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Aug 2015, Issue 37

Double taxation agreement (DTA) signed to benefit mutual trade and investment between mainland China and Taiwan

On 25 August 2015, the representatives from mainland China and Taiwan signed the Agreement between the Mainland of China and Taiwan for the Avoidance of Double Taxation and Enhanced Collaboration in Tax Matters (the 'Agreement') after six years of negotiations between the two parties.

The Agreement follows the OECD Model Tax Convention in general. However, given the special investment structure, and economic and trade relations between mainland China and Taiwan, the Agreement provides more favourable treatments compared to other DTAs signed by mainland China, for instance, the allocation of taxing right on capital gains, the applicability of the Agreement to investments in mainland China via a third jurisdiction, etc. The Agreement will enter into force after the completion of the ratification procedures by both contracting parties and apply to income derived on and after 1 January of the year following its entry into force.

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