The Income Tax Treaty between China and the United Kingdom entered into force on 13 December 2013. The new tax treaty replaces the 1984 income tax treaty between the United Kingdom and China and is effective beginning 2014.
The new treaty provides for lower rates of dividend and royalties withholding tax, and for an exclusion of certain capital gains on minority shareholdings from capital gains tax. Also, the treaty introduces new anti-abuse provisions, facilitates the application of domestic anti-avoidance measures and tightens up the permanent establishment (PE) provisions, allowing for greater certainty in their application.
