China's Convention on Profit Shifting
Recently, the State Taxation Administration ("STA") has issued the Announcement on the Entry into Force of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting in China and Its Application to Certain Tax Treaties (the "Announcement").
The Announcement states that, on May 25, 2022 China deposited its instrument of rectification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the "Convention") with the Secretary-General of the OECD. Pursuant to Paragraph 2 of Article 34 (Entry into Force) of the Convention, the Convention will enter into force in China on September 1, 2022. According to the Announcement, the Convention's impacts on China's existing tax treaties include three parts: the tax treaties to which the Convention applies, the clauses amended by the Convention, and the consolidated texts of the Convention and existing tax treaties. China has adopted two types of achievement recommendations in the Convention: the minimum standard clauses of BEPS; and other BEPS achievement recommendations usually included in the tax treaties signed by China in recent years.