April 2018 - The PRC SAT issued Public Note 11 to update interpretations of tax treaty articles

On 9 February 2018, the PRC State Administration of Taxation (“SAT”) issued Public Notice [2018] No. 11 (“PN No.11”). The circular updates the SAT’s interpretation of a few selected articles under Double Tax Agreements (“DTAs”) that are concluded by China and clarifies the tax treatments of partnerships.

Salient points are set out as follows:

- Clarification of permanent establishment (“PE”) for Sino-foreign co-operative education institutions and the 6-month period threshold for service PEs;

- Amending the scope of international shipping and air transportation income under DTAs;

- Comprehensive interpretations of the DTA article involving Artists and Sportsmen; and

- New interpretations for DTA treatment of partnerships, both domestic and foreign, and their partners.

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