An income tax treaty, and Protocol, between France and China was signed in late November 2013.
The treaty and related Protocol—once ratified and in force—would replace the existing treaty and Protocol (1984). If the ratification processes are completed in 2014, it is anticipated that provisions of the new France-China income tax treaty could be effective as early as 1 January 2015.
The double tax agreement (DTA) provides for lower levels of dividend withholding tax (WHT) than those available under the 1984 DTA. It clarifies the application of the DTA to partnerships and tightens up the DTA permanent establishment (PE) provisions, allowing for greater certainty in their application. The agreement provides for special WHT treatment of Sovereign Wealth Funds (SWF), while abolishing the previous tax sparing relief. The new DTA also introduces new anti-abuse provisions, facilitates the application of domestic anti-avoidance measures, and provides for greater administrative cooperation in respect of taxes.
