Practical notes on application of tax treaties when conducting business in China

Over the past 15 years of serving foreign companies doing business in China, the application of tax treaties has been a frequently discussed topic. Many foreign companies and their Chinese partners are either not familiar with the details of these tax treaties, or not sure how to apply the benefits they offer. Consequently, income taxes are sometimes paid incorrectly in China. This article explains the meaning and practical application of the most commonly used tax treaty clauses and highlights the frequent misunderstandings in their implementation.