems a permanent establishment to exist where services have been furnished in China by a UK enterprise, through employees or other personnel, for a period or periods aggregating more than 183 days in any twelve-month period commencing or ending in the fiscal year concerned.

Building sites

The time period required before a building site constitutes a permanent establishment in China is increased from 6 to 12 months.

Transfer pricing

The new treaty introduces a requirement in paragraph 2 of Article 9 for a state to make a corresponding adjustment in transfer pricing cases.


  • The withholding rate applying to direct investors has been reduced from 10% to 5%.
  • The new treaty also introduces a 15% withholding rate on property income dividends.

Capital gains

The new treaty introduces limitations on the source state taxation of capital gains arising from the disposal of Chinese assets. Now only gains derived from the disposal of immovable property in China, shares in companies deriving the majority of their value from immovable property in China and substantial shareholdings in Chinese companies will taxable in China. All other gains made by UK residents are taxable only in the UK.

Other income

Income beneficially owned by a UK resident and not dealt with in other articles of the new treaty is now taxable only in the UK under the provisions of Article 21.


The dividend, interest, royalties and other income articles now contain anti-treaty shopping rules.