Taxation of Shipping and Air Transport in Domestic Law, EU Law and Tax Treaties by Maisto Guglielmo;

Author:Maisto, Guglielmo;
Language: eng
Format: epub
Publisher: IBFD Publications USA, Incorporated
Published: 2017-08-15T00:00:00+00:00

13.4.2. Tonnage corporate taxes

Neither China nor Hong Kong levy tonnage corporate tax; thus, neither covers tonnage tax in their bilateral treaties or agreements.

13.4.3. POEM and residence

13.4.3.1. Mainland China

China used the terms “place of effective management” “head office” and “residence state” in its bilateral tax treaties and agreements. Chinese domestic laws, however, do not have a definition for “head office” and the concept of “place of effective management” is mainly used to determine whether an enterprise incorporated outside of China is in fact a Chinese-resident enterprise (see section 13.3.1.).

In contrast, the term “residence state” is interpreted in more detail by the SAT, particularly in Circular 75, which is the rule governing interpretation of tax treaties in China. 63 The principle rule for the residence state of the taxpayer according to the criteria set out in the laws of the foreign jurisdiction and the resident state identity that certificates issued by the competent tax authority of the other jurisdiction could be used as proof of residence. Furthermore, when a company or any other body of persons is a resident of both contracting states, the Chinese tax authorities should then deem the residence state as the state where the POEM of the taxpayer (enterprise) is situated. In addition, if the dual residence is still unable to be resolved, the Chinese tax authorities shall settle the question by mutual agreement with the competent authorities of the contracting states.

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