China clarifies beneficial ownership guidance

July 2012

Overview

Circular 601, which China issued in 2009, provided taxpayers and Chinese local-level tax authorities with high-level guidance for assessing beneficial ownership status when claiming treaty benefits on passive income such as dividends, interests and royalties. However this guidance created many technical and practical issues, leading to disputes in assessing BO status. The State Administration of Taxation addressed these issues, on June 29, 2012, with Public Notice [2012] No. 30. The notice, effective on the issuance date, is intended to clarify how to assess BO status. This newsalert summarizes the notice along with our observations.

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