Jul 2012, Issue 18
One step further on the assessment of "Beneficial Ownership" status
Back in late 2009, the State Administration of Taxation ("SAT") promulgated Circular Guoshuihan [2009] No.601 ("Circular 601") providing high level guidance on the determination of beneficial ownership ("BO") status for the purpose of claiming treaty benefit by treaty residents in respect of China-sourced dividends, interest and royalties (collectively called "passive income") under the Sino-foreign Double Taxation Agreements ("DTAs").
Since the implementation of Circular 601, treaty resident applicants (taxpayers) and Chinese local-level tax authorities have encountered many technical and practical issues and often run into disputes in assessing the BO status of the treaty resident applicants. They urged the SAT to further clarify such issues. On 29 June 2012, the SAT released the long-awaited supplementary notice to Circular 601, i.e., SAT Public Notice [2012] No.30 ("Public Notice 30") which took effect from the issuance date, to provide further clarification on how to assess the BO status.
In this Issue of News Flash, we would like to highlight the salient points of the Public Notice 30 and share our observations.
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