The income tax treaty between China and Ethiopia, which was signed on 14 May 2009, entered into force on 25 December 2012.
The treaty generally follows the OECD Model Convention. According to the treaty the maximum withholding tax rates on dividends and royalties would be 5% and for interest the maximum rate of withholding tax would be 7% with an exemption for interest paid to or on loans guaranteed by the government.
The treaty contains a tax sparing provision. Where business profits are exempt or taxed at a reduced rate in a contracting state for a limited period of time the tax that would have been payable on the profits but for the exemption or reduction may be credited against tax payable on those profits in the other contracting state.
