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Double tax treaty of Mexico with mainland China and Hong Kong

Trade between China and Latin America grows more and more, so it increased by 8% in 2012. However, many Latin American countries have an unfavorable tax system to invest in China, making dividends, interest and royalties taxed twice and reducing profitability of the investments. One way to counter this problem is often the appeal of tax treaties between two countries. It is this that has recently entered Mexico with China and Hong Kong. The article introduces the main points of the both tax treaties.

Spain Double Tax Treaty with Hong Kong

Recently, Hong Kong has increased its number of tax treaties with other countries, in order to enhance economic cooperation and avoid taxation of companies taxed under two jurisdictions. It is in this light that Hong Kong has entered into treaty with Spain on April 1, 2011.

Double Tax Treaty Between China and Switzerland

Switzerland and China signed a new tax treaty on September 25, 2013 in order to avoid double taxation and to prevent from fiscal evasion as regards taxes on income. The new Treaty replaces the existing treaty from 1990. The agreement has become effective since November 15, 2014 and applies to income derived on or after January 1, 2015.

The key features of the main changes are summarized in this table:

SAT Fights Tax Avoidance with Investigation

Recently, the State Administration of Taxation (SAT) accelerated its commitment to fight tax avoidance in China. The tax authority decided to carry out investigation on Chinese subsidiaries sending money offshore via service fee or royalties to related entities. Indeed, the SAT issued the Circular of the General Office of State Administration of Taxation on Carrying out Anti-tax Avoidance Investigation on Large Sum External Payments on July 30, 2014 (“Circular No. 14-146”).

Sino-French Double Tax Treaty

On November 26th, 2013 French and Chinese governments have agreed upon a double tax treaty aiming at reducing taxes on companies investing in both France and China. The update was much needed since this text had not been modified for 30 years. It aligns with the tax treaties China has signed with the other European countries.

CHINA-SWITZERLAND: THE NEW DOUBLE TAXATION AGREEMENT

Recently China and Switzerland re-negotiated the double taxation agreement that has been in existence since 1990 and signed a new double taxation agreement “DTA”. The new agreement still has to go through referendum in Switzerland so its enforceability is still uncertain. However, if everything goes as planned, it’s expected to become effective some time next year.

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