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HMRC internal manual

Double Taxation Relief Manual

HM Revenue & Customs
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Guidance by country: China: interest

Interest arising in China and beneficially owned by a United Kingdom resident may be taxed in China at a rate not exceeding 10 per cent (Article 11(2)).

Interest arising in China and paid to a United Kingdom resident is, however, exempt from Chinese tax if the beneficial owner is the United Kingdom government or the Bank of England (or the loan is guaranteed by the government or the Bank of England).

Where the interest is effectively connected with a permanent establishment which the United Kingdom resident recipient has in China, the provisions of Article 7 will apply.