"Guidance on promoting international cooperation in capacity and equipment manufacturing",issued by the State Council recently, outlines the financial and tax policies intended to provide support and services for enterprises which are planning to go global.

"China has signed 99 tax treaties to avoid double taxation," central government officials and experts said in an online interview on www.gov.cn on May 21.

As businesses in China accelerate these plans, many of them become enmeshed in increasing cross-border tax issues.

International taxation agreements provide legal support for companies to avoid double taxation and to resolve tax-related disputes.

101 tax agreements and arrangements

"A Tax Agreement is an agreement that avoids double taxation for income or property, and prevents tax evasion in different countries," said Zhu Qing, the professor of School of Finance, Renmin University of China. China has signed 101 tax agreements and arrangements with 99 countries on avoiding double taxation, coupled with the Mainland and Hong Kong SAR, and the Macao Special Administrative Region. The coverage is wide enough.

"The state-owned key enterprises go abroad first, and they have encountered many overseas tax issues. Tax agreements are indeed very important for companies operating outside China," said Wen Limin, the Chief Accountant of Orient Electric Group. As the leading supplier of power generation equipment and contractor of power plant equipment, it has markets in 50 countries and has undertaken power plant projects in more than 20 countries. It has found itself confronted by the potential risk of tax uncertainty, especially when entering a new market where it was unfamiliar with the local tax environment.

According to Wang Qinwen, the deputy director of SAT ( State Administration of Taxation ), the first step will be to eliminate double taxation, reducing the tax burden of going global. The second is to enhance tax certainty, and reduce the risk of cross border operation. The third is to reduce the tax in the host country and to improve competitiveness. The fourth is to provide a mutual consultation mechanism and to resolve issues when tax disputes arise.

The article is edited and translated from 《避免双重征税 我国已签订99个税收协定（政策解读）》, source: People's Daily, author: 吴秋余