DT4910 - Double Taxation Relief Manual: Guidance by country: China: Tax spared

The agreement provides for credit to be given for tax 'spared' (see INTM161270) in China under the provisions of Chinese law set out in Article 23(3). Relief is restricted to tax spared in China for a period of ten years in respect of any one source of income.

The further agreement which took effect on 1 January 1995 (see DT4902) updates the rules dealing with tax spared by introducing new paragraphs (3), (4) and (5) to Article 23. New tax sparing provisions under Chinese law are now covered by these paragraphs. But a new overall limitation is introduced. In addition to the ten years in respect of any one source referred to above (which is now extended to thirteen years in some cases), relief is not available in respect of tax spared on income or profits which arise or accrue after 4 March 2007.

Amounts of tax spared for which relief is given should be reported as mentioned in INTM161290.