China has been extremely active in putting into place a variety of trade agreements. This includes bilateral investment treaties (BITs), free trade agreements (FTAs), and double taxation agreements (DTAs), etc.
Free Trade Agreements
China has developed a strategic position when it comes to entering into free trade agreements – the policy of allowing dutiable and tax reduction on certain products and services being one of the main cornerstones that has projected the nation to be the world’s manufacturing hub over more recent years.
Without doubt, the signing of the China-ASEAN FTA, followed by the recent RCEP agreement in particular, will continue to have a huge impact on China and Asia’s development in global sourcing and the foreign investment related to this.
China also has a Free Trade Agreement with Switzerland, which as a result has become one of the few European nations not to have a China trade surplus.
In total, China has signed off 23 FTAs impacting 26 countries or regions countries (including the 10 ASEAN nations), has another 10 under negotiation, and a further eight under consideration.
Countries/Regions Having FTAs with China |
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FTA |
Countries |
Status |
RCEP |
ASEAN (10), China, Japan, South Korea, Australia, New Zealand |
Signed and effective |
China-Cambodia FTA |
Cambodia |
Signed and effective |
China-Mauritius FTA |
Mauritius |
Signed and effective |
China-Maldives FTA |
Maldives |
Signed |
China-Georgia FTA |
Georgia |
Signed and effective |
China-Australia FTA |
Australia |
Signed and effective |
China-Korea FTA |
South Korea |
Signed and effective |
China-Switzerland FTA |
Switzerland |
Signed and effective |
China-Iceland FTA |
Iceland |
Signed and effective |
China-Costa Rica FTA |
Costa Rica |
Signed and effective |
China-Peru FTA |
Peru |
Signed and effective |
China-Singapore FTA (including upgrade) |
Singapore |
Signed and effective |
China-New Zealand FTA |
New Zealand |
Signed and effective |
China-Chile FTA (including upgrade) |
Chile |
Signed and effective |
China-Pakistan FTA (including upgrade) |
Pakistan |
Signed and effective |
China-ASEAN FTA (including upgrade) |
Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanrnar, Philippines, Singapore, Thailand, Vietnam |
Signed and effective |
Mainland and Hong Kong Closer Economic and Partnership Arrangement |
Hong Kong |
Signed and effective |
Mainland and Macao Closer Economic and Partnership Arrangement |
Macao |
Signed and effective |
China Taiwan ECFA |
Taiwan |
Signed and originally expired in September 2020 |
Bilateral investment agreements (BITs)
China has been entering into bilateral investment treaties (BITs) with other countries since the early 1980s, when the nation began its path to reforms under then-state leader Deng Xiaoping. Although many have now been superseded by more complicated and sophisticated trade agreements and other bilateral mechanisms, BITs remain important, especially for investors from emerging nations with relatively immature tax laws and regulatory environments. Such treaties also help to underpin the bilateral investment conditions between China and other developed nations.
Among others, BITs are a useful starting point to clarify legal and tax treatments under bilaterally agreed conditions and should be understood as a bilateral document of first resort when understanding the investment environment, and protection mechanisms that China offers its many trading partners.
China has China has in total 107 BITs in force, with another 17 under negotiation.
Countries/Regions Having BITs with China (as of March 2022) |
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Algeria |
Mali |
Argentina |
Guyana |
Cameroon |
Mauritius |
Barbados |
Jamaica |
Cape Verde |
Morocco |
Bolivia |
Mexico |
Democratic Republic of Congo |
Mozambique |
Canada |
Peru |
Egypt |
Nigeria |
Chile |
Trinidad and Tobago |
Ethiopia |
South Africa |
Colombia |
Uruguay |
Equatorial Guinea |
Sudan |
Cuba |
Papua New Guinea |
Gabon |
Tanzania |
Australia |
Lithuania |
Ghana |
Tunisia |
New Zealand |
Macedonia |
Madagascar |
Zimbabwe |
Albania |
Malta |
Armenia |
North Korea |
Austria |
Moldova |
Azerbaijan |
Oman |
Belarus |
Netherlands |
Bahrain |
Pakistan |
Belgium/Luxembourg |
Norway |
Bangladesh |
Philippines |
Bosnia and Herzegovina |
Poland |
Cambodia |
Qatar |
Bulgaria |
Portugal |
Georgia |
Saudi Arabia |
Croatia |
Romania |
Iran |
South Korea |
Cyprus |
Russia |
Israel |
Sri Lanka |
Czech Republic |
Serbia |
Japan |
Syria |
Denmark |
Slovakia |
Kazakhstan |
Tajikistan |
Estonia |
Slovenia |
Kuwait |
Thailand |
Finland |
Spain |
Kyrgyzstan |
Turkey |
Germany |
Sweden |
Laos |
Turkmenistan |
Greece |
Switzerland |
Lebanon |
United Arab Emirates |
Hungary |
United Kingdom |
Malaysia |
Uzbekistan |
Iceland |
Ukraine |
Mongolia |
Vietnam |
Italy |
|
Myanmar |
Yemen |
Latvia |
|
Double tax avoidance agreements (DTAs)
DTAs are mostly of a bilateral nature and, while DTA-signing countries are not all members of the Organization for Economic Cooperation and Development (OECD), DTAs are generally based on model conventions developed by the OECD or (less commonly) the United Nations. And while about 75 percent of the actual words of any given DTA are identical with the words of any other DTA, the applicability and specific provisions of each treaty can vary substantially.
From an investor’s perspective, confusion about international taxation can arise when investors are subject to two different and potentially conflicting tax systems. For example, Hong Kong and Singapore adopt a “territorial source” principle of taxation, which means that only profits sourced locally are taxable. Meanwhile, other countries, such as China and the United States, are on the worldwide tax system, and resident enterprises can be required to pay tax on income sourced both inside and outside of the country.
DTAs not only provide certainty to investors regarding their potential tax liabilities but also act as a tool to create tax-efficient international investments.
So far, China has signed DTAs with 110 countries or regions.
Countries (Regions) with Signed DTAs with China (as of April 2021) |
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A-B |
C-J |
K-N |
P-S |
T-Z |
Argentina* |
Denmark |
Katar |
Oman |
Tajikistan |
Angola* |
Ecuador |
Kazakhstan |
Pakistan |
Taiwan* |
Albania |
Egypt |
Kenya* |
Papua New Guinea |
Thailand |
Algeria |
Estonia |
Korea (ROK.) |
Philippines |
Trinidad & Tobago |
Armenia |
Ethiopia |
Kuwait |
Poland |
Tunisia |
Australia |
Finland |
Kyrgyzstan |
Portugal |
Turkey |
Austria |
France |
Laos |
Romania |
Turkmenistan |
Azerbaijan |
Gabon* |
Latvia |
Russia |
Ukraine |
Bahrain |
Georgia |
Lithuania |
Saudi Arabia |
United Arab Emirates |
Bangladesh |
Germany |
Luxembourg |
Serbia & Montenegro |
United Kingdom |
Barbados |
Greece |
Macao |
Seychelles |
United States |
Belarus |
Hong Kong |
Macedonia |
Singapore |
Uzbekistan |
Belgium |
Hungary |
Malaysia |
Slovakia |
Uganda* |
Bosnia-Herzegovina |
Iceland |
Malta |
Slovenia |
Venezuela |
Botswana |
India |
Mauritius |
South Africa |
Vietnam |
Brazil |
Indonesia |
Mexico |
Spain |
Zambia |
Brunei |
Iran |
Moldova |
Sri Lanka |
Zimbabwe |
Bulgaria |
Ireland |
Mongolia |
Sudan |
|
Cambodia |
Israel |
Morocco |
Sweden |
|
Canada |
Italy |
Nepal |
Switzerland |
|
Chile |
Jamaica |
Netherlands |
Syria |
|
Congo* |
Japan |
New Zealand |
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Croatia |
Nigeria |
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Cuba |
Norway |
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Cyprus |
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Czech Republic |
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* Signed, but not in effect at time of writing. |